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What is the relevant legislation regulating the award of public contracts?
Public procurement is governed by legislative, regulatory and policy measures, as well as contract law.
The legal measures that govern public procurement depend on the identity of the public body conducting the procurement, the type of goods or services being procured and the value of the goods and services being procured. This is because of two factors.
First, Canada is a federation made up of separate governments- the federal government, provincial governments and territorial governments - all of which are subject to different legislative, regulatory and policy requirements. Public procurement is also conducted by municipalities and sub-provincial governmental entities, such as hospitals, universities, colleges and social service organisations.
Second, even within the jurisdiction of a particular level of government, procurement obligations are often imposed on the basis of the subject matter of the goods or services being procured, the monetary value of the goods or services being procured, and the identity of the procuring entity.
This chapter focuses on procurements conducted by entities associated with the government of Canada as this accounts for the vast majority of government purchasing in Canada. Where appropriate, responses are supplemented with information regarding procurements conducted by subnational entities, such as entities associated with provincial and territorial governments. In this regard, we note that the World Trade Organizations’ Agreement on Government Procurement (GPA), as revised in 2014, includes provincial-level procurement obligations; the Comprehensive Economic Trade Agreement (CETA) with the European Union (EU) includes subnational procurement obligations at both the provincial and municipal level; and the Canada Free Trade Agreement (which replaces the Agreement on Internal Trade) has enhanced subnational procurement obligations at both the provincial and municipal level.
At the federal level, public procurement is primarily governed by procurement disciplines and chapters in trade agreements to which Canada is a party. These trade agreements include:
- the Canadian Free Trade Agreement (FTA);
- the North American Free Trade Agreement (NAFTA);
- the GPA;
- the CETA;
- the FTA between Canada and the Republic of Colombia;
- the FTA between Canada and the Republic of Chile;
- the FTA between Canada and the Republic of Panama; and
- the FTA between Canada and the Republic of Peru.
The trade agreements identify the government of Canada entities that are subject to procurement disciplines and also describe monetary thresholds and subject matter exemptions. The terms of the procurement disciplines that are included in a particular trade agreement are enforced by the Canadian International Trade Tribunal (the Tribunal), pursuant to the terms of the Canadian International Trade Tribunal Act and the Canadian International Trade Tribunal Procurement Inquiry Regulations.
In addition, procurement processes may, in some instances, be characterised as ‘government decisions’ that are subject to judicial review before the Federal Court of Canada. Decisions made by entities associated with the government of Canada must meet certain public law requirements of general application, such as being free from bias, being reasonable, and only taking into account relevant considerations.
Procurement conducted by a province or sub-provincial governmental organisation are subject to obligations set out in intra-national and international trade agreements, including:
- the Canadian FTA;
- the New West Partnership Trade Agreement;
- the Trade and Cooperation Agreement between Ontario andQuebec;
- the GPA; and
Public procurement in Canada is also governed by laws passed by legislatures and regulations enacted under the authority of laws passed by legislatures. For example, the Government Contracts Regulations apply to the procurement of goods and services by the Canadian government.
Public procurement in Canada is also governed by contract law. As such, participants in a procurement process may be able to commence proceedings before a Superior Court of Justice of a province (or, if the procurement was conducted by a federal government entity, the Federal Court). Such proceedings normally proceed on contract law principles that are developed in common law for the purpose of claiming monetary damages on the basis of an alleged breach ofcontract.
Is there any sector-specific procurement legislation supplementing the general regime?
The Defence Production Act is sector-specific legislation associated with purchase of military equipment by the federal government. In practice, the Defence Production Act may apply, exempting from production documents associated with military procurement in the context of procurement complaint processes.
The Department of Public Works and Government Services Act provides for the establishment of the department with the function of acquiring goods and services for other government departments. Also, pursuant to the Shared Services Canada Act, Shared Services Canada is having an increased role with respect to the procurement of information technology services and equipment.
In which respect does the relevant legislation supplement the EU procurement directives or the GPA?
The various trade agreements applicable in Canada are consistent with the GPA.
