Re Secure Energy (Onsite Services) Inc, 2017 CITT
On July 17, 2017, Secure Energy (Onsite Services) Inc. (“Secure Energy”) filed a complaint with the CITT alleging that Defence Construction Canada (“DCC”) had improperly disqualified its bid for the demolition of two buildings at CFB Esquimalt, British Columbia. DCC had disqualified the proposal on the basis that Secure Energy had not complied with DCC’s instructions prohibiting electronic bid bonds. In its complaint, Secure Energy submitted that the manner in which it submitted its bid bond did not affect the bid’s substance, and that since the legal standard for bid submission is not perfection but rather “material and substantial compliance,” Secure Energy’s bid should have been considered. Further, Secure Energy argued that as its bid met the mandatory requirements and offered the lowest price, it should have been awarded the contract.
Subsection 30.11(1) of the Canadian International Trade Tribunal Act allows for potential suppliers to file complaints with the Canadian International Trade Tribunal (“CITT”) concerning any aspect of the procurement process; this filing is subject to the Canadian International Trade Tribunal Procurement Inquiry Regulations. The CITT retains the discretion to decide whether it should conduct an inquiry into a complaint even when that complaint complies with subsection 30.11(2) of the CITT Act, as provided by subsection 30.13(1).
Sections 6 and 7 of the Regulations provide that the CITT may conduct an inquiry if the following four conditions are met:
- the complaint was filed within the time limits prescribed by section 6;
- the complainant is a potential supplier;
- the complaint concerns a designated contract; and
- the information provided in the complaint reasonably indicates that the procurement process was not conducted in compliance with applicable trade agreements.
According to section 6 of the Regulations, a complainant has 10 working days from the day it becomes aware – or should reasonably have become aware – of a potential problem that would ground its complaint to submit that complaint either to the CITT or to object to the relevant government institution.
DCC released the original tender forms for the Esquimalt demolition project on November 18, 2016, and a subsequent amendment was released on February 1, 2017. This amendment provided, among other items, that electronic bid bonds – or printed copies of such – would not be accepted. Bidding closed on March 2, 2017.
Secure Energy was informed on March 8, 2017 that its tender could not be accepted because the bid failed to comply with the prohibition against electronic bid bonds. Secure Energy submitted that its representative had made a verbal complaint to DCC shortly after Secure Energy was notified of the DCC’s decision, but no evidence was provided to support this claim save for the representative’s statement. Secure Energy alleged that its representative did not receive a response. A written complaint was then sent to DCC on June 27, 2017, in which Secure Energy objected to its bid having been rejected and requested relief for lost profits, bid preparation, and costs. DCC responded three days later, maintaining its rejection of the bid on non-compliance grounds and denying Secure Energy’s request for relief. As noted above, Secure Energy submitted its complaint to the CITT on July 17, 2017.
Since Secure Energy had learned of the basis for what became its objection to DCC and then complaint to the CITT on March 8, 2017, the company would have had until March 22, 2017 – that is, within 10 working days – to submit an objection or a complaint. Because Secure Energy missed this deadline, the CITT dismissed the complaint without conducting an inquiry. The CITT also found that there was no reasonable indication that the applicable trade agreements had been breached. Thus, for the conditions that must be met for the CITT to conduct an inquiry – listed above – the CITT found that while Secure Energy was a potential supplier and the complaint concerned a designated contract, the failure of Secure Energy’s complaint to meet conditions 1 and 4 led to the CITT’s decision not to follow through on an inquiry.
The CITT was clear that even if Secure Energy had made a complaint by March 22, 2017, it would still have not conducted an inquiry, as Secure Energy’s submissions failed to provide a reasonable indication for the complaint’s validity. On the evidence provided, the CITT did not find a reasonable indication that DCC failed to carry out its procurement in accordance with the Agreement on Internal Trade, as Secure Energy had alleged, nor that DCC had breached Contract A. Despite Secure Energy’s argument, the CITT held that jurisprudence has found that irregularities in bid submissions can be sufficiently substantial to render a bid non-compliant even when the pricing of the bid is unaffected. Further, regardless of the substantiveness of the non-compliance, DCC maintained its discretion to reject any bid for that non-compliance. Secure Energy’s submitted bid included a certification that it was in the prescribed form when it was not. On the basis of all of these findings, the CITT dismissed Secure Energy’s claim.
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.