Khoury Real Estate Services Ltd. v. Canada (Public Works and Government Services), docket T-2050-95

     T-2050-95

BETWEEN:

     KHOURY REAL ESTATE SERVICES LTD.

     and KRES VIII LIMITED,

     Applicants,

AND:

     THE MINISTER OF PUBLIC WORKS AND

     GOVERNMENT SERVICES CANADA and

     THE PWGSC EVALUATION BOARD,

     Respondents.

     REASONS FOR ORDER

MACKAY, J.:

     In this application for judicial review, the applicants seek an Order requiring the Public Works and Government Services Canada Evaluation Board, Atlantic Region (the "Board"), to provide the applicants forthwith with written details of its evaluation of the tender proposals submitted to it in regards to a building project to be undertaken for the Government of Canada in Fredericton, New Brunswick. The applicants also seek an Order declaring invalid the decision of the PWGSC Evaluation Board, by letter dated September 1, 1995, rejecting the tender proposal of the applicants submitted in relation to the project.

The Background:

     In April 1995, Public Works and Government Services Canada ("PWGSC"), by publication in newspapers, issued an invitation for proposals for "Fredericton Federal Buildings, Public-Private Partnership Project", project number 660060, here in issue. The project called for provision of 4900 square metres of office and storage space for the Government of Canada in Fredericton, and parking spaces for approximately 50 vehicles. The project was intended to provide modern office space for federal agencies in Fredericton, by incorporating and upgrading two smaller buildings already owned by the Government of Canada, which were in need of refurbishing, with additional space being provided through a partnership enterprise with the private sector.

     The applicants received copies of the Request for Proposals through the Open Bidding Service operated by the Government of Canada. That document, more than 500 pages long, sets out the detailed requirements to be met under the project. The Request included a "Notice to Tenderers", a tender call number, and it described the invitation at one place as a "Tender for Space Proposal, Government of Canada, Fredericton, New Brunswick". It also included a definition of "tender" as meaning "offer" and "tenderer" as an "offeror".

     The Request for Proposals described the objective of the project as:

1.      The objective of the development is to provide stable, long-term office accommodation for the Federal Government in the downtown core of Fredericton.

2.      The development is to provide the Government of Canada with office space of quality, comparable to the standards for office space constructed for and occupied by a national corporation on a long-term basis.

3.      The Government of Canada will seek to secure optimum value by obtaining good quality office space at the lowest cost over the life of the project, including low operating costs and viable energy saving measures.

     The Request for Proposals contained and described a procedure for evaluation of proposals that might be submitted. Subject to the right of the Crown not to accept the highest or any proposal, proposals submitted were to be evaluated by a process described, to determine which provided the best value to the Crown. The evaluation process was intended to assess a combination of the quality of the technical aspects of a proposal, and its financial aspects as quoted in the offer form to be submitted with a proposal. The two aspects, technical and financial, were to be evaluated independently of each other and the results then combined, with the top ranked proposal to be that with the highest combined total score. If there were a tie in scores, the proposal with the lower "net present value cost", as a result of the assessment of financial aspects, would be ranked higher. The described evaluation process also provided that PWGSC reserved the right to terminate any further consideration of any proposal at any time during the acceptance period. Further, the Crown reserved the right to conduct negotiations with any or all offerors following receipt of their proposals.

     Six proposals, including one from the applicants ("Khoury"), were submitted by the closing date, July 26, 1995. They were then evaluated by the process described in the Request for Proposals. By letter dated September 1, 1995, the applicants were advised that the evaluation was completed in accord with the criteria set out in the request document, that their proposal was not top-ranked, and that their security deposit would be returned. A list was enclosed of the six firms which submitted proposals, ranked by order according to the evaluation process, and on that list, the applicants Khoury ranked third of the six firms listed.

     The letter held out that "a debriefing addressing issues related to your submission is available on request". Khoury requested a debriefing appointment, which was initially scheduled for September 14, 1995, subject to confirmation. That date was not confirmed and a meeting was later set for October 26, 1995, for offerors that had submitted proposals, although it appears that there was a meeting with representatives of the highest ranked tenderer in September.