In addition to the trade agreements, procurements conducted by government entities are subject to the requirements of the Government Contracts Regulations. The Regulations (made under the Financial Administration Act) provide that, as a minimum requirement, federal government entities are required to solicit bids by giving public notice in a manner that is consistent with generally accepted trade practices or inviting bids from suppliers on a suppliers’ list with respect to procurements that involve expenditures greater than C$25,000 (or C$100,000in respect of contracts that involve architectural and engineering services). The Regulations also include requirements relating to industrial security and ethical requirements.
Also, the principles applied in the context of judicial review and contract proceedings are similar to the GPA in that procurement decisions are to be made in accordance with the requirements expressed in the solicitation documents as opposed to undisclosedcriteria.
Are there proposals to change the legislation?
Changes to Canadian legislation have resulted from the implementation of the Canadian FTA (which replaces and expands on the Agreement on Internal Trade) and from the implementation of CETA, both of which are consistent with the procurement obligations set out in the GPA and also expand coverage to government entities that were not previously covered by the other trade agreements. Also, the government of Canada recently signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (a multilateral trade agreement between Pacific-Rim countries that includes procurement disciplines) that are also consistent with the obligations set out in the GPA.
Applicability of procurement law
Which, or what kinds of, entities have been ruled not to constitute contracting authorities?
Only entities listed in a particular trade agreement are subject to the obligations of that trade agreement. Put another way, the obligations set out in a trade agreement do not apply at large. Rather, the trade agreements list subject entities.
An issue can arise where a listed entity procures goods or services through an unlisted entity. In such a situation, the Tribunal will analyse the circumstances to determine whether the procurement is being conducted on behalf of a listed entity or whether the procurement is being conducted independently of a listed entity. If the Tribunal determines that the procurement is being conducted on behalf of a listed entity, the Tribunal will apply the requirements of the applicable trade agreement to the procurement. This is, in part, a function of the anti-avoidance provisions in the trade agreements.
To the extent that a trade agreement does not apply, the procurement may nonetheless be subject to contract law requirements, regulations, or public law obligations through a proceeding in contract or judicial review, as the case may be.
Are contracts under a certain value excluded from the scope of procurement law? What are these threshold values?
The rules relating to the calculation of the threshold value of contracts are set out in the trade agreements. These rules are used to determine the minimum contract value required to trigger obligations under a trade agreement. The government publishes the monetary thresholds on the Treasury Board of Canada Secretariat website. There are sectoral specific monetary thresholds for goods, services and construction.
Amendment of concluded contracts
Does the legislation permit the amendment of a concluded contract without a new procurement procedure?
A concluded contract may be amended without a new procurement process. The trade agreements and other laws associated with government procurement primarily address the process by which goods and service are procured.
Contract amendments are generally permitted insofar as they do not amount to a new procurement that was not contemplated by the procurement that resulted in the contract that is being amended. This requires a balancing between contract administration that occurs in the normal course of business and circumvention of procurement obligations.
For example, amendments to delivery dates and changes to the commercial terms on which the goods or services are to be delivered are generally treated as matters of ‘contract administration’ that do not require a new procurement.
Also, for example, a new procurement is not required to exercise options to extend or increase quantifies under an existing contract, so long as those options were identified in the procurement process that gave rise to the contract. To the extent that the options are exhausted or were not included in the procurement that resulted in the contract at issue, a new procurement is required.
Has there been any case law clarifying the application of the legislation in relation to amendments to concluded contracts?
The most significant case that deals with amendments to a concluded contract is the Supreme Court of Canada’s decision in Double N Earthmovers Ltd v Edmonton (City)  1SCR 116. In that case, the Court was required to consider a situation where a bid was selected for contract award that, on its face, was compliant with the requirements of the procurement process. However, subsequent to contract award, the procuring authority learned that the selected bidder did not meet certain technical requirements. The procuring authority, despite this issue, nonetheless continued with the contract. This was challenged by another bidder. The majority of the Court (in a rare five-to-four split decision) determined that the procuring entity was allowed to continue with a contract that did not conform with the requirements stipulated in the procurement process.
This case stands for the proposition that, where the procurement process was conducted in a fair manner that was consistent with applicable legal obligations, a procuring entity may ultimately accept goods or services under the resulting contract that do not conform with the requirements stipulated in the procuring documents. This has resulted in procuring entities having wide discretion with respect to ‘contract administration’. However, this decision has been criticised on the basis that it may operate to reward deceitfulness on the part of bidders and encourage a lack of effort by procuring entities in conducting evaluations.
