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Procurement
Determinations
File No. PR-2000-018R
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Ottawa, Wednesday, July 31, 2002
File No. PR-2000-018R
IN THE MATTER OF a determination of the Canadian International Trade Tribunal, dated September 26, 2000, relating to a complaint filed by Xwave Solutions Inc. under subsection 30.11(1) of the Canadian International Trade Tribunal Act, R.S.C. 1985 (4th Supp.), c. 47;
AND FURTHER TO a decision of the Federal Court of Appeal which remitted, in part, the above-mentioned determination to the Canadian International Trade Tribunal to consider only the aspect of Xwave Solutions Inc.'s complaint relating to Article 504(3) of the Agreement on Internal Trade.
DETERMINATION OF THE TRIBUNAL
Pursuant to subsection 30.14(2) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal determines that Xwave Solutions Inc.'s complaint relating to Article 504(3) of the Agreement on Internal Trade is not valid.
Peter F. Thalheimer
Peter F. Thalheimer
Presiding Member
Michel P. Granger
Michel P. Granger
Secretary
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Date of Determination and Reasons: |
July 31, 2002 |
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Tribunal Member: |
Peter F. Thalheimer, Presiding Member |
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Investigation Manager: |
Paule Couët |
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Counsel for the Tribunal: |
Philippe Cellard |
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Complainant: |
Xwave Solutions Inc. |
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Counsel for the Complainant: |
Eric R. Williams |
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Government Institution: |
Department of Public Works and Government Services |
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Counsel for the Government Institution: |
David M. Attwater |
STATEMENT OF REASONS
The Canadian International Trade Tribunal (the Tribunal), further to a judgment by the Federal Court of Appeal (the Court) dated November 8, 2001, 1 has reviewed the determination 2 which was remitted, in part, to it.
The Tribunal's inquiry in File No. PR-2000-018 was conducted as a result of a complaint filed on June 28, 2000, by Xwave Solutions Inc. (Xwave). On September 26, 2000, the Tribunal determined that the complaint was not valid because the Department of Public Works and Government Services (PWGSC) had properly determined that, in that instance, and read in the context of the Request for Proposal (RFP), the requirement of section 3.3.1.1 of the Statement of Work (SOW) relating to the fielding experience of the OMS/CAD (Occurrence Management System/Computer-aided Dispatch) software meant OMS and CAD software, not OMS or CAD or OMS and/or CAD software, as submitted by Xwave.
In the same determination, the Tribunal indicated that, having decided that the expression "OMS/CAD" in section 3.3.1.1 of the SOW could not, in the circumstances, be reasonably interpreted to mean OMS or CAD, it followed that Xwave should have reasonably become aware of its allegation that PWGSC's interpretation would favour Versaterm Inc.'s (Versaterm) product, contrary to the provisions of Article 504(3) of the Agreement on Internal Trade, 3 at or about the time the RFP was issued. Therefore, Xwave should have filed its complaint on this ground with the Tribunal within 10 working days from that date, as provided by subsection 6(1) of the Canadian International Trade Tribunal Procurement Inquiry Regulations. 4 Xwave did not do so. Consequently, the Tribunal determined that this ground of complaint had not been filed within the prescribed time frame and, therefore, did not address it on its merits. On October 12, 2000, the Tribunal issued its statement of reasons.
On November 8, 2001, following the hearing of an application for judicial review under section 28 of the Federal Court Act 5 brought by Xwave, the Court remitted the matter to the Tribunal. In allowing the appeal in part, the Court directed the Tribunal to consider Xwave's complaint relating to Article 504(3) of the AIT.
On December 11, 2001, the Tribunal informed Xwave and PWGSC that, as a result of the Court's judgment, it was recommencing its inquiry into Xwave's complaint of June 28, 2000. That same day, the Tribunal requested that Xwave provide submissions regarding Litton PRC Inc.'s (Litton) OMS software. Xwave filed its submissions with the Tribunal on December 17, 2001. On December 21, 2001, PWGSC filed submissions in response with the Tribunal. On January 9, 2002, the Tribunal wrote Xwave requesting that it respond to each of the submissions made by PWGSC in its response of December 21, 2001. Xwave filed additional submissions in response on January 18, 2002, and, on January 25, 2002, PWGSC filed comments with the Tribunal. Xwave filed comments in response on January 31, 2002.
On February 20 and 26, 2002, the Tribunal requested, in writing, that PWGSC provide submissions as to the rationale behind the fielding requirements of the RFP and whether, in the present case, Article 504(3) of the AIT would have been breached by these requirements if they could have been met by a single product (i.e. Versaterm's OMS). PWGSC filed the requested submissions with the Tribunal on February 28, 2002. On March 11, 2002, Xwave filed comments on these submissions with the Tribunal, and PWGSC filed comments in response on March 15, 2002.
Given that there was sufficient information on the record to determine the validity of the complaint, the Tribunal decided that a hearing was not required and disposed of the complaint on the basis of the information on the record.