     The applicants requested information concerning the evaluation of the Khoury proposal prior to the meeting on October 26, and also sought an undertaking that the Department would provide them with information concerning the evaluation of the two leading proposals. No information was provided in advance of the meeting, and the department officer responsible for the project avers by affidavit that it is not in accord with departmental policy or practice to provide proponents with particulars concerning the nature or evaluation of proposals other than their own. Rather, the practice is to protect proprietary interests of all proponents in their proposals and not to release information about them to others unless authorized, in relation to any proposal, by the proponent who submitted it.

     It was after the applicants had received no further explanations from PWGSC, and were advised that the debriefing session would not be arranged before a contract for the project was awarded, and after the security deposit posted with their proposal was returned, that they commenced these proceedings by an originating notice of motion, filed on September 28, seeking judicial review.

     Mr. Charles J. Khoury, President of the applicant corporation, with some of his staff, attended the session on October 26. There were debriefing sessions on the same day for three other firms that had submitted proposals. At the session with Khoury representatives, it was discovered that the copy of the applicants' proposal which was considered by the Evaluation Board of the PWGSC, was missing two pages that had been included in the proposal as submitted to PWGSC's Office in Saint John. One of the missing pages included financial information that, if it had been considered, would have significantly reduced the net present value cost of the Khoury proposal. Moreover, in the applicants' view, any discrepancies between requirements of the project as set out in the Request for Proposals and their proposal, in light of discussions at the October 26 meeting, could be readily remedied. That impression may not have been shared by the PWGSC officers who attended the meeting in October. I note that the affidavits of the representatives of the parties differ in their description of the outcome of the meeting with respect to the significance of information undertaken then to be provided by PWGSC.

     Following the meeting on October 26, at which the debriefing of Khoury representatives was not completed, the applicants' proposal was re-evaluated taking into account the information contained in the two pages previously omitted at the time of the original evaluation. Then, by letter of November 1, 1995, all offerors, including Khoury, were advised by letter from PWGSC that the applicants' proposal had been re-evaluated and that it had, as a result, been given the top ranking. As the applicants point out, that letter did not specifically withdraw the notice of rejection of its proposal that was contained in the earlier letter of September 1, and it did not include any information about the award of a contract to any of the offerors that had submitted proposals. For the respondents, it is urged that at least following the review of the Khoury proposal after the October 26 meeting, it was treated as one of the proposals still under consideration for the project.

     Thereafter, Khoury and PWGSC exchanged several letters in which the department sought to schedule a time to complete the debriefing on the Khoury proposal and Khoury sought information in advance of such meeting of the points awarded and the bases for those, with regard to aspects of the Khoury proposal. This was information which Mr. Khoury understood PWGSC had undertaken, at the October 26 meeting, to provide within a few days. However, PWGSC, without ready explanation, did not provide that information and ultimately gave up on trying to arrange a meeting to complete the debriefing of Khoury representatives.

     By letter of January 26, 1996, PWGSC advised Khoury that, after a review of the project by an independent third party, it was decided that none of the proposals submitted in relation to the project would be accepted. Further, the department advised that the request for proposals process arranged for the project was cancelled.

     In these circumstances, the parties in this application for judicial review raise a number of issues. Two of those are preliminary; the first, whether under the doctrine of "mootness" the Court should dismiss the application without consideration of its merits, and the second, whether the application in this case, in seeking to review more than one decision, is more extensive than the Court's statute and Rules allow. A third issue concerns the substance of the application, including a consideration of the application of the principle of fairness in this case.

     I deal with each of these issues in turn, determining each in order that all issues now raised be resolved. Thus, should there be an appeal of my decision, all issues will have been dealt with by this Court and the Court of Appeal.