In which circumstances do privatisations require a procurement procedure?
Privatisation of various Canadian federal corporations took place in the 1980s and 1990s, either through public share offerings or a competitive bidding process. While some federal corporations continue to exist, the privatisation of an existing federal corporation has not occurred in some time and no further privatisations are expected in the foreseeablefuture.
Presently, there is no legal requirement that the privatisation of a federal corporation proceed according to a procurement-like procedure.
In which circumstances does the setting up of a public-private partnership (PPP) require a procurement procedure?
Canada does utilise PPPs, whereby a private enterprise and a government entity partner on the delivery of a public good. For example, an enterprise may be selected to finance, design, construct, build and maintain a building that is leased back to a government.
A procurement process is followed when a PPP is selected as the method to deliver a public good. Trade agreements will govern selection of the private partner, insofar as the private partner is delivering a good or service otherwise covered by an applicable trade agreement.
While this has not been judicially considered, the Canadian FTA suggests that PPP are subject to certain obligations set out in the Canadian FTA.
Advertisement and selection
In which publications must regulated procurement contracts be advertised?
The government advertises opportunities on the Public Works and Government Services Canada’s Buyandsell and MERX websites.
Are there limitations on the ability of contracting authorities to set criteria or other conditions to assess whether an interested party is qualified to participate in a tender procedure?
Yes, the procurement obligations in trade agreements generally include national treatment and non-discrimination provisions, and require that any conditions for participation are limited to those required to ensure that suppliers have the legal and financial capacities and the commercial and technical abilities to undertake the procurement.
Is it possible to limit the number of bidders that can participate in a tender procedure?
It is possible to limit the number of bidders that can participate in a tender procedure. This is often done on the basis that participation in the tender procedure requires bidders to undergo a pre-qualification process. Also, this may happen in the context of creating supplier lists whereby potential suppliers are qualified to be on the list to provide goods or services to a government entity. The actual decision to purchase a good or service is made on the basis of a further process that is limited to those suppliers on the list.
Regaining status following exclusion
How can a bidder that would have to be excluded from a tender procedure because of past irregularities regain the status of a suitable and reliable bidder? Is the concept of ‘self-cleaning’ an established and recognised way of regaining suitability and reliability?
The rules adopted by Canada relating to debarment are twofold. First, the government of Canada has adopted policies relating to a supplier’s past performance, and, where the supplier failed to perform in accordance with applicable contract, it may be barred from participating in future procurements.
Second, the government of Canada has adopted policies relating to the ethical behaviour of suppliers. These policies are known as the ‘Integrity Regime’, which requires bidders to certify that they and their affiliates have not been charged with, or convicted of, specified offences in Canada or abroad. The specified offences include such things as competition law offences, bribery of government officials and tax evasion.
Where a bidder or an affiliate of the bidder has been convicted of a listed Canadian offence, there is little opportunity for ‘self-cleaning’. Where a supplier has been convicted of a foreign offence, the government of Canada will assess whether the foreign offence and the process by which it was prosecuted are consistent with applicable Canadian law. Where an affiliate of the bidder has been convicted of a foreign offence, the government of Canada will assess the bidder’s apparent involvement in the acts that led to the conviction and assess whether the process by which it was prosecuted are consistent with applicable Canadian law. If the government of Canada determines that the foreign offence or the involvement of the bidder, or both, meet the applicable criteria, the bidder will be debarred.
The standard period of debarment is 10years. However, a bidder may be able to reduce that period by entering into an administrative agreement, which involves reporting on ethical issues, the adoption of anti-corruption procedures and third-party oversight. An administrative agreement may also be considered when a supplier faces a suspension as a result of being charged with a listed offence.
The procurement procedures
Does the relevant legislation specifically state or restate the fundamental principles for tender procedures: equal treatment, transparency and competition?
Independence and impartiality
Does the relevant legislation or the case law require the contracting authority to be independent and impartial?
Yes, in the sense that the contracting authority is required to assess bids on the basis of the published evaluation criteria and not on the basis of unstated criteria or any other bias.
