citt interference in deloitte case represented by photo of finger crushing bridge separating 2 people

Deloitte Inc v Department of Fisheries and Oceans; and Department of Public Works and Government Services, CITT 2016-069 (reasons July 2017)

This conflict arose after Deloitte Inc. (“Deloitte”) responded to a Request for Proposals issued on January 13, 2017 by the Department of Fisheries and Oceans (“DFO”) under the framework set out by the Department of Public Works and Government Services (“PGWSC”) regarding three phases of fleet procurement for the Canadian Coast Guard (“CCG”). The RFP was for consulting services in three successive phases to assist the CCG in preparing its 2017 Fleet Renewal Plan. In Phase 1, the CCG wanted to develop a Concept of Analysis for a Fleet Optimization Study to determine possible procurement options for the best mix, number, and sequencing of vessels for a later 2017 RFP. Phases 2 and 3 were both possible extensions at the DFO’s option: Phase 2 was to conduct the actual optimization study, and Phase 3 is for evaluating, planning, and implementing the 2017 RFP.

The RFP issued on January 13, 2017 provided that the contract would be awarded to the compliant bidder who had the highest combined technical and financial scores for 4 mandatory criteria and 12 rated criteria; four of the latter related to Phase 1 of the work. Technical proposals were evaluated in February first on an individual and then on a final consensus scoring basis by a panel of four CCG officials, all of whom were highly experienced. Three addendums were issued for the RFP: the first extended the closing date to February 3; the second amended a requirement for a rated criterion for Phase 2 work and provided the Bid Evaluation Score Sheet that was ultimately used in the assessment of proposals; and the third further amended the requirements for that Phase 2 rated criterion.

Two companies responded to the RFP: Deloitte and QinetiQ Ltd. (“QinetiQ”). Deloitte met all of the mandatory criteria and received full points for the rated criteria for Phase 1 and Phase 3. However, it did not receive full marks for the six rated criteria for the Phase 2 work. Deloitte claims that the DFO made an error in assessing Deloitte’s proposal and that save for this error it would have had the highest-ranked proposal and been awarded the resulting contract and two one-year extension options.

Specifically, Deloitte claims that it should have received full marks for five of the six Phase 2 rated criteria. The facts show that three of the four evaluators who initially awarded full points to Deloitte on their individual evaluations actually changed their mind at the consensus scoring stage. The criterion in question had to do with experience in simulation modelling.

Deloitte argued that its final score was unreasonable either because it introduced an undisclosed criterion into the evaluation, or because the decision resulted from an ambiguity that should be resolved in favour of Deloitte. The ambiguity was an element of the scoring that one evaluator interpreted differently than the others, who then revised their scores accordingly, resulting in a lower score given to Deloitte. The DFO did not present evidence as to why the evaluators changed their minds.

Deloitte requests that it be compensated for its lost profits or for the lost opportunity on the Phase 1 work. Deloitte also requests that it be awarded the Phase 2 and Phase 3 contracts, or that the DFO retender the solicitation for those two phases. Deloitte also seeks its costs in bringing the complaint to the CITT. PWGSC is named in the complaint as the contracting authority for the contract awarded to QinetiQ, the winning bidder.

Providing important clarity, the CITT affirmed that tribunals interfere in evaluations only when evaluations are unreasonable, and will substitute their judgement for that of the evaluator only in one of five specific scenarios:

  1. when the evaluators have not applied themselves in evaluating a bidder’s proposal;
  2. when the evaluators have ignored vital information provided in a bid;
  3. when evaluators have wrongly interpreted the scope of a requirement;
  4. when evaluators have based their evaluation on undisclosed criteria; or
  5. when evaluators have otherwise conducted the evaluation in a procedurally unfair way.

Is Deloitte’s complaint valid? You be the judge!

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Answer

The CITT determined that Deloitte’s complaint was valid in part and that they deserved compensation for lost profits.

Because the DFO did not present any evidence as to why the evaluators changed their scores at the consensus meeting, the CITT held that the DFO’s position that the evaluation process was conducted fairly was untenable. The CITT relied on the plain meaning of the provision that created confusion, along with its interpretive history in the industry, to decide that Deloitte’s reading of the provision was correct. Thus the CITT held that Deloitte’s complaint was valid.

In determining the remedy appropriate when a complaint is found to be valid, the CITT considers the circumstances in question, including:

  1. the seriousness of the deficiencies found by the CITT;
  2. the degree of prejudice faced by the complainant, as well as by all other interested parties;
  3. the degree of prejudice suffered by the competitive procurement system’s integrity and efficiency;
  4. whether the parties acted in good faith; and
  5. the extent to which the contract was performed.

The CITT found that the DFO’s failure to evaluate Deloitte’s proposal was a serious deficiency. Further, the CITT determined that based on the evidence provided, Deloitte had shown that but for the DFO’s errors, Deloitte would have been awarded the contract, rather than QinetiQ. Thus Deloitte suffered prejudice. Prejudice to the procurement system here is real, but limited, as the DFO’s conduct in this evaluation was not so prejudicial, unfair, and lacking in transparency that the contract needs to be retendered. There is no allegation that any party acted in bad faith, and Phases 1 and 2 of the project are already complete or near completion. Further, should the DFO choose to exercise its option to contract with QinetiQ for Phase 3, it makes sense for the company who performed the work in Phases 1 and 2 to perform the work in Phase 3.

Based on the above, the CITT determined that the appropriate remedy here was to award Deloitte lost profits for Phases 1, 2, and 3; awarding lost profits for the latter two phases is to the extent that PWGSC has or will have exercised its option to renew with QinetiQ. Costs were also awarded to Deloitte.

Editor’s Note:

Much of the information in this CITT ruling has been redacted, presumably for reasons of national security. It is therefore difficult to assess the exact nature of the flaw in evaluating the rated criterion in question, although the record clearly shows it was an ambiguous provision that was capable of more than one meaning. As we know, ambiguous provisions are typically interpreted against the drafter, under the interpretation rule of contra proferentum.

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