     For the respondents, it is urged that any issues once existing between the parties are now moot, and the Court should decline to deal with matters raised by the application. In light of developments after the originating motion was filed, it is said there is longer a dispute between the parties, no live issue which an Order of this Court can resolve. While the Court may have discretion to deal with the issue raised even if it now be moot, it is urged by the respondents, but not accepted by the applicants, that none of the criteria are met for the exercise of that discretion, as those criteria were identified by Mr. Justice Sopinka, speaking for the Supreme Court of Canada in Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342. Thus the parties dispute whether there is here any continuing adversarial context to the dispute, with collateral consequences of importance depending on the outcome. They differ on whether there are circumstances that warrant dealing with a moot issue because the decision will have a practical effect on rights of the parties, even though the controversy giving rise to the dispute is not formally determined, or because the issues are of a recurring nature but of short duration, and likely to disappear before determination of the issue. Finally, the Court may exercise its discretion to determine an issue that is moot where special reasons warrant the Court demonstrating its authority to make pronouncements that concern the parties, even without a justiciable issue still to be resolved between them.

     In my opinion, the applicants are persuasive in at least one aspect, that the original dispute between the parties remains alive and unresolved, that is, the applicants' claim for an Order directing PWGSC "to provide the applicants forthwith with written details of its evaluation of the tender proposals submitted ... in regard to Project No. 660060, Government of Canada Space Requirements, Fredericton, New Brunswick ...". In oral submissions, counsel for the applicants described that claim as one seeking the marks from 0 to 10 assigned to each of the criteria on which the proposals were evaluated on technical aspects, and the net present value cost calculated by PWGSC, none of which would, in Khoury's view, reveal proprietary information about any proposal. Resolving the continuing difference between the parties regarding Khoury's entitlement to that information may well affect continuing interests of the parties, in relation to other projects or in relation to any replacement project in Fredericton at a future time.

     My view is that the doctrine of mootness in this case should not be a basis for the Court declining to resolve that matter, still in dispute, even if the project itself is now withdrawn from competition or from development. The doctrine is applicable, on the other hand, to the relief sought by the applicants for an Order declaring the decision of PWGSC said to be contained in the letter of September 1, 1995, "rejecting the tender proposal of the applicants in regard to the project". Indeed, in oral submissions when this matter was heard, counsel for Khoury acknowledged that relief could no longer be expected. That issue is moot, for an Order of this Court cannot revive the project which was cancelled in January 1996.

     I note that in written submissions, the respondents urge that there was not a decision to exclude the applicants' or any other proposal, implying the letter of September 1 was not a rejection of the applicants' proposal, but I am persuaded that the text of the letter can hardly be interpreted otherwise than as the applicants did, as a rejection. However, in my view, resolving that matter has no practical significance at this stage.

     The determination in January 1996 not to accept any proposal and to cancel the process of tendering for the project precludes any practical significance of now reviewing the decision of September 12, 1995, to reject the applicants' proposal. In the invitation for proposals, PWGSC clearly reserved its authority to deal with any tenderer, or to decline to accept any proposal. That is not disputed. Thus, the department was not obliged to accept even the highest ranked proposal, or that with the lowest net present value cost, or any other proposal.

     A second preliminary issue concerns the form of the application for judicial review in this case, in light of the Court's statute and rules concerning judicial review. The issue is raised by the respondents, because of the Rules, but the respondents do not oppose disposition of this application on its merits rather than on a procedural ground.

     Relevant provisions of the Federal Court Act, R.S.C. 1985, c. F-7 as amended, and the Court's Rules, are s. 18.1(2) of the Act and Rule 1602(4), which provide as follows:

s. 18.1(2)      An application for judicial review in respect of a decision or order of a federal board, commission or other tribunal shall be made within 30 days after the time the decision or order was first communicated [ ... ]

Rule 1602(4)      The notice of motion shall be in respect of a single decision, order or other matter only, except in respect of a decision under the Immigration Act that a person has no credible basis for a claim as a Convention refugee and a subsequent removal order issued against the person.

     In the view of the respondents, the application here filed is said to seek review of two decisions: that contained in the letter of September 1, said by the applicants to be a rejection of their proposal, and the later refusal to release information requested by Khoury concerning details of the various proposals submitted. The applicants submit that while their application refers to two orders sought, there is only one matter here sought to be reviewed, that is, the propriety of PWGSC rejecting a tender proposal without supplying the evaluation of all tenders. Moreover, it is urged the purpose of Rule 1602(4) is to preclude judicial review of intermediate decisions where there are a series of them. Here there was a single basic decision, from which various consequences flowed, that is, to evaluate and rank the proposals without providing to the tenderers the basis for that evaluation.