PROCUREMENT PROCESS
On August 2, 1999, PWGSC received advance notice of a request for the specification, acquisition, fielding and operational support of a commercial off-the-shelf (COTS) software system that would include an OMS and, where practical for operational control, a CAD system, in order to meet the requirements of the Canadian Forces Provost Marshal (hereinafter DND).
A Notice of Proposed Procurement and related RFP for the Security and Military Police Information System (SAMPIS) were posted on Canada's Electronic Tendering Service (MERX) on December 10, 1999.
The RFP, as amended, included the following provisions relevant to this case.
Section 3.1 of the SOW read, in part:
SAMPIS is primarily a hardware/software acquisition project. The delivered solution shall be an integrated commercial off-the-shelf (COTS) system. It shall be tailored to accommodate the security and military police (MP) clientele.
Section 3.1.1 of the SOW read, in part:
The SAMPIS project will ultimately provide a system with the following functional capabilities:
b) An Occurrence Management System (OMS);
d) A Computer-Aided Dispatch (CAD) system integrated with the OMS.
Section 3.2.1.1 of the SOW read, in part:
The Contractor shall:
a) Provide an existing in-service COTS software package that must, as a minimum, include the following capabilities:
· OMS (in accordance with the Requirements Specification - Appendix 7);
· CAD, integrated with OMS (in accordance with the Requirements Specification - Appendix 7).
Section 3.3.1.1 of the SOW read:
Each bidder's proposal shall include documentary evidence that the OMS/CAD software has been successfully fielded in at least three other police agencies, at least two of which are in Canada. Names, addresses and telephone numbers for at least three current Canadian/U.S. references, which the PM [Project Manager] SAMPIS may contact during bid evaluation, are to be included with the proposal.
Section 3.3.1.2 of the SOW read, in part:
For bidders that propose a system configuration that is based on the first-time integration, in the policing environment, of a collection of COTS components, the bidder shall provide experiential evidence of the bidder's system design and integration capability.
Section 3.3.1.4 of the SOW read, in part:
The design shall accommodate requirements that are
· currently mandatory,
· specified in Appendix 7 to be mandatory by a future time or event within Phase I or Phase II.
Section 3.4.4 of the SOW specified the five project management stages to be employed to manage the development of the SAMPIS and to track the deliverables as follows: Stage A, Preliminary Design; Stage B, Detailed Design; Stage C, Implementation and Integration; Stage D, System Acceptance Test; and Stage E, In-Service.
A number of solicitation amendments were issued during the bidding period. Amendment No. 005 included the following question and answer relevant to this case:
QUESTION 62.
Article 3.3.1.1 of the Statement of Work states that "Each Bidder's proposal shall include documentary evidence that the [OMS]/CAD software has been successfully fielded in at least three other police agencies, at least two of which are in Canada". If a bidder is able to provide evidence of successful fielding of OMS/CAD software but only in the U.S., will the absence of current Canadian sites be a fatal flaw in that bidder's submission, or would an allowance be made based on the suitability of the U.S. Sites detailed in the bid?
ANSWER 62.
AS THIS SYSTEM WILL BE USED IN CANADA, AND BECAUSE OF THE DIFFERENCES BETWEEN CANADIAN AND U.S. LAWS, THE EXPERIENCE GAINED THROUGH SUCCESSFUL IMPLEMENTATION OF AT LEAST TWO CANADIAN POLICE SYSTEMS IS ESSENTIAL.
By bid closing date of February 15, 2000, three proposals had been submitted by three bidders, including one from Xwave. PWGSC determined that the proposal submitted by Xwave was non-responsive, as the OMS software that it proposed, that of Niche Technology (Niche), failed to comply with the mandatory fielding requirements of section 3.3.1.1 of the SOW. The other two proposals were deemed technically compliant. On June 14, 2000, a contract in the amount of $7,211,493.98 was awarded to MacDonald, Dettwiler and Associates Ltd. (MDA).
POSITION OF PARTIES
On December 11, 2001, the Tribunal requested Xwave to provide it with submissions as to whether it was Xwave's position that Litton's OMS that had been fielded in Canada would not have satisfied the requirements of the RFP at issue.
On December 17, 2001, Xwave submitted that, while, at the time of the SAMPIS RFP, Litton had multiple installations of an older, technically non-compliant product, its latest product, the Altaris CAD and Altaris OMS software, had not yet been deployed in Canada. As such, Xwave submitted that Litton's Altaris CAD and Altaris OMS software would not have satisfied the fielding requirements of the RFP.
