Date: 20000623
Docket: A-195-00
CORAM: ROBERTSON J.A.
NOËL J.A.
McDONALD J.A.
BETWEEN:
SIEMENS WESTINGHOUSE INCORPORATED
Applicant
- and -
| THE MINISTER OF PUBLIC WORKS |
| AND GOVERNMENT SERVICES CANADA |
| AND MIL SYSTEMS, A DIVISION OF DAVIE |
| INDUSTRIES INC. AND FLEETWAY INC. |
Respondents
- and -
CANADIAN INTERNATIONAL TRADE TRIBUNAL
Intervener
Heard at Toronto, Ontario, on Monday, May 29, 2000
Judgment delivered at Ottawa, Ontario, on Friday, June 23, 2000
REASONS FOR JUDGMENT BY: ROBERTSON J.A.
CONCURRED IN BY: NOËL J.A.
McDONALD J.A.
Date: 20000623
Docket: A-195-00
CORAM: ROBERTSON J.A.
NOËL J.A.
McDONALD J.A.
BETWEEN:
SIEMENS WESTINGHOUSE INCORPORATED
Applicant
- and -
| THE MINISTER OF PUBLIC WORKS |
| AND GOVERNMENT SERVICES CANADA |
| AND MIL SYSTEMS, A DIVISION OF DAVIE |
| INDUSTRIES INC. AND FLEETWAY INC. |
Respondents
- and -
CANADIAN INTERNATIONAL TRADE TRIBUNAL
Intervener
REASONS FOR JUDGMENT
ROBERTSON J.A.
[1] On October 8, 1998, the Department of Public Works and Government Services Canada ("Public Works") awarded Siemens Westinghouse Incorporated ("Siemens") a contract for technical services in regard to certain naval ships commissioned by the Department of National Defence ("National Defence"). Siemens" bid was less than that of its competitors, MIL Systems (a division of Davie Industries Inc.) and Fleetway Inc. In response, these two unsuccessful bidders filed a complaint with the Canadian International Trade Tribunal on October 21, 1998, pursuant to section 30.14 of the Canadian International Trade Tribunal Act . On March 6,1999 the Tribunal upheld the joint complaint on two grounds. First, it was determined that Siemens" bid proposal did not include the evidence necessary to establish the requisite work experience and, correlatively, that it was improper for Public Works to have relied on information not found within that proposal when assessing whether Siemens had met that mandatory requirement. In short, it was held that Public Works was guilty of "bid repair"and, therefore, Siemens" bid should have been declared "non-responsive". The second ground for upholding the complaint was that National Defence applied an evaluation methodology materially different than the one set out in the bidding documents. Having regard to these two findings, the Tribunal "recommended" that Siemens" contract be terminated and that the bid proposals, tendered by the complainants only, be re-evaluated in accordance with the original methodology. Siemens sought judicial review of the Tribunal"s decision as did Public Works in a separate application (A-221-00). The two applications were subsequently consolidated.
[2] In the reasons that follow, I conclude that there is no basis in law on which to interfere with the Tribunal"s finding with respect to the change in evaluation methodology and its directive that the bids be re-evaluated according to the original scheme. However, I am of the respectful view that the Tribunal erred in holding that Siemens" bid was non-responsive and that Public Works had offended the rule against bid repair. It follows that Siemens is entitled to have its bid proposal re-evaluated along with those submitted by the complainants. This contrary finding brings into issue the proper standard of review of the Tribunal"s decision. Before turning to that issue, a fuller recitation of the relevant facts is warranted.
[3] On June 15, 1998 Public Works received a requisition from National Defence in the amount of $34.6 million with respect to the need for in-support services pertaining to certain naval vessels. On July 17, 1998 a "Letter of Interest" was posted by Public Works on its electronic tendering site. One of the purposes of the Letter of Interest is to pre-qualify potential bidders with respect to mandatory experience. Those who do not pre-qualify are not provided with the necessary bidding documents which in the federal sphere are labelled a "Request for Proposal". In response to the July 17 Letter of Interest, a submission was made on behalf of a joint venture of four companies which included Donelad Hydronautics Limited ("Donelad") and Westinghouse Canada Incorporated. The latter corporation subsequently merged with Siemens Inc. to become Siemens Westinghouse Incorporated, the applicant in this case. Public Works ultimately pre-qualified this joint venture on the basis of Donelad"s and Siemens" work experience as subcontractors on the "CFAV Quest Mid-Life Refit Project" which had been undertaken in Marystown, Newfoundland. [The complainants dispute the fact that the joint venture qualified on the basis of Siemens" work experience, but for purposes of this case it is unnecessary to address this issue.] Public Works also received a request for pre-qualification from another joint venture consisting of MIL and Fleetway. That joint venture was pre-qualified. On November 4, 1998, Public Works provided both joint ventures with the necessary bidding documents.