Conflicts of interest
How are conflicts of interest dealt with?
Conflicts of interest are dealt with internally by the contracting authority pursuant to government conflict of interest policies. Government conflict of interest policies generally prohibit a government representative from participating in a decision-making process in which he or she has an interest. The results of a procurement or the awarding of damages have been overturned on the basis of bias, conflict of interest, orboth.
Bidder involvement in preparation
How is the involvement of a bidder in the preparation of a tender procedure dealt with?
Private sector entities that are involved in the preparation of tender procedures are generally precluded from participating in the resulting solicitation and contracting processes. This is done as a matter of government policy, and, depending on the circumstances, the prohibition may be absolute or qualified. It is the normal practice for contracting authorities to disclose the names of outside service providers who have been involved in the development of the requirement or tenderprocedures.
What is the prevailing type of procurement procedure used by contracting authorities?
The prevailing types of procurement procedures are requests for proposals for goods and services and requests for standing offers for goods and services. Goods and services that are of a less complex nature and where price is the primary consideration are often procured by requests for quotations.
Separate bids in one procedure
Can related bidders submit separate bids in one procurement procedure?
Whether or not bidders may submit separate bids in one procurement is normally a matter that is determined in the context of a particular procurement process. Depending on the requirement, the contracting authority may expressly permit or prohibit the submission of multiple bids. If this is not expressly permitted by the procuring authority, bidders should be wary of Competition Act requirements that pertain to bid rigging (ie, coordination among bidders that is not disclosed to the procuring entity).
Negotiations with bidders
Is the use of procedures involving negotiations with bidders subject to any special conditions?
The government primarily procures goods and services through competitive solicitation processes. While Canada’s standard solicitation and contracting documents indicate that the government of Canada reserves the right to conduct negotiations as part of the competitive solicitation process, this tends not to occur to any significant extent inpractice.
Trade agreements to which Canada is a party include negotiation disciplines. In general, these agreements provide that the primary use of negotiations is to identify weaknesses and strengths among bids, that the purchasing authority shall treat bids in confidence, that the purchasing authority shall not discriminate between suppliers and that the elimination of a supplier from the process must proceed according to criteria set out in tender documentation.
If the legislation provides for more than one procedure that permits negotiations with bidders, which one is used more regularly in practice and why?
This is not applicable in Canada.
What are the requirements for the conclusion of a framework agreement?
In Canada, a ‘framework agreement’ is often referred to as a ‘supplier list’ or ‘supply arrangement’, which creates a list of suppliers that may be called upon to provide goods or services throughout the term of the framework agreement. The goods and services are then procured from the suppliers that were qualified to participate in the framework agreement. The choice of supplier to provide the goods or services under the framework agreement may be subject to a further competitive procurement process (such as providing quotes) or opportunities to supply goods or services may be divided among suppliers pursuant to a formula.
Framework agreements are concluded in accordance with standard procurement requirements set out in the trade agreements (ie, suppliers are chosen through a competitive solicitation process for which public notice has been given). Subject to the specific terms used, framework agreements are enforceable contracts.
May a framework agreement with several suppliers be concluded?
Framework agreements are normally concluded with several suppliers.
Changing members of a bidding consortium
Under which conditions may the members of a bidding consortium be changed in the course of a procurement procedure?
This is normally not permitted. Changes to a bid are normally prohibited once a bid is submitted to the contracting authority and the solicitation process has closed.
This would include changes due to a merger or spin-off that occur after a bid’s submittal. Whether a bidder that has undergone a change due to a merger or spin-off would be disqualified from a bid would have to be determined in the context of a specific procurement and also with reference to the bidder’s ability to meet the requirements of the solicitation after the merger or spin-off.
Participation of small and medium-sized enterprises
Are there specific mechanisms to further the participation of small and medium-sized enterprises in the procurement procedure? Are there any rules on the division of a contract into lots? Are there rules or is there case law limiting the number of lots single bidders can be awarded?
Canada has policies and mechanisms to support the participation of small and medium-sized enterprises (SMEs) in procurement processes. The Office of Small and Medium Enterprises supports the participation of SMEs in procurement activities and advises government purchasers on SME concerns.