     I am prepared to accept the applicant's refinement of the decision questioned by their application and to determine the matter here presented on its merits. There is no objection by the respondents to that disposition and they have argued the basic matter here raised on its merits. That reflects a reading of the application for judicial review in light of the events as they unfolded, and the fact that the rejection of the Khoury proposal on September 1, 1995, is no longer significant, as a matter for relief, in light of the decision in January 1996 to cancel the project and the process requesting proposals.

     I turn now to the merits of the applicants' request for judicial review of the decision by PWGSC to evaluate the proposals by a marking system without revealing the marks assigned. The only results provided to the applicants was a ranking from 1 to 6 of the proposals received.

     The applicants urge that revealing the marks assigned to various criteria, for their own and other proposals, will provide a basis for ensuring fairness in the consideration of proposals. It is urged that in this case, where proposals may vary in their design and arrangements for meeting the PWGSC objectives, revealing the marks assigned, and the calculated net present value costs for each, is comparable to the release of costs or prices bid in construction tenders for projects for which the design is fixed. If the net present value costs had been released earlier to the applicants, even for their own proposal alone, it is said they would have had a basis upon which to question PWGSC's assessment, and probably to discover much earlier than they did that the assessment of their proposal was not based on their full submission.

     For the respondents, it is submitted there is no obligation to reveal the marks assigned or the net present value costs. There was no commitment in the Request for Proposals to do so and no general legal requirement under legislation to provide that information. The debriefing sessions arranged for any interested tenderer were intended to answer any concerns about the evaluation of its own proposal, but not to provide information about the evaluation of others. Implicitly, that information could only be meaningful if details of other proposals were also provided, and those, PWGSC maintains it was not at liberty to provide without the authority of the other tenderers in relation to assessments of their respective proposals.

     For the respondents it is argued that the process here was different from that where tenders are called on a designed project where, once tenders close and the bids are opened, the prices proposed for construction of the project are made known to all bidders. Here the request for proposals invited tenders which required a basic design by the tenderer of the manner in which the objectives of the project would be met. There may be much or little similarity in the specific details of particular projects. Thus the necessity for the evaluation process, established in this case by assigning marks ranging from 0 to 10 in relation to a number of designated criteria set out in the Request for Proposals. It is said that disclosure of the marks assigned to each proposal, by criterion, and of the net present value cost for each, would permit the tenderers to extrapolate proprietary information concerning aspects of other proposals. While I may be surprised that providing the information requested would permit any more than speculation about other projects, there is evidence by affidavit of the Manager, Office Accommodation Services, New Brunswick Division of Public Works and Government Services Canada, that in this case, the provision "of point scores of other proposals, because of certain factors common to all proposals, would permit Khoury to extrapolate proprietary information [ ... ] of the other proposals".

     Protection of proprietary information and ensuring an appropriate measure of confidentiality concerning details of different proposals are accepted aspects of the process of tendering in response to invitations to contract. At the same time, courts have traditionally intervened at least in the award of public contracts where there is unfairness in the process (Assaly (Thomas C.) Corp. v. Canada, [1990] 34 F.T.R. 156 (F.C.T.D.)), or possibly for other reasons necessary to ensure the integrity of the process. Clearly, judicial review of decisions made in the contracting of work by federal public authorities is within this Court's jurisdiction (Gestion Complexe Cousineau (1989) v. Canada, [1995] 2 F.C. 694 at 702-703, per Décary J.A.).

     It is due to the necessity of ensuring fairness in the process that tenders submitted on projects that are defined in detail ordinarily lead, on opening of the bids, to publication of the tender prices submitted. That ensures for all who have submitted a tender, that their tender has been received and evaluated in relation to cost at the prices they have set, and it also indicates where their tender ranks, in terms of price, in relation to others. In that process, the cost or price is that determined by the party submitting the tender.