[4] Following issuance of the bidding papers, Public Works received requests from both Siemens and Fleetway. Fleetway sought pre-qualification as an independent bidder on the contract. Siemens on the other hand informed Public Works that, in the event the joint venture with which it was associated was awarded the contract, Siemens was to be designated the prime contractor. Public Works responded to this request by informing Siemens that it had to re-qualify in order to come within the terms of the Letter of Interest. Correspondence was exchanged between Siemens and Public Works as to the former"s experience. Siemens referred to the work it personally had undertaken in regard to the CFAV Quest Refit, as well as that of Donelad. It is to be noted that in contrast to the strict rules regarding bid closing, potential bidders are permitted to respond to a Letter of Interest after its closing date and even after issuance of a Request for Proposal provided there is sufficient time before the closing date for acceptance of bids.
[5] On February 17, 1999, Siemens was advised that it pre-qualified. Fleetway, acting in its individual capacity, was also informed that it pre-qualified. As a result Public Works and National Defence had to consider three bid proposals: Siemens, Fleetway and the MIL/Fleetway joint venture.
[6] Under the terms of the Request for Proposals bidders were informed that proposals would be evaluated with respect to all mandatory requirements, such as work experience, and obtain minimum scores for technical merit. They were also advised that the lowest priced responsive proposal would be recommended for award of the contract. With respect to technical merit, points were to be awarded on a scale which varied from 100 to a maximum of 350 for each of the eight categories set out in "Annex H" of the bid documents:
| 1) General Requirements (350) |
| 2) Project Management Organization Plan (350) |
| 3) Class Design Agency Services (800) |
| 4) Technical Data Agency Services Plan (400) |
| 5) Quality Program Plan (300) |
| 6) Data Link Access Plan (100) |
| 8) Sample Task Requisitions (1100). |
[7] According to subsection 1.8 of Section C of the Request for Proposals, bidders had to score at least 60% in each of the categories and a minium of 70% overall.
[8] During the time the Request for Proposals was first issued on November 4, 1998 and the bid closing date of February 26, 1999, National Defence finalized a technical evaluator"s handbook on February 19, 1999. Under that handbook the evaluation categories set out in "Annex H" were further broken down into a total of 549 sub-categories to be individually assessed on a pass/fail basis. To determine the actual number of points to be awarded for a particular sub-category an evaluator multiplied the maximum number of points available by a point score factor of .8 for each pass and .3 for each failure in regard to technical requirements. In assessing overall technical capability, each pass was assigned a point score factor of .85 while each fail was assessed a point factor of .35 (see generally Joint Application Record at 627 et seq ). All three bids were evaluated by National Defence according to this methodology and all were deemed compliant in that each received a minium overall average of 70%. By fax letter dated October 8, 1999, Public Works notified Siemens that it had been awarded the contract in question.
[9] Both MIL and Fleetway proceeded to file complaints with the Tribunal, which as noted at the outset were upheld on two grounds. With respect to the two judicial review applications flowing from the Tribunal"s decision, it is common ground that the proper standard of review is "patent unreasonableness" because of this Court"s decision in Symtron Systems Inc. v. Canada (Attorney General) , [1999] 2 F.C. 514 (F.C.A.), applied in Canada (Attorney General) v. Corel Corp., [1999] F.C.J. No. 525, April 21, 1999 (F.C.A.), and Jastram Technologies Inc. v. Canada (Minister of Public Works), [2000] F.C.J. No. 367, March 19, 2000 (F.C.A.).
[10] Accepting that the proper standard of review in this case is patent unreasonableness, that is, the so-called "clearly irrational" test, I shall address each of the two grounds on which the Tribunal upheld the complaints lodged by MIL and Fleetway, beginning with the evaluation methodology adopted and applied by Public Works and National Defence after the issuance of the Request for Proposals.