Most trade agreements provide that set-asides for ‘small’ businesses are excluded from the government procurement obligation set out therein.
The division of a contract into ‘lots’ or several small contracts is only prohibited if it is done to avoid the obligations of a trade agreement.
What are the requirements for the admissibility of variant bids?
Whether bidders may submit separate bids in one procurement is normally a matter that is determined in the context of a particular procurement process. Depending on the requirement, the contracting authority may expressly permit or prohibit the submission of multiplebids.
This does not usually occur in the context of procurements conducted by the government of Canada. Unless expressly authorised by the procuring documents, a bidder should seek clarification from the procuring authority before submitting two or more bids.
Must a contracting authority take variant bids into account?
This is dependent upon the requirements expressed in the procuringdocuments.
Changes to tender specifications
What are the consequences if bidders change the tender specifications or submit their own standard terms of business?
There is a very high risk that a bidder that changes the tender specifications or submits its own standard terms of business will be found to be non-compliant with the terms of the solicitation.
What are the award criteria provided for in the relevant legislation?
Trade agreements require that contracting authorities prescribe the criteria that bidders must meet in order to submit a compliant bid that is capable of being accepted.
In Canada, contracts are awarded on the basis of technical requirements and price. The technical requirements will change significantly based on the nature of the goods and services being procured. For example, service contracts will include technical requirements that are focused on the experience of the bidders in providing the service being sought and the proposed manner of delivery. Contracts for the supply of goods may include requirements relating to the quality or nature of the goods being supplied. Price is often evaluated on the basis of a formula that compares the price of the lowest-priced bid to that of higher-priced bids. The relative value of price to technical requirements for the purposes identifying the top-ranked bid will vary from procurement to procurement.
In addition, Canada has recently adopted the ‘Integrity Regime’, which requires bidders to certify that they and their affiliates have not been charged with, or convicted of, specified offences in Canada or abroad. (See question 14.)
Abnormally low bids
What constitutes an ‘abnormally low’ bid?
Canada’s laws and its trade agreements do not specify what constitutes an ‘abnormally low’ bid. Bid solicitation documents may specify what constitutes an abnormally low bid within the context of the particular solicitation.
What is the required process for dealing with abnormally low bids?
Some trade agreements provide that a government entity may inquire with the supplier of an abnormally low bid as to whether it can comply with the conditions of procurement and whether it is capable of fulfilling the terms of the contract.
The bid solicitation documentation for a particular procurement may specify an additional process to address abnormally low bids. The government has asked for price certification in the context of service contracts of a significant value. This is to confirm that bidders are able to perform work at the prices proposed.
Which authorities may rule on review applications? Is it possible to appeal against review decisions and, if so, how?
Yes, it is possible to appeal against review decisions.
Procurement decisions made by entities associated with the government of Canada that are subject to a trade agreement may be reviewed by submitting a procurement complaint to the Tribunal. Also, procurement decisions by entities associated with the government of Canada that are not subject to a trade agreement may be reviewed by commencing an application for judicial review before the Federal Court on the basis of public law obligations.
Procurement decisions made by entities associated with provincial and territorial governments that are subject to a trade agreement may be reviewed by submitting a procurement complaint to the provincial or territorial government authority. Also, procurement decisions by entities associated with provincial and territorial governments that are not subject to a trade agreement may be reviewed by commencing an application for judicial review before the Superior Court of the province or territory.
If more than one authority may rule on a review application, do these authorities have the power to grant different remedies?
Yes. The Tribunal, which determines reviews that are brought pursuant to an alleged violation of a trade agreement, may award compensatory damages for lost profit, lost opportunity or bid preparation costs. The Tribunal may also require that a contract be cancelled (if already awarded) and that the contract be subject to a new procurement process or be awarded to the supplier that brought the review.
On judicial review, the Federal Court has the ability to make mandatory orders against the government of Canada with respect to procurements and, as such, may require the government of Canada to do something that it did not do, refrain from doing something that it ought not to have done or rectify or nullify something that it ought not to have done. However, the Federal Court does not have the ability to award damages on judicial review.
In the context of a civil action, the Superior Court of a Province or the Federal Court may require the government of Canada to pay damages, but does not have the power to order mandatory or injunctiverelief.