As for the older software products, these would not have satisfied the technical requirements of the RFP, specifically, section 3.3.3.6.1 of the SOW dealing with graphical user interface, section 3.3.3.9.1 of the SOW dealing with database standards, section 4.4.1 of Appendix 7 to the SOW dealing with archive capabilities, section 4.3.2 of Appendix 7 to the SOW dealing with access methodology, section 4.6.1.1 of Appendix 7 to the SOW dealing with role-based access control, sections 4.6.5.4 and 5.1.1.1 of Appendix 7 to the SOW dealing with single file concept and section 3.3.8.7 of the SOW dealing with mobile connectivity.
Furthermore, Xwave provided a letter from Litton's Director of Operations for Canada at the time of the SAMPIS RFP, who was responsible for all significant business opportunities within Canada and who received and personally evaluated the SAMPIS RFP on behalf of Litton. In that letter, it was stated that Litton did not submit a proposal on the SAMPIS RFP because, while its first and second generation OMS software would have satisfied the fielding requirements of the RFP, they would not have satisfied the technical specifications of the RFP. In addition, Litton's Altaris CAD and Altaris OMS software were, at the time, still under development and, therefore, would not have satisfied the fielding requirements of the RFP.
In light of the above, Xwave reiterated its allegation that the only system that could have satisfied both the fielding requirements and technical specifications of the RFP was that of Versaterm.
On December 21, 2001, PWGSC responded to Xwave's submissions as follows.
PWGSC submitted that DND conducted extensive research into the availability of COTS police and law enforcement software. This research revealed that several manufacturers (Versaterm, Xwave, Litton, Intergraph Corporation [Intergraph], DKW, Enterpol and Unisys) produce OMS and/or CAD software capable of meeting the requirements of the RFP.
PWGSC further submitted that, during DND's research, it became apparent that no available software system met all the mandatory requirements of the RFP without some modifications. Therefore, the RFP was structured to allow modifications and enhancements during the implementation of the SAMPIS project. In this context, PWGSC indicated that, in their respective proposals, MDA proposed modifications to Versaterm's OMS software, while, for its part, Xwave proposed modifications and enhancements to Niche's OMS software.
PWGSC submitted that any combination of OMS and CAD software could have been proposed, since the RFP did not require bidders to propose a CAD system integrated with the OMS. Therefore, the very compliance of Xwave's CAD software undermines its allegation that the RFP was limited to Versaterm's software. PWGSC submitted that Xwave could have proposed its CAD software, or any other compliant CAD software, with any OMS software which was found compliant with the RFP, such as Versaterm's OMS software.
With respect to the statements by Litton's former Director of Operations for Canada, PWGSC submitted that neither those statements nor Xwave addressed the flexibility provided by the RFP to modify software during implementation. In this context, PWGSC submitted that Litton's OMS software could have been modified during implementation to meet the requirements of the RFP.
PWGSC further submitted that all measures included in Article 504(3) of the AIT, and any other measure that may be included by analogy to those expressly included, are inconsistent with Article 504(2) only if they breach the requirement for provincial and regional neutrality. PWGSC argued that this interpretation of Article 504 is supported by the Court's decision in E.H. Industries v. Canada (Minister of Public Works and Government Services). 6
PWGSC submitted that, assuming that Articles 504(3)(a), (b), (c) and (g) of the AIT apply, which it expressly denies, paragraphs (a) and (c) have no bearing on the facts of this complaint. It added that the Tribunal's inquiry must be limited to the subject matter of the complaint, i.e. that the fielding requirements of the RFP limited bidders to proposing Versaterm's software. PWGSC argued that Xwave did not allege, in its complaint, that the technical specifications of the RFP limited bidders to proposing Versaterm's software. In any event, PWGSC submitted that it did not discriminate between goods, services and their suppliers based on province or region or in any other way.
In the alternative, PWGSC submitted that it did not breach Article 504(3)(b) of the AIT because the RFP was structured with the knowledge that several different quality software products could satisfy DND's requirements; the original requirement for the CAD system to be integrated with the OMS had been relaxed; and the RFP allowed for modifications and enhancements during the implementation of the SAMPIS project. Furthermore, PWGSC argued that Xwave did not allege or include any evidence that the RFP contained technical specifications for the purpose of avoiding the obligations of Chapter Five of the AIT.
PWGSC also submitted that the RFP did not breach Article 504(3)(g) of the AIT, as this article is limited to prohibiting certain qualification and other procedures that serve to exclude a supplier from tendering. No such allegation was made in this instance; in fact, Xwave participated in the tendering process.