[11] Pursuant to the Agreement on Internal Trade Implementation Act, S.C. 1996, c. 17, the Agreement on Internal Trade has the force of domestic law and is binding on the federal government in regard to the awarding of procurement contracts. Article 506(6) of that Agreement provides that tender documents "shall clearly identify the procurement criteria that will be used in the evaluation of bids, and the methods of weighing and evaluating the criteria". In my view, the Tribunal"s finding that the change in evaluation methodology adopted in the handbook constituted a material change is unassailable. Reasonably viewed, the change could favour less experienced bidders. In theory, a pre-qualified but relatively inexperienced bidder could benefit from the change for the reason that it is guaranteed a minimum of 35% and a maximum of 85% even if it were deserving of less because of its relative inexperience. On the other hand, it is theoretically possible that a more experienced bidder could be disadvantaged by this scoring system if it is assumed that this bidder is more likely to obtain scores in excess of the minimum and maximum because of its enhanced experience. As well, the Tribunal cannot be faulted for concluding that it is impossible to assert with certainty whether any of the proposals would qualify under the evaluation methodology set out in the Request for Proposals.
[12] In my opinion, the pivotal issue in this case is whether the Tribunal erred in concluding that Siemens" bid was non-responsive because it failed to include evidence of related work experience as required by paragraph 1.3 a) of Section C of the Request for Proposal and, correlatively, that Public Works engaged in bid repair by going outside Siemens" proposal to establish that this mandatory requirement had been met. In addressing that issue I am going to leave aside the fact that the Siemens/Donelad joint venture had already pre-qualified under the terms of the Letter of Interest and that the experience requirements imposed under paragraph 4(a) of that document are identical to those prescribed under paragraph 1.3 a) of the Request for Proposals. What is of immediate relevance is whether Siemens in its own right as a bidder provided the required evidence of experience in its proposal and whether paragraph 1.3 a) was satisfied from an evidentiary viewpoint. That provision reads as follows:
| 1.3 The Bidder must provide with its proposal, evidence of having the following qualifications and experience: |
| (a) Completion of (i.e. within the last 5 years) or currently managing, at least one (1) contract valued at $1 M or more, in the fields of engineering support and technical data management of Canadian Forces vessels. |
[13] The above makes it clear that bidders were to provide evidence of experience of completion, or current management, of a contract valued at $1 million or more in the fields of engineering support and technical data management of Canadian naval vessels. Neither the Tribunal nor this Court was provided with an entire copy of Siemens" bid proposal. However, the Tribunal requested Public Works to produce a copy of all relevant portions of Siemens" proposal on which it relied to establish Siemens" qualification under paragraph 1.3 a) of the Request for Proposals. Public Works identified and submitted the following portions of Siemens" proposal:
| 1) Section 2.0, "SWTS Company Profile", in particular, paragraph 2.4; |
| 2) Section 2.5 "Marine Capabilities", in particular, paragraph 2.5.11; |
| 3) Section 1.2 "Past Experience in Similar Projects", paragraphs 1.2.1 and 1.2.2, and 1.2.5, particularly as related to the CFAV QUEST contract; |
| 4) Section 1.6 "Experience in Naval Warship Design and Integration" as related to the CFAV QUEST contract. |
[14] It appears to be common ground that only sections 1.6 and 2.5 pertain to Siemens" work experience as opposed to that of Donelad. Yet the Tribunal rejected these portions of Siemens" proposal as being evidence of compliance with paragraph 1.3 a) on the basis that there is no express claim by Siemens in its bid that its work experience on the CFAV Quest was advanced in response to that mandatory requirement. I cannot accept this conclusion for two reasons. First, neither the Tribunal nor this Court was provided with a complete copy of Siemens" proposal and, therefore, neither is in a position to state with certainty whether such an express claim was made or not. All that we know is that Public Works was asked to submit those portions of Siemens" proposal which were relied on in determining whether it met the experience requirement under paragraph 1.3 a). Second, why else would Siemens make extensive reference to work performed on another project if it were not for the fact that it was offering evidence to satisfy the work experience requirement?
[15] In a similar line of attack, the complainants argue that as Siemens" proposal makes no express reference to the CFAV Quest contract having a value of $1 million or more its bid should have been declared non-responsive. I cannot accede to this argument. The CFAV Quest contract was submitted in response to a request that Siemens provide evidence that it was a party to a contract having a value of $1 million or more. Surely, in that context the submission of the CFAV Quest contract must be viewed as an express statement that this contract met the dollar value requirement.