Timeframe and admissibility requirements
How long do administrative or judicial proceedings for the review of procurement decisions generally take?
Proceedings before the Tribunal take 135days from commencement to determination. This time period is provided for by way of statute.
Judicial review proceedings are not time-limited but generally take between six to 12months depending on the court’s schedule and the ability of the parties to move the matter forward. Judicial review proceedings that are more complex may take longer.
Proceedings on based on a civil law claim (ie, breach of contract) that proceed before the Federal Court or a Superior Court of a province are lengthy and can take two or more years. This is owing to the discovery process that involves the pretrial examination of opposing parties and extensive documentary disclosure process. These processes are generally not available in judicial review or Tribunal proceedings.
What are the admissibility requirements?
The Tribunal has jurisdiction to inquire into procurement complaints that are subject to a trade agreement (ie, procurements conducted by Canada entities that are listed in a trade agreement that applies to the procurement on the basis of specified monetary thresholds and whose subject matter is not exempt from the applicable trade agreement).
In the case of procurements conducted by entities associated with the government of Canada to which a trade agreement does not apply, a bidder may commence an application for judicial review with the Federal Court within 30days of when the decision giving rise to the judicial review became known. Judicial review proceedings are concerned with public law (as opposed to commercial) obligations. As such, the Federal Court retains jurisdiction to determine whether the proceeding before it involves a sufficient public law component to justify a remedy. Owing to the commercial nature of procurement, suppliers seeking a remedy in the context of a judicial review must invoke public law, as opposed to commercial law, considerations.
What are the time limits in which applications for review of a procurement decision must be made?
Complaints to the Tribunal must be made within 10business days of when the complainant knew, or ought to have known, the basis for the complaint.
Also, a bidder may file an objection with a contracting entity objecting to conduct that is inconsistent with an applicable trade agreement. In order to be effective, an objection must be filed within 10business days of when the basis of the objection became, or ought to have been, known to the bidder. If a bidder files an objection, the bidder must file a complaint with the Tribunal within 10business days of the objection being rejected by the contracting authority.
Decisions of the Tribunal are subject to judicial review by the Federal Court of Appeal. An application for judicial review of a determination of the Tribunal must be commenced within 30days of when the Tribunal releases its determination.
In the case of procurements conducted by entities associated with the government of Canada to which a trade agreement does not apply, a bidder may commence an application for judicial review with the Federal Court within 30days of when the decision giving rise to the judicial review became known. Decisions of the Federal Court may be appealed to the Federal Court of Appeal.
Does an application for review have an automatic suspensive effect blocking the continuation of the procurement procedure or the conclusion of the contract?
No. In the case of a proceeding before the Tribunal, a bidder may request that contract award be postponed until after the complaint is determined. Should the Tribunal issue such an order, the contracting authority may override the order by issuing a declaration certifying that procurement is urgent and that a delay in awarding the contract would be contrary to the public interest.
In the context of bid challenges taking place by judicial review, an unsuccessful bidder may seek an injunction to prevent the contracting authority from taking further steps in the procurement or contract. An injunction may be granted where the bidder is able to establish that it has a prima facie case, that it will suffer irreparable harm in the event that an injunction is not issued, and that the balance of convenience favours the issuance of an injunction.
Approximately what percentage of applications for the lifting of an automatic suspension are successful in a typical year?
This is not applicable in Canada.
Notification of unsuccessful bidders
Must unsuccessful bidders be notified before the contract with the successful bidder is concluded and, if so, when?
No, unsuccessful bidders are not required to be notified prior to the contract with the successful bidder being concluded. Normally, unsuccessful bidders are notified of the results of the solicitation immediately after the contract with the successful bidder has been concluded.
Access to procurement file
Is access to the procurement file granted to an applicant?
A bidder is normally entitled to a debriefing after the conclusion of a solicitation process. The information disclosed during a debriefing process is usually limited to the manner in which the unsuccessful bidder was evaluated (ie, points awarded for various criteria) and the total points awarded to, and price of, the successful bidder. An unsuccessful bidder is not granted unfettered access to the procurement file.
Should an unsuccessful bidder seek review of a procurement decision, the bidder (or its counsel) may be granted greater access to the procurement file through the adjudicative process.
