Key developments at the federal level
CHANGES TO PROCUREMENT POLICIES
In June 2021, Public Services and Procurement Canada (PSPC) announced that it would be making changes to the Contract Security Program (CSP). Changes to the personnel screening process were implemented under Phase 1 in October 2021. On May 2, 2022, PSPC implemented Phase 2 of its plan for changes to the CSP, which focused on the organization security screening process. The changes in Phase 2 refocus organization security screening efforts on active participants in a procurement process with a view to shortening processing times, reducing the administrative burden on industry, streamline the subcontracting process, and improve the competitiveness of Canadian industry in foreign defence and security markets. Through these changes to the CSP, PSPC intends to improve service standards and align the security screening process with those of like-minded foreign partners.
Last year also marked the transition to a full implementation of the new Directive on the Management of Procurement (Directive) replacing the Contracting Policy and Policy on Decision Making in Limiting Contractor Liability in Crown Procurement Contracts. While this initially entered into effect on May 13, 2021, federal departments had until May 13, 2022, to fully transition. The new Directive attempts to streamline the prior policies by moving to an approach focussed on the key procurement principles of fairness, openness, and transparency, and away from prescriptive, process-directed requirements. The new Directive prioritizes the simplification of solicitations and solicitation documents, including by limiting the number of mandatory technical criteria to those determined to be essential. It also specifically provides that contracting authorities should, to the extent possible, take past performance into consideration when assessing the bidder's ability to deliver.
The new Directive prioritizes the simplification of solicitations and solicitation documents, including by limiting the number of mandatory technical criteria to those determined to be essential.
In January 2022, the federal government also announced a comprehensive plan to diversify suppliers. The Supplier Diversity Action Plan lays out steps to increase the participation of businesses from underrepresented groups in federal procurement, including enhanced services to help underrepresented groups navigate the procurement system. One such service is a new coaching program for underrepresented suppliers that have had limited success in federal procurements. The coaching service was launched in May 2022, and will help suppliers address some of the most commonly perceived barriers in procurement, as well as bidding challenges they have previously faced.
NEW AND NOTEWORTHY DECISIONS
Federal case law in 2022 underlined the limits of the complaint process in procurements covered by the national security exemption, as well as reaffirmed the powers of the Tribunal deference with which the Federal Courts will treat Tribunal decisions.
In Thales Canada Inc., 2022 CanLII 26909, the Canadian International Trade Tribunal (Tribunal) addressed a complaint by Thales regarding a procurement by the Department of Public Works and Government Services (PWGSC) on behalf of the Department of National Defence (DND). Thales alleged that it was unable to submit its bid through no fault of its own, but rather because of a technical problem with the bid submission platform—Canada Post Corporation's "epost Connect". PWGSC refused to accept Thales' bid submission by email and accepted no responsibility for the technical failure of the epost Connect system. Thales argued that the circumstances it encountered were unfair and that PWGSC had acted contrary to its obligations under the Canadian Free Trade Agreement (CFTA) and the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
The complaint was ultimately dismissed pursuant to subsections 10(2) and (3) of the Canadian International Trade Tribunal Procurement Inquiry Regulations (Regulations). A national security exception (NSE) had been invoked for the procurement, and, as a result, it was excluded from all obligations of all trade agreements. In light of amendments to the Regulations in 2019, the Tribunal had no interpretive discretion in such circumstances and was required to dismiss any complaint, regardless of the underlying merit, where an NSE was invoked in the manner and time prescribed by the Regulations. Moreover, the Tribunal could not "lift the veil" to control for DND's rationale in invoking the NSE. The tone of the decision suggests that the Tribunal would have been minded to intervene were its hands not tied. The Tribunal noted that this was a missed opportunity to further investigate shortcomings with the epost Connect platform and encouraged PWGSC to examine the issues raised by Thales and to take any appropriate action.
In Pacific Northwest Raptors Ltd., 2022 CanLII 27511, the Tribunal investigated a complaint concerning another procurement by PWGSC on behalf of DND. The matter involved a solicitation for aerodrome wildlife control services at a Nova Scotia air force base. In its complaint, Pacific Northwest Raptors Ltd. (PNWR) alleged various failures of PWGSC in evaluating its bid in accordance with the provisions of the RFP, including (1) that the evaluation was based on undisclosed criteria, (2) that the evaluation team failed to arrive at a consensus score as required by the evaluation methodology, (3) that the evaluation methodology used was less favourable to PNWR than it was to other bidders, and (4) that the evaluation results and level of disclosure provided by PWGSC raised doubts about the transparency and integrity of the procurement process.