[16] Accepting as I do that Siemens" bid proposal outlines the extent of its previous work-related experience gained from the CFAV Quest contract and not just Donelad"s, it remains to be decided whether such claims by themselves were sufficient to render Siemens" bid responsive. The Tribunal went on to conclude that in order for Public Works to determine whether Siemens met the mandatory experience requirement it was necessary for the former to examine the actual subcontract which Siemens obtained with respect to the CFAV Quest Refit (the "Marystown purchase order"). Public Works acknowledged that it had recourse to information in its possession, namely the Marystown purchase order, when evaluating Siemens" proposal. As I read the Tribunal"s reasons, the fact that the Marystown purchase order was not attached to Siemens" proposal was fatal to its bid and incapable of being "cured" by Public Works resorting to information which was already in its possession. At pages 18-19 of its reasons the Tribunal concluded:
| The Tribunal is of the view that, as [Siemens"] proposal did not, at the time of bid closing, include the evidence required by subparagraph 1.3a) of Section C of the RFP, the Department and DND acted improperly by introducing and relying on additional information not provided in [Siemens"] proposal and, on this basis, declaring the proposal responsive. Section C of the RFP is clear as to the consequences to proposals not providing sufficient evidence. [Siemens"] proposal should have been declared nonresponsive on that basis alone. |
[17] In summary, the issue is whether the failure of Siemens to include a copy of the Marystown purchase order rendered its bid non-responsive and, correlatively, whether Public Works engaged in bid repair by examining that document. In my respectful view, the Tribunal clearly erred in two material respects in ruling against Siemens on this issue. First, the Tribunal failed to appreciate that the Request for Proposals, unless it specifies otherwise, does not impose a mandatory requirement that bidders provide documentary evidence of facts or representations set out in their proposals. Second, the Tribunal failed to appreciate that the Request for Proposal, at subsection 1.7 of Section C, expressly authorizes Public Works to verify all statements made by bidders with respect to work experience. In my view, the right of verification necessarily empowers Public Works to go outside the boundaries of the bidding documents to confirm aspects of the contractor"s work experience. In short, I do not accept the argument that Public Works is not permitted to verify information provided and in so doing to resort to information which it already possesses.
[18] My conclusions hinge on the proper construction of "Section C - Evaluation Criteria" of the Request for Proposal. Like the Tribunal, this Court recognizes that ensuring compliance by potential suppliers with all mandatory requirements of solicitation documents is one of the cornerstones of the integrity of any tendering system: see Re I.B.M. Canada Ltd., [1999] C.I.T.T. No. 87 at para. 34-35. I also accept that procuring entities must evaluate a bidder"s conformance with mandatory requirements thoroughly and strictly. But this is not to suggest that mandatory requirements should be construed in an isolated and disjunctive manner. As was held in Re E.D. Elections Inc., [1998] C.I.T.T. No. 44 at 5, they should "be interpreted as a whole with consideration of the overall purpose and objectives of the [Request for Proposal]". For this reason substantial portions of Section C must be reproduced:
| To be considered responsive, a proposal must (a) meet all the mandatory requirements of this Request for Proposal and (b) obtain the required minimum marks for technical merit. Proposals not meeting (a) or (b) above will be given no further consideration and deemed non-responsive. |
| A proposal will be declared non-responsive if it fails to provide the supporting evidence required by a mandatory item or for non-compliance with any mandatory requirement set out in this Request for Proposal (RFP) document or its Annexes. |
| The lowest priced responsive proposal will be recommended for award of a contract. |
| 1.0 MANDATORY REQUIREMENTS |
| 1.1 A mandatory requirement is described using the words "must", "shall", "will", "is required", "is mandatory", "is essential" or any other wording unless explicitly indicated as non mandatory or discretionary. Requirements described with the wording "may", "should", "could", "is desirable" or "is recommended" are to be considered as discretionary. |
| 1.2 The Bidder is requested to provide a certification that clearly indicates the Bidder"s compliance with all the articles, clauses, terms and conditions contained in this document and the Statement of Work (SOW), or referenced in this Request for Proposal and any amendment and Questions & Answers issued during the bid-period. Words such as "Comply and Intent", "Understood", or the like are unacceptable and shall result in the proposal being removed from further consideration. |
| 1.3 The Bidder must provide with its proposal, evidence of having the following qualifications and experience: |
| a) Completion of (ie within the last 5 years), or currently managing, at least one (1) contract valued at $1 M or more, in the fields of engineering support and technical data management of Canadian Forces vessels; |
| b) Provision of a Project Manager with significant experience (5 years in the last 8) in the management of design, engineering and drafting projects resulting from contracts valued at $1 M or more; ...... |
| Note: Proof of personnel qualifications shall be provided in the form of a degree/diploma or certificate (in the applicable field) from a recognized educational institution or a minimum TQ6B qualification (for technologists only) from the Canadian Forces. Proof of the required experience shall be in the form of a detailed résumé for each person proposed. |
| 1.6 Bidders submitting proposals under joint ventures, must provide proof (i.e. certification) that such joint venture is in place at time of submission of their proposal. |
| 1.7 A9001T 31/03/95 Education/Experience Certification |
| Bids, to be considered responsive must contain the following certification: |
| " The Bidder hereby certifies that all statements made with respect to education and experience are true and that any person proposed by the Bidder to perform the Work or part of the Work is either an employee of the Bidder or under a written agreement to provide services to the Bidder. |
| Canada reserves the right to verify the above certification and to declare the bid non-responsive for any of the following reasons: |
| -unverifiable or untrue statement |
| -unavailability of any person proposed on whose statement of education and experience Canada relies to evaluate the bid and award the Contract. |
[underlining is mine]
[19] The complainants maintain that the Marystown purchase order should have been submitted with Siemens" proposal because the second opening paragraph of Section C states that a bid proposal will be declared non-responsive if it fails to provide supporting evidence of compliance with a mandatory term. In my respectful view, this argument cannot succeed for a number of reasons.