Is it customary for disadvantaged bidders to file review applications?
Bidders will file review applications if they perceive that there has been a breach of an applicable trade agreement, public law requirement or the terms of the solicitation.
Violations of procurement law
If a violation of procurement law is established in review proceedings, can disadvantaged bidders claim damages?
Yes. As noted above, the Tribunal has the ability to award monetary compensation. Monetary compensation will be awarded where the supplier can demonstrate that a trade agreement has been breached and that the violation justifies an award of compensation in the circumstances. Where a breach has been established, the Tribunal may also require cancellation of the contract and the resolicitation of the procurement. The choice of remedy will be dependent upon the circumstances of the case and the status of the underlying procurement process. For example, if the challenge relates to requirements in the solicitation documents and the challenge is brought before bid submittal, the Tribunal may require that the impugned requirements of the solicitation be amended to comply with the trade agreements.
May a concluded contract be cancelled or terminated following a review application of an unsuccessful bidder if the procurement procedure that led to its conclusion violated procurement law?
The Tribunal may recommend that a concluded contract be cancelled on the basis of it finding that the procurement process was compromised by a breach of an applicable trade agreement. Contracting authorities generally follow recommendations made by the Canadian International Trade Tribunal. In the event that a contracting authority refuses to implement a recommendation to cancel a concluded contract, the Tribunal will normally recommend, as an alternative, that the unsuccessful bidder receive monetary compensation.
The Federal Court has the jurisdiction necessary to order the termination or cancellation of a contract where the procurement procedure that led to the contract violated public law requirements. The Federal Court is reluctant to exercise this power. As a result, unsuccessful bidders will also request a declaration confirming the breach of procurement law and then seek damages on the basis of thedeclaration.
Is legal protection available to parties interested in the contract in case of an award without any procurement procedure?
Yes, parties interested in a contract may seek a remedy where the contract was awarded without any procurement procedure.
What are the typical costs of making an application for the review of a procurement decision?
The costs of seeking a remedy in the context of a procurement decision are dependent upon the complexity of the case and the chosen forum. For example, a court proceeding in the form of a civil action may take two to five years from beginning to end. In contrast, a procurement complaint process before the Tribunal will be completed within 135days of commencement.
Most challenges to procurements conducted by the government of Canada are brought pursuant to the Tribunal’s procurement complaint process. Again, the costs of this process are dependent upon the complexity of the case and can range from C$50,000to in excess of C$300,000in legal fees.
Update and trends
Update and trends
Are there any emerging trends or hot topics in public procurement regulation in your country? In particular, has the scope of applicability of public procurement law been broadened into areas not covered before (eg, sale of land) or on the contrary been restricted?
The Tribunal recently released its recommendation with respect to the award of compensation in File Nos. PR-2015-051and PR-2015-067, which involved a review of a procurement of vehicles for the Canadian Armed Forces.
The Tribunal considered its jurisdiction and mandate to award monetary compensation as a result of a breach of a trade agreement. The Tribunal confirmed that monetary compensation is not to be determined pursuant to common law rules that apply in the context of a breach of contract. Rather, the Tribunal’s mandate is more nuanced and is determined by the Canadian International Trade Tribunal Act. In the end, the Tribunal held that the ‘normal’ compensation for monetary compensation would be 10per cent of the revenues that were expected to be generated on the impugned contract and that this amount would increase or decrease marginally depending on the nature of the goods and services at issue. This ruling is currently the subject of ongoing proceedings before the Federal Court of Appeal.
Also, with the adoption of the Comprehensive Economic Trade Agreement with the European Union and the Canada Free Trade Agreement, there is a clear trend toward increasing the entities that are subject to procurement obligations. However, the provinces have been slow to implement effective dispute resolution mechanisms that would allow for oversight by an administrative tribunal of similar competence and capability as the Canadian International Trade Tribunal, which is the dispute resolution authority with respect to procurements conducted by the government of Canada. The one exception is Quebec, which has adopted the Act to facilitate oversight of public bodies’ contracts and to establish the Public Procurement Authority (Autorité des marchés publics). However, this legislation is designed to avoid the potential for corruption in the awarding of public contracts in Quebec and is not focused on trade agreement obligations.