You may have encountered a situation where some defect in the evaluation process has been identified after closing and, rather than attempting to correct the issue, the procuring entity has simply let the bid validity period expire and then started the procurement process anew. Have you ever wondered if this is the most appropriate way to proceed? Test your understanding with the following CITT case that examines this precise issue.

Background

In December 2017 PWGSC issued an RFP on behalf of the Department of National Defence for maintenance of turbochargers on frigate engines. The mandatory criteria specified that the bidder be a Napier Turbocharger Authorized Agent and have overhauled Napier turbochargers within the previous 5 years. Three companies submitted bids – the complainant (Turbo Expert), Wårtsilå and Dynamic.

Upon notification February 9, 2018 that Wårtsilå was the successful bidder, both Turbo Expert and Dynamic informed the PWGSC that Wårtsilå was not compliant with the mandatory requirements. Although the bid documents reserved PWGSC’s right to extend the bid validity period and allowed PWGSC to request that compliant bidders extend the validity of their bids, PWGSC did not exercise those rights. The bid validity period expired March 25 and on April 10th PWGSC cancelled the contract with Wårtsilå and issued a new RFP for the same work.

Turbo Expert then filed a complaint with the CITT. Turbo Expert’s primary argument was that PWGSC should have awarded it the contract, rather than cancelling the contract with Wårtsilå and issuing a new RFP. Turbo Expert’s bid had ranked second in the initial RFP process, and was compliant.

What do you think? Should Turbo Expert’s claim succeed?

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Answer

In PR-2018-029, A Complaint by Turbo Expert Quebec (CITT), the tribunal ruled in favour of Turbo Expert and recommended that PWGSC award it the contract. If such an award were not feasible, the CITT recommended that PWGSC compensate Turbo Expert for its lost profits. If the parties could not agree on this calculation, the CITT would decide the amount based on further submissions.

The CITT followed its previous decisions that establish that:

  • “upon discovery of errors in an evaluation process, the contracting authority must take appropriate steps to correct such errors”; and
  • the expiration of the bid validity period does not prevent PWGSC from remedying a breach brought to its attention – even when an award has been made – as long as this is done “consistent with the bidders’ rights as . . . crystallized before the expiration of the bidding period”.

PWGSC had no explanation for its failure to re-evaluate Wårtsilå’s bid within the bid validity period, although notified by the 2 unsuccessful bidders of its defect. Further, PWGSC had opted neither to exercise its right to extend nor requested that compliant bidders extend their bids.

The CITT therefore decided that Turbo Expert’s complaint is valid as PWGSC “failed to act in a reasonable and diligent manner by letting the bid validity period expire. PWGSC cannot use the expiration of the bid validity period caused by its own lack of diligence to justify not awarding the contract to Turbo Expert”. Had PWGSC acted with appropriate efficiency, the contract would have been awarded to Turbo Expert as the second ranked and compliant bidder.

Procurement professionals should keep this important ruling in mind when faced with allegations of non-compliance by rival respondents. Consider whether extending the bid validity period to allow time for re-evaluation, rather than waiting out the validity period to justify cancelling and re-issuing, would be a better approach. Aside from potentially creating legal risk, re-issuing a procurement process can wreak havoc with user requirements and project timelines, and puts valued suppliers to the unnecessary expense of re-submitting to the new process.

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Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case.  For any particular legal problem, seek advice directly from your lawyer or in-house counsel.  All dates, contact information and website addresses were current at the time of original publication.