On January 9, 2002, the Tribunal requested Xwave to respond to each of the submissions made by PWGSC in its response of December 21, 2001. Xwave reiterated that Versaterm's system was the only one that could meet both the technical specifications and the fielding requirements of the RFP. As for Litton's inability to meet the requirements of the RFP, Xwave argued that PWGSC did not meaningfully rebut its submissions on this point. With respect to Intergraph, Xwave submitted that, at the time of the RFP, this company did not have any OMS installation that would satisfy the technical, functional and fielding requirements of the RFP nor does it have any such installation at this time. As for DKW, Xwave submitted that it did not have any OMS or CAD software installed in any policing environment in Canada. In fact, Xwave added, DKW is not, and never was, in the business of OMS or CAD software. With respect to Enterpol, Xwave submitted that the software mentioned by PWGSC refers to a software system specified as of December 20, 2001, after the RFP bidding period expired. Furthermore, Xwave argued that Enterpol's OMS software is, in fact, at best, a records management system which could not even come close to the basic requirements of the SAMPIS RFP. As for Unisys, Xwave submitted that it does not have OMS or CAD software that would have complied with both the technical specifications and fielding requirements of the RFP. Xwave submitted that, for Unisys, a system integrator, to submit a bid with regard to this RFP, it would have had to offer a compliant third-party product, of which Versaterm is the only vendor.
With respect to the issue of the modifications and enhancements allowed by the RFP during the implementation of the SAMPIS project, Xwave submitted that they cannot be of such magnitude that they would effectively allow the technical specifications and fielding requirements of the RFP to be met by bidders after the close of bidding. Xwave added that software produced by Litton, Intergraph, DKW, Enterpol and Unisys would have to be completely rebuilt from the ground up or completely new in order to meet the requirements of the RFP. Xwave argued that such extensive rebuilding or new development would clearly not fall within the realm of the "modifications" and enhancements, which PWGSC now suggested were contemplated within the RFP, and could certainly not meet the delivery schedule stated in the RFP. Finally, Xwave submitted that the fact that the procurement required a system configuration consisting of COTS components is further evidence that the modifications and enhancements envisioned in the RFP were not to be as extensive as those now proposed by PWGSC.
With respect to PWGSC's submission that Article 504 of the AIT only prohibits regional discrimination, Xwave argued that, in E.H. Industries, the Court dismissed the application for judicial review on grounds independent of Article 504. In fact, the Court did not find that Article 504 only prohibited the federal government from exercising regional discrimination.
In this context, Xwave re-affirmed its contention that, in conducting this solicitation, PWGSC breached the provisions of Article 504 of the AIT by: (a) imposing conditions on the invitation to tender which were based on software provided by Versaterm; (b) biasing the technical specifications in favour of or against certain goods and services for the purpose of avoiding the obligations of the AIT; and (c) unjustifiably excluding Xwave from tendering.
Xwave further submitted that PWGSC knew or ought to have known that the technical specifications and fielding requirements of the RFP, in their entirety, were biased against any bidder that did not bid using Versaterm's product. Xwave submitted that this fact alone should be sufficient to dispose of PWGSC's argument that it did not intend to avoid the obligations of the AIT in conducting this solicitation.
In its response of January 25, 2002, relying on excerpts from Xwave's proposal, PWGSC submitted that not only was Xwave aware of the extent to which modifications and enhancements were authorized during the SAMPIS implementation process but it even proposed to use that flexibility extensively to meet the requirements of the RFP. In the circumstances, PWGSC submitted that the position taken by Xwave in its proposal completely contradicts Xwave's argument on this point.
In its comments of January 31, 2002, Xwave submitted that the modifications and enhancements that it contemplated in its proposal were of a relatively minor nature and were not such that they would have allowed Xwave to fulfil either the technical specifications or fielding requirements of the RFP subsequent to the close of bidding.
On February 20 and 26, 2002, the Tribunal requested PWGSC, in writing, to provide submissions on the rationale behind the fielding requirements of the RFP and whether these requirements would have breached Article 504(3) of the AIT if they could only have been met by Versaterm's OMS.
In its reply of February 28, 2002, PWGSC submitted that the term "Versaterm product" was used in the complaint to mean Versaterm's OMS and CAD software. PWGSC submitted that this was the meaning ascribed to the term in the Tribunal's statement of reasons and by the Court when it remanded the matter to the Tribunal. Thus, the issue on remand should be whether bidders were limited to proposing the integrated Versaterm OMS and CAD software in the fielding requirements of the SOW and whether this constituted a breach of Article 504(3) of the AIT. PWGSC submitted that the interpretation of the term "Versaterm product" to mean the integrated Versaterm software is supported by numerous allegations in the complaint.
PWGSC submitted that, since Xwave could have proposed its CAD system and Versaterm's OMS, it is unrefuted that bidders were not limited to bidding the integrated Versaterm product. Furthermore, PWGSC submitted that Enterpol's OMS met the fielding requirements of the SOW at the time of bid closing.
On the question of the rationale behind the fielding requirements of the RFP, PWGSC submitted that, due to the significance of the capabilities being established for Canada's military police and their costs, DND required a fully mature COTS solution. This is reiterated 22 times in the SOW. Nevertheless, PWGSC submitted that, in order to promote competition, the initial fielding requirements of the RFP were relaxed from requiring evidence of 5 instances of prior fielding of integrated OMS/CAD software in Canada to requiring successful fielding in at least three other police agencies, at least two of which are in Canada. The reason why emphasis was placed on experience in a Canadian policing environment was due to differences in law and law enforcement in Canada and the United States.