[20] First, the interpretation advanced by the complainants leads to the unwarranted result in that every factual representation made in a proposal would have to be supported by documentary evidence. For example, paragraph 1.3 b) provides that the bidder must provide evidence that its "Project Manager" has significant work experience relating to the management of design contracts valued at $1 million or more. According to the complainants" argument, Siemens would be required to submit with its proposal documentary evidence that it had retained a project manager with the requisite experience, (e.g. employment contract). This is not what the Request for Proposals contemplates.
[21] Indeed, the complainants" argument fails to account for the fact that Section C of the Request for Proposals clearly sets out the circumstances in which supporting documentation is required. For example, subsection 1.6 requires that proposals from joint ventures be accompanied by proof, in the form of a certification, that a joint venture is in place at the time a bid is submitted. As well, the "Note" at the end of subsection 1.3 dictates that proof of personnel qualifications is to be provided in the form of a degree or certificate, while proof of required experience is to be in the form of a detailed résumé. However, no mention is made of the need to provide documentary evidence in relation to a bidder"s previous work experience. As a matter of interpretation, the Tribunal erred in reading into the bidding documents such a requirement.
[22] Finally, the complainants" argument conflicts with subsection 1.7 of the Request for Proposals which empowers Public Works to verify the accuracy of facts certified by a bidder. The Tribunal in its reasons placed emphasis on Public Work"s limited power to seek clarification, but it appears to have overlooked the verification clause altogether.
[23] The CFAV Quest contract was referred to by Siemens in its proposal as evidence that it met the work experience requirement. It follows that Public Works was entitled under subsection 1.7 of Section C of the Request for Proposal to verify that information against other information available to it. In response, the complainants argue that that provision applies only to representations made with respect to a bidder"s employees and not the bidder itself. In my view, this distinction makes no sense and, in any event, is contradicted by the express terms of the Request for Proposal. Subsection 1.3 imposes an obligation to show evidence of work experience of the corporate bidder and certain key employees, not just the latter group. Furthermore, subsection 1.7 requires that the bidder provide a written certification that "all statements made with respect to education and experience are true...". It does not read that bidders must certify that "all statements made with respect to education and experience of employees are true...". In short, and as a matter of interpretation, the right of verification under the Request for Proposals extends to representations made in respect of the work experience of both bidder and employees.
[24] In conclusion, I am of the respectful view that, on a proper construction of the Request for Proposal, Public Works did not engage in bid repair by examining the Marystown purchase order and, therefore, the Tribunal"s conclusion on this point must be characterized as being patently unreasonable.
[25] The application for judicial review in this file and file A-221-00 should be allowed in part, with one set of costs. A copy of these reasons will be filed in A-221-00 and be deemed the reasons of the Court in that file. That part of the Tribunal"s decision recommending the re-evaluation of the bids of MIL and Fleetway only should be set aside and the matter remitted to the Tribunal on the basis that
the recommendation to re-evaluate bids in accordance with the methodology set out in the Request for Proposals include the bid submitted by Siemens.
"J.T. Robertson"
J.A.
"I agree
Marc Noël J.A."
"I agree
F.J. McDonald J.A."
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