Bid Challenge in Canada and the Impact on Public Procurement

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HEGGART 1256This evolution had its benefits for <strong>the</strong> procur<strong>in</strong>g entities as well.Often purchas<strong>in</strong>g officers were able to f<strong>in</strong>d cheaper alternatives by<strong>in</strong>clud<strong>in</strong>g <strong>the</strong> words “or equivalent” along with <strong>the</strong> br<strong>and</strong> name. A 1997compla<strong>in</strong>t 11 was found <strong>in</strong> favour of <strong>the</strong> procur<strong>in</strong>g entity because <strong>the</strong>specification had <strong>in</strong>cluded <strong>the</strong> words “or equivalent” <strong>and</strong> <strong>the</strong> w<strong>in</strong>n<strong>in</strong>gbidder had proposed an equivalent <strong>and</strong> cheaper alternative. Even if <strong>the</strong>words “or equivalent” are left out but <strong>the</strong> procur<strong>in</strong>g entity awards acontract to a bidder offer<strong>in</strong>g an equivalent product, <strong>the</strong> Tribunal hasdecided 12 that such actions are permissible because allow<strong>in</strong>g equivalentsis consistent with <strong>the</strong> trade agreements.Fur<strong>the</strong>r caution<strong>in</strong>g on <strong>the</strong> use of br<strong>and</strong> names was provided after acompla<strong>in</strong>t was filed <strong>in</strong> 1999 by a supplier of cabl<strong>in</strong>g. 13 In <strong>the</strong> Alcatel case<strong>the</strong> Tribunal reiterated that <strong>the</strong> use of a “no substitute” specification isnot permitted by <strong>the</strong> trade agreements. It went on to say that becauserecognized st<strong>and</strong>ards existed to describe <strong>the</strong> cabl<strong>in</strong>g requirement <strong>in</strong> ageneric manner, <strong>the</strong>re existed a precise <strong>and</strong> <strong>in</strong>telligible way of describ<strong>in</strong>g<strong>the</strong> requirement without us<strong>in</strong>g a br<strong>and</strong> name. As such, <strong>the</strong> technicalspecification did not conform to <strong>the</strong> trade agreements nor would it haveeven if <strong>the</strong> words “or equivalent” had been added.Ano<strong>the</strong>r identified problem with technical specifications is when<strong>the</strong>y are drafted us<strong>in</strong>g design criteria ra<strong>the</strong>r than performance criteria.Although not prohibited, design criteria will reduce <strong>the</strong> openness of aprocurement <strong>and</strong> <strong>the</strong> number of potential suppliers that could compete. In<strong>the</strong> case Danbar Enterprises PR-2004-036, 14 <strong>the</strong> Tribunal <strong>in</strong>dicated that,although not <strong>the</strong> preferred means of creat<strong>in</strong>g specifications, if designspecifications are used <strong>and</strong> <strong>the</strong>y are not biased <strong>in</strong> favour of a particularbr<strong>and</strong> of product <strong>and</strong> <strong>the</strong>re is sufficient competition, a violation of <strong>the</strong>trade agreements has not occurred.What happens when specifications are changed after bid clos<strong>in</strong>g,perhaps even after <strong>the</strong> contract is awarded? Is this a matter of contractadm<strong>in</strong>istration or someth<strong>in</strong>g more? A Tribunal case called CanyonContract<strong>in</strong>g (PR-2006-016) 15 is a significant example of this situation.That procurement was for <strong>the</strong> <strong>in</strong>stallation of signs <strong>in</strong> one of <strong>Canada</strong>’snational parks. After <strong>the</strong> contract was awarded, discussions with <strong>the</strong>contractor led to substantive changes to <strong>the</strong> orig<strong>in</strong>al specification. Abidder <strong>in</strong> <strong>the</strong> orig<strong>in</strong>al competition filed a compla<strong>in</strong>t <strong>and</strong> <strong>the</strong> Tribunaldecided that <strong>the</strong> changes effectively created a new procurement that wasnot competed <strong>in</strong> conformity with <strong>the</strong> applicable trade agreements.
BID CHALLENGE IN CANADA AND THE IMPACT ON PUBLIC PROCUREMENT 1257Although it is perhaps too soon to tell, this decision could have importantimplications on what constitutes contract adm<strong>in</strong>istration.F<strong>in</strong>ally, <strong>the</strong>re is a method of specification development thatprocurement professionals <strong>in</strong> <strong>Canada</strong> <strong>and</strong> elsewhere may wish toconsider adopt<strong>in</strong>g for complex procurements. This method ofprocurement, used rarely <strong>in</strong> <strong>Canada</strong> but one that is relied on heavily <strong>in</strong><strong>the</strong> United States, is <strong>the</strong> BAFO or best <strong>and</strong> f<strong>in</strong>al offer method. This<strong>in</strong>volves a two stage procurement whereby <strong>in</strong>itial proposals are receivedbased on a broad specification. The specification is <strong>the</strong>n ref<strong>in</strong>ed <strong>and</strong> reissuedso that suppliers can ref<strong>in</strong>e <strong>and</strong> resubmit <strong>the</strong>ir proposals. The useof this method could lead to a better def<strong>in</strong>ition of goods <strong>and</strong> serviceswhen <strong>the</strong> precise specification of <strong>the</strong> procurement is not completelyknown <strong>in</strong> advance. It is also consistent with <strong>the</strong> rules <strong>in</strong> <strong>the</strong> tradeagreements.CONCLUSIONAlthough <strong>the</strong> majority of cases cited above were decided <strong>in</strong> favour of<strong>the</strong> compla<strong>in</strong>ants, it is important to provide a few statistics todemonstrate <strong>the</strong> quality of work produced by <strong>the</strong> public procurementofficers that work for <strong>the</strong> federal government <strong>in</strong> <strong>Canada</strong>. The Tribunalreceives, on average, 75 procurement compla<strong>in</strong>ts per year. Thisrepresents considerably less than one percent of <strong>the</strong> more than 20,000transactions per year that are covered by one or more of <strong>the</strong> tradeagreements. Of <strong>the</strong> compla<strong>in</strong>ts received, only about half are accepted for<strong>in</strong>quiry 16 <strong>and</strong>, of those accepted for <strong>in</strong>quiry, between 10 <strong>and</strong> 15 aredecided <strong>in</strong> favour of <strong>the</strong> compla<strong>in</strong>ant.It would be naïve to attribute all of <strong>the</strong> changes above simply to <strong>the</strong>work of <strong>the</strong> Procurement Review Board <strong>and</strong> <strong>the</strong> Canadian InternationalTrade Tribunal. The changes have come about through a comb<strong>in</strong>ation of<strong>the</strong> discipl<strong>in</strong>es imposed by <strong>the</strong> various trade agreements; <strong>the</strong><strong>in</strong>terpretation by <strong>the</strong> Board, <strong>the</strong> Tribunal <strong>and</strong> <strong>the</strong> Federal Court of Appealof those trade agreements; <strong>and</strong> by <strong>the</strong> ability of <strong>the</strong> <strong>Canada</strong>’s professionalpublic procurement community to adapt to <strong>the</strong> new rules <strong>and</strong> rul<strong>in</strong>gsthrough practice modifications, tra<strong>in</strong><strong>in</strong>g <strong>and</strong> best practice reviews.<strong>Canada</strong> has recently signed a free trade agreement that conta<strong>in</strong>s aprocurement chapter with Peru. 17 I am look<strong>in</strong>g forward to <strong>the</strong> new <strong>and</strong>
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Bid Challenge in Canada and the Impact on Public Procurement

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