PWGSC further submitted that the RFP required bidders to propose both OMS and CAD software, not one or the other. Thus, PWGSC argued, the "sole sourcing issue" raised by Xwave and remanded by the Court necessarily involved consideration of whether bidders were limited to proposing a single combination of OMS and CAD software. Therefore, PWGSC submitted, it is inappropriate for the Tribunal to consider whether bidders were limited to bidding a single OMS and, if so, whether this constitutes a breach of Article 504(3) of the AIT. PWGSC submitted that, even if Xwave were limited to proposing Versaterm's OMS, which it expressly denied, it could still have bid its CAD system with Versaterm's OMS. Thus, PWGSC concluded, Xwave was not limited to bidding the integrated Versaterm software, as it alleged.
In its response of March 11, 2002, Xwave asserted that, simply put, the subject matter of this procurement was a dispatch, communications and police incident management system. In this context, it submitted that any rationale behind the fielding requirements must have a logical basis relating to the system's abilities to carry out its intended functions. Xwave submitted that PWGSC had failed to provide such a rationale in its submissions.
Xwave recognized that PWGSC, in answer 62, suggested that differences between Canadian and U.S. laws and law enforcement was a reason behind the fielding requirements of the RFP. However, Xwave submitted, there was no logical basis to this suggestion. PWGSC has provided no factual basis in support of it nor demonstrated that, due to alleged differences in Canadian and U.S. laws and law enforcement, the capability of Xwave's proposed system would be insufficient for Canadian installations. Furthermore, Xwave submitted that, if the Tribunal accepted PWGSC's suggestion as a valid rationale for the fielding requirements, the application of that logic would have required that bidders provide evidence of having successfully fielded their OMS and/or CAD software in each of the geographical areas where the military police were intending to operate the SAMPIS because each such area could arguably have different laws and law enforcement techniques. Moreover, given that many of the laws that would have been enforced by eventual users of the SAMPIS project would have been of a nature completely unique to military police (i.e. military laws), PWGSC's suggestion, therefore, did not hold in the circumstances.
Xwave further submitted that the technical specifications of the RFP were not foreign to Xwave at the time of bid submission, since these had been used on a number of occasions over the five to six years preceding the release of the SAMPIS RFP. Xwave indicated that it had bid on each of these large-scale procurements, none of which had any requirement for prior Canadian fielding. As well, Xwave indicated that Enterpol did not bid on any of these projects, as it was simply unable to meet the levels of sophistication, scope and complexity of these large-scale projects. Xwave added that, since PWGSC originally deemed its bid "non-compliant", the particular OMS that it bid has been fielded in more than 20 Canadian police and law enforcement agencies and that none of these installations required evidence of prior Canadian fielding during the procurement process. In light of the above, Xwave submitted that no considerations specific to this procurement, other than to favour Versaterm, justified the fielding requirements of the RFP.
Xwave submitted that, if the Tribunal found that only Versaterm's OMS could have met the fielding requirements with respect to the OMS component of the procurement, a determination that Article 504(3) of the AIT has been breached must follow. Xwave argued that PWGSC's tacit admission that any ultimately successful bidder would have had to bid Versaterm's OMS obviously means that the procurement failed to provide equal access to all Canadian OMS suppliers. Xwave submitted that, due to the nature of the technology used by Versaterm in its OMS and licensing fees, a solution that proposed Xwave's CAD and Versaterm's OMS could not have achieved maximum cost efficiency. Furthermore, Xwave submitted that PWGSC's suggestion that Xwave could have bid Versaterm's OMS was simply not reflective of the commercial reality that exists in a competitive marketplace.
Xwave submitted that PWGSC's attempt to justify the fielding requirements through reference to COTS was factually incorrect. Indeed, there was no necessary connection between the fact that a product was COTS and the fielding requirements of the RFP. Finally, Xwave submitted that the Tribunal was required, pursuant to the Court's judgment, to determine whether or not this procurement, in its entirety, breached Article 504(3) of the AIT.
In its response of March 15, 2002, PWGSC addressed Xwave's assertion that Versaterm would not likely allow Xwave to propose its OMS software. PWGSC submitted that this assertion flies in the face of commercial realities. Versaterm earns revenue through licensing its software and would no doubt be pleased to have its "competitors" and others propose its software. PWGSC also mentioned that Versaterm did not bid in response to the RFP.
TRIBUNAL'S DECISION
The Court, having allowed in part the application for judicial review filed by Xwave, remitted the matter to the Tribunal with a direction that it consider only the aspect of Xwave's complaint relating to Article 504(3) of the AIT. PWGSC submitted that the question before the Tribunal is whether the fielding requirements of section 3.3.1.1 of the SOW, as they affect the SAMPIS as a whole, are contrary to Article 504(3). Therefore, PWGSC argued, the Tribunal cannot decide whether these fielding requirements, as they affect the OMS and CAD system separately, are discriminatory, particularly considering that integration of the OMS and CAD software before bid closing was not required.