     That is not the process followed in this case. Here, the Request for Proposals invited bidders to submit their detailed proposals to meet objectives established for the project. No overall standard method for achieving these objectives was set, and thus, the various proposals were evaluated, in accord with criteria and a marking system described adequately in the Request for Proposals. The outcome of that assessment by PWGSC was not made public, except that each tenderer was offered a debriefing concerning the assessment of its own project only, and a listing, in order, of how the department ranked the several submissions made. That process is not comparable, in my view, to that followed with respect to tenders on defined projects. The comparison with other bids in the latter case is relatively easy, made on the basis of comparative prices established by each one. In this case, the marks assigned in the evaluation process by PWGSC staff were not revealed except, for each project, in the debriefing session with the respective proposer.

     While I am not prepared to order that the marks assigned to each of the defined criteria for all of the projects be revealed to the applicants or any other tenderer, something more by way of explanation of the department's assessment of a tender should here be provided, in my opinion, to ensure integrity in the tender process for projects of the sort here in question, and to ensure that there is a rationally explicable basis for the departmental assessment of one project in relation to the others. That explanation, for all who tender in a project like this one, with separate assessment for technical and financial aspects of the proposals, might be information about the total marks assigned in technical assessment of the overall project together with its net present value cost, or it might be information about the marks assigned by criterion to the tenderer's own proposal together with the range, average or median of the marks assigned to all the projects by criterion. or overall, together with the net present value costs assigned to all the proposals. PWGSC is in the best position to determine appropriate information to be released, in regard to each project, which permits the tenderer in a case like this to know how his or her or its proposal is assessed in relation to other proposals or other proposals generally. This simply puts him in a position in relation to a call for tenders for a project such as this, that is similar to the position it would be in if tendering in relation to a fully-defined project.

Conclusion:

     In the circumstances, the Court is not persuaded to deal with the request for an order in regard to the decision of September 1, 1995, to reject Khoury's proposal as submitted. That decision, I consider moot.

     Nor is the Court persuaded to order production by the respondents to the applicants of detailed information on any project proposal, including the marks assigned, to particular criteria in the assessment of other projects. Such information should, however, be forthcoming in relation to Khoury's own proposal. If that information, with regard to other projects, is considered likely to yield proprietary information, as PWGSC officers say, that judgment must be left to those with knowledge of the process who have the responsibility to make the process work with integrity.

     However, in the interest of fairness to the applicants, who have spent a substantial sum in preparation of a tender and who held property for development of the project, an order will go directing PWGSC to provide information permitting general comparison of marks assigned to the applicants' project proposal with a general measure, such as the range, or the average, or the median of marks assigned to all proposals. The most appropriate comparative information in regards to its assessments of the various proposals to be released to the applicants, and any other tenderer that is interested, I leave to be determined by the respondents.

     While the direction now made by Order is not sought in specific terms in the application for judicial review, where the Court finds unfairness in the process, as I here do, it is within the Court's authority, under s-s. 18.1(3) of the Federal Court Act, R.S.C. 1985, c. F-7 as amended, to award appropriate relief, i.e. "to order a federal board, commission or other tribunal to do any act or thing it has unlawfully failed or refused to do or has unreasonably delayed in doing [ ... ]". The applicants in an open tendering process which did not set out in the invitation to tender any limitation on the information to be provided by the respondents in regard to their evaluation of proposals, were entitled to expect information about proposals generally that would demonstrate fairness in their evaluation. In my opinion, by its refusal to provide to tenderers any information in relation to its evaluation, even in general terms, by marks assigned to the various proposals submitted, PWGSC failed in its responsibility to demonstrate that it acted fairly in evaluation of the proposals, a demonstration that is a key element of the open tendering process.

     Thus, an Order goes directing that comparative information shall be provided to the applicants and other interested tenderers in relation to marks assigned generally, by criterion, for all proposals, such as the range of marks assigned, or the average or the median of marks assigned, or other general measure, not specifically referable to any particular proposal, as may be determined by the respondents. The measure chosen shall permit a tenderer to relate its project proposal to the general measurements assigned for all proposals.

     In all other aspects, the application for judicial review is dismissed.

    

     __________________________

     J U D G E

O T T A W A, Ontario

October 3, 1996.