The Tribunal dismissed most of PNWR's claim, but found that the allegation that the evaluation methodology used was less favourable to PNWR than to other bidders was valid in part. One evaluator out of a three-person panel was of the view that three statements in PNWR's proposal constituted "red flags" demonstrating a less than total understanding of the work to be provided at the air base and, consequently, awarded fewer points in evaluating certain technical criteria in the bid. Upon investigation, the Tribunal found that the evaluation at issue was unreasonable and that there was no basis to find that PNWR demonstrated a misunderstanding of the work to be performed. Even if PNWR had been awarded full points for the criteria in question, the resulting increase in its score still would not have been sufficient for it to obtain the highest combined rating for technical merit and price required to win the contract. Nevertheless, the Tribunal concluded that PWGSC's failure to properly apply its evaluation methodology warranted a remedy. It recommended that PWGSC issue a new solicitation at the end of the one-year contract rather than exercising its option to extend the contract for a subsequent year. Pacific Northwest Raptors Ltd. v. Canada (Attorney General), 2022 FCA 76
Nevertheless, the Tribunal concluded that PWGSC's failure to properly apply its evaluation methodology warranted a remedy. It recommended that PWGSC issue a new solicitation at the end of the one-year contract rather than exercising its option to extend the contract for a subsequent year.
In a separate claim involving a PNWR bid for wildlife control services at air force bases in Ontario, PNWR sought judicial review of two Tribunal decisions, alleging breaches of procedural fairness and that the decisions were unreasonable. The Federal Court of Appeal dismissed PNWR's application in its entirety. The Court found no merit to the breach of fairness allegations and noted that it would be improper for PNWR to succeed on such a claim considering that it had not raised the fairness issue before the Tribunal and only argued a breach on appeal. Regarding reasonableness, the Court deferred to the judgment of the Tribunal for both decisions.
The Court emphasized that, in conducting an investigation, the role of the Tribunal is not to reevaluate a bid, but to determine whether the finding of the evaluators was reasonable. In the first decision under review, the evaluators found that PNWR had failed to comply with mandatory criteria for the bid, and the Court determined that there was nothing in the record to support a finding that this evaluation was unreasonable. The Court found that the remedy imposed by the Tribunal in recommending the contract with PNWR be terminated and a new contract be awarded to the competing bidder was also reasonable. In this case, the standards for evaluation were clearly expressed in the RFP, PNWR was found to have not met the standards for certain mandatory criteria, and PNWR made no arguments as to why awarding the contract to the only competing bidder was unreasonable.
The Court emphasized that, in conducting an investigation, the role of the Tribunal is not to reevaluate a bid, but to determine whether the finding of the evaluators was reasonable.
Ontario: a year of change
Procurement policies in Ontario followed the global trend inward, with the passage of new protectionist legislation intended to favour local businesses. On the other side, the Divisional Court confirmed that it would hear challenges to provincial procurement decisions under CETA, providing a new avenue of recourse for suppliers.
CHANGES TO PROCUREMENT POLICIES
In March 2022, the Ontario Government launched the Building Ontario Businesses Initiative (BOBI) to "reduce barriers and provide companies in Ontario with greater access to public procurement opportunities." The central plank of BOBI is the Building Ontario Businesses Initiative Act, 2022, S.O. 2022, c. 2, Sched. 2 (BOBI Act). Once in force (on a date to be named), the BOBI Act will require Ontario's public sector buyers to give preference to Ontario businesses when procuring goods and services under a certain threshold amount.
Not much is known about how the BOBI Act will be implemented, but its potential impact on procurements is significant. Ontario's own news releases describe the BOBI Act as a means of awarding contracts to Ontario businesses worth $3 billion annually by 2026. Businesses not given "preference" by the BOBI Act could stand to lose a considerable value in public contracts.
Further, the text of the BOBI Act itself is very limited. The statute sets out a broad goal to "give preference to Ontario businesses, in accordance with the regulations" to be issued by the Lieutenant Governor in Council. The content and framing of these regulations is as yet unknown, and will likely be the focus of lobbying efforts by stakeholders. Interested parties will need to wait until promulgation to learn the threshold amount under which the Act will apply, as well as other key information, including the goods and services to which the Act applies, the definition of an Ontario business, and the manner in which "preference" will be given to Ontario businesses.
Depending on the threshold value adopted by regulation, the BOBI Act may contravene the non-discrimination provisions of international and interprovincial free trade agreements. But it should be expected that Ontario will purposely set the value threshold at a level below its obligations under the CFTA and the other trade agreements..
Even if the BOBI Act is ultimately of limited application, it provides a strong signal that the Ontario Government intends to take a more protectionist bent with its public procurement strategy into the future.
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