Subsection 30.14(1) of the CITT Act provides that, in conducting an inquiry, the Tribunal shall limit its considerations to the subject matter of the complaint. In the Tribunal's view, in determining whether the fielding requirements breach Article 504(3) of the AIT, it is entitled to look at whether only Versaterm's OMS could satisfy the fielding requirements concerning the OMS. Indeed, if the Tribunal is entitled to look at the impact of the fielding requirements with respect to an OMS/CAD system, clearly it must also be entitled to investigate the impact of the fielding requirements with respect to a part of that system.
In its initial inquiry, the Tribunal determined that the expression "OMS/CAD" meant OMS and CAD. This determination has been upheld by the Court. The Tribunal must now determine whether, in light of the interpretation of the expression "OMS/CAD", the fielding requirements of section 3.3.1.1 of the SOW breach the provisions of Article 504(3) of the AIT by favouring Versaterm's product.
Xwave submitted that only Versaterm's product could satisfy the fielding requirements. This took into account the fact that the fielding examples had to relate to products that met the technical specifications of the SOW. PWGSC submitted that, on the contrary, many products could satisfy the fielding requirements. In the Tribunal's view, as clearly indicated in the RFP, the OMS/CAD system could result from the integration of separate OMS and CAD system components. In such a case, the fielding requirements would have to be met separately by the OMS and the CAD system. With respect to the CAD system, the Tribunal finds that Versaterm's product was not the only one able to fulfil the fielding requirements. Indeed, Xwave submitted, in its proposal, 19 examples of fielding of its CAD system. However, with respect to the OMS, the Tribunal, having carefully examined all the evidence, finds that, at the time of bidding, only Versaterm's OMS could meet the technical specifications and fielding requirements of the RFP.
With respect to Litton's OMS, the Tribunal relies on Xwave's submissions that Litton's older OMS software could not have satisfied section 3.3.3.6.1 of the SOW concerning graphical user interface because it was character-based; could not have satisfied section 3.3.3.9.1 of the SOW concerning database standards because it used a flat-file database management approach; and could not have satisfied section 4.4.1 of Appendix 7 to the SOW concerning archive capabilities because it did not have the archive capabilities required. Similar examples affecting the eligibility of Litton's older OMS software have been provided by Xwave in relation to section 4.3.2 of Appendix 7 to the SOW relating to access methodology, to section 4.6.1.1 of Appendix 7 to the SOW on role-based access control, to sections 4.6.5.4 and 5.1.1.1 of Appendix 7 to the SOW on single file concept and to section 3.3.7 of the SOW on mobile connectivity. Many of those statements were supported by a letter from Litton's Director of Operations for Canada at the time of the SAMPIS RFP. PWGSC did not rebut those statements.
PWGSC did, however, submit that Litton's older OMS could have been modified during implementation to meet the requirements of the RFP. In the Tribunal's view, the modifications and enhancements contemplated by the RFP could not be of such magnitude that they would effectively allow the currently mandatory technical specifications of the SOW to be met by bidders only after the close of bidding. In the Tribunal's opinion, such an interpretation would completely defeat the purpose of the mandatory requirements, as drafted. For example, changing the sequential flat-file database management approach of Litton's older OMS software to structured query language, as required by the RFP after bid closing, would be tantamount to bidding a non-compliant product. To accept that such sweeping changes be made to the product offered would render meaningless both the requirement that the software proposed be COTS and the fielding requirements of the RFP.
With respect to Litton's newer Altaris OMS, PWGSC has not refuted to the Tribunal's satisfaction Xwave's assertion that, at the time of bidding, the Altaris OMS had not yet been deployed in Canada. On this basis, the Tribunal concludes that the Altaris OMS software would not have met the fielding requirements of the RFP.
As with Xwave's submissions on Litton's OMS, Xwave's submissions on the eligibility and availability, at the time of bidding, of other OMS software from Intergraph, DKW, Unisys and Enterpol demonstrated a thorough knowledge of the public safety software and solutions used in policing environments. The statements that Xwave made with respect to Intergraph, 7 DKW 8 and Unisys 9 were based on that knowledge and have not been refuted by PWGSC. As with Litton's older OMS, the products from those companies would have had to be redesigned into new products in order to meet the technical specifications of the SOW. In the Tribunal's opinion, such extensive rebuilding or new development is clearly out of the purview of the enhancement and modification provisions of the RFP. As regards Enterpol's OMS, on the basis of the evidence adduced by Xwave and PWGSC, the Tribunal is not persuaded that Enterpol's OMS, which is based on a Lotus Notes database, could meet the sophistication, scope and complexity of the SAMPIS requirements. The Tribunal notes that the statement made by Xwave to the effect that Enterpol's OMS does not support structured query language, as required by section 3.3.3.9.1 of the SOW, has not been refuted by PWGSC.
The fact that Versaterm's OMS was the only one capable of fulfilling the fielding requirements of the RFP does not automatically mean that Article 504(3) of the AIT has been breached. Article 504(3) stipulates that certain types of measures are inconsistent with the non-discrimination provisions of the AIT, including but not limited to:
(a) the imposition of conditions on the invitation to tender, registration requirements or qualification procedures that are based on the location of a supplier's place of business or the place where the goods are produced or the services are provided or other like criteria;
(b) the biasing of technical specifications in favour of, or against, particular goods or services, including those goods or services included in construction contracts, or in favour of, or against, the suppliers of such goods or services for the purpose of avoiding the obligations of this Chapter;
. . .
(g) the unjustifiable exclusion of a supplier from tendering.
For its part, Article 506(6) of the AIT provides that:
In evaluating tenders, a Party may take into account not only the submitted price but also quality, quantity, delivery, servicing, the capacity of the supplier to meet the requirements of the procurement and any other criteria directly related to the procurement that are consistent with Article 504. The tender documents shall clearly identify the requirements of the procurement, the criteria that will be used in the evaluation of bids and the method of weighting and evaluating the criteria. [Emphasis added]
In the Tribunal's view, evidence of successful fielding is an acceptable and accepted method to assess the capacity of a product to meet the requirement of a procurement. As such, the use of successful fielding information in evaluating tenders may be seen as directly related to a procurement and, therefore, permissible. The Tribunal notes, in this respect, that Xwave did not contest, in principle, the use of fielding requirements to assess, in part, the capacity of the proposed OMS/CAD software. Therefore, the Tribunal finds that the use of evidence of prior successful fielding to determine the capacity of a product to meet the requirement of a procurement does not, in and of itself, constitute a breach of the AIT.
With regard to the requirement for two prior successful Canadian fieldings, the Tribunal notes that, despite the arguments that it made in the present inquiry, Xwave does not seem to have found the Canadian fielding requirements unrelated to the procurement at the time that it considered the SOW and submitted its proposal. In his affidavit dated November 24, 2000, the Business Director of the Public Safety Group of Xwave mentioned that answer 62 emphasized the need for Canadian experience. He stated that, as such, Xwave, in its proposal, emphasized its Canadian experience with respect to its proposed software systems, understanding this to be of importance in meeting the requirements of section 3.3.1.1 of the SOW. He added that, in response to the requirements of that section, Xwave included documentary evidence of its CAD system being successfully installed and operated in 19 police sites and of the proposed OMS in one police agency, all in Canada. 10 The Tribunal, therefore, finds that the requirements for two prior successful fieldings in Canadian policing environments are directly related to the procurement at issue.
As indicated above, Article 506(6) of the AIT not only requires that the criteria taken into account to evaluate tenders be directly related to the procurement but that they be consistent with Article 504. In the present case, Xwave complained that the fielding requirements breached Article 504(3)(b) that prohibits the biasing of technical specifications in favour of particular goods for the purpose of avoiding the obligations of Chapter Five of the AIT. In the Tribunal's view, fielding requirements are not, per se, technical specifications. Therefore, Article 503(3)(b) that prohibits biasing of technical specifications in favour of particular goods is not directly at issue. However, the enumeration found in Article 504(3) is not exhaustive. In the Tribunal's view, the biasing of fielding requirements in favour of particular goods for the purpose of avoiding the obligations of Chapter Five of the AIT also constitutes a breach of the AIT. A government institution cannot use fielding requirements to favour a product or supplier.
In the present case, the Tribunal does not find that PWGSC biased the fielding requirements to favour Versaterm's OMS. The Tribunal finds that PWGSC and DND did not structure this solicitation so as to ensure that only bidders proposing Versaterm's software could be successful. The Tribunal is satisfied, on the basis of its review of the history of this procurement on the record, that DND has significantly relaxed its original requirement for an integrated, already proven, OMS and CAD system to allow for greater competition consistent with its legitimate operational needs. Specifically, the Tribunal notes that the requirement that the proposed system be an integrated system at the time of bidding was changed to requiring only that the system ultimately delivered be an integrated system. This approach allowed systems not yet integrated, but that could be integrated, to be proposed. As well, it allowed for a larger number of bidders, e.g. system integrators, to participate in this solicitation, provided the system that they offered met certain mandatory technical requirements and that the capabilities of those systems or their key components and the experience of the bidders in system integration could be demonstrated. The Tribunal is of the view that the representations made to Xwave to the effect that the RFP would accommodate Xwave and allow integration of the required OMS and CAD software were made within this broad framework.
The Tribunal also notes that provisions pertaining to modifications and enhancements to existing software were set out in the RFP and that these were used by bidders, including Xwave and MDA. In addition, the Tribunal notes that the evidentiary requirements for prior fielding were reduced to three instances from the original requirement for five such instances.
In the Tribunal's view, the preceding establishes a willingness on the part of DND to permit greater competition. It does not support the position that DND wanted to favour Versaterm's OMS.
Xwave submitted that, in setting out the requirements for the SAMPIS RFP, DND or PWGSC knew or ought to have known the conditions prevailing in the OMS and CAD market and ensured that the conditions that it imposed on prospective bidders in its tender documents, such as the fielding requirements of section 3.3.1.1 of the SOW, were not or did not have discriminatory effects on bidders or constituted an unnecessary obstacle to trade, thereby preventing the attainment of the efficiency and economy objectives set out in Article 501 of the AIT.
The Tribunal is not convinced that DND knew that Versaterm's OMS was the only one that could meet the fielding requirements. No convincing evidence to that effect has been presented to the Tribunal. With respect to Xwave's argument that DND should have known that only Versaterm's product could meet the fielding requirements, the Tribunal finds that, while government institutions cannot use fielding requirements to favour one specific product, there is no obligation imposed by the AIT on government institutions to know the conditions of the market when setting out fielding requirements. Government institutions do not have to know how many times specific products have been fielded when setting out fielding requirements. Therefore, the fact that fielding requirements have the impact of favouring one product does not breach Article 504(3) of the AIT, if the government institution is not aware that such is the impact of the fielding requirements.
If the government institution is aware that fielding requirements favour a specific product, it must ensure that the fielding requirements are justified in the context of the specific procurement. If they are justified in the context of the procurement, they are permitted under Article 506(6) of the AIT and would not amount to discrimination under Article 504(3). Indeed, in that context, it could not be said that legitimate and justified fielding requirements were, at the same time, biased in favour of a product for the purpose of avoiding the obligations of Chapter Five. If, on the contrary, fielding requirements are not justified and the government institution is aware that they favour one specific product, the fielding requirements would amount to a breach of Article 504(3).
In this instance, the RFP included provisions allowing bidders to ask questions on any aspects of the RFP and to receive answers from PWGSC. In fact, this process was used, in this instance, by a prospective bidder to inquire about the mandatory nature of the Canadian fielding requirements (question and answer 62). The answer was communicated to all potential suppliers through amendment No. 005, which reported question and answer 62 in full. Had a potential supplier complained specifically that the fielding requirements were too restrictive, PWGSC would have had to inquire seriously to ensure that the fielding requirements were justified and not too restrictive.
It is unfortunate that, because of the interpretation that it gave to the expression "OMS/CAD", Xwave failed to avail itself of this process or to appreciate the possible implications of PWGSC's answer 62 for its own offer. However, it has been determined by the Tribunal and confirmed by the Court that the interpretation used by PWGSC and DND in evaluating the fielding requirements of section 3.3.1.1 of the SOW is reasonable and, in the absence of any representation by Xwave or any other prospective bidder during the bidding process that the fielding requirements were unjustifiably restrictive, the Tribunal is satisfied that PWGSC and DND discharged their responsibility towards potential suppliers and did not breach Article 504(3) of the AIT.
Xwave also submitted that the fielding requirements were in breach of Article 504(3)(g) of the AIT because they unjustifiably excluded it from tendering. As indicated above, in the Tribunal's view, the fielding requirements at issue sought to assess the capacity of a product to meet the requirement of a procurement and were directly related to the procurement. They were not challenged by potential suppliers prior to the deadline to file proposals in response to the RFP. Under such circumstances, a potential supplier cannot argue successfully that it has been "unjustifiably" excluded from tendering.
Xwave further submitted that the fielding requirements breached Article 504(3)(a) of the AIT. The Tribunal does not find that this article has been breached. Xwave did not establish that the fielding requirements were conditions based on the location of a supplier's place of business, or the place where the goods are produced or the services provided, or other like criteria.
DETERMINATION OF THE TRIBUNAL
In light of the foregoing, the Tribunal finds that the fielding requirements of section 3.3.1.1 of the SOW did not breach Article 504(3) of the AIT and, therefore, determines that this aspect of the complaint is not valid.
1 . Xwave Solutions v. PWGSC, A-668-00 (F.C.A.).
2 . Re Complaint Filed by Xwave Solutions (26 September 2000), PR-2000-018 (CITT).
3 . 18 July 1994, C. Gaz. 1995.I.1323, online: Internal Trade Secretariat <http://www.intrasec.mb.ca/eng/it.htm> [hereinafter AIT].
4 . S.O.R./93-602.
5 . R.S.C. 1985, c. F-7.
6 . (7 March 2001), A-696-00 (C.A.) [hereinafter E.H. Industries].
7 . Xwave's position is that Intergraph did not, at the time of bidding, or on the date of these submissions, have OMS installations that would satisfy the technical, functional and fielding requirements of the RFP.
8 . Xwave's position is that DKW is not and never was in the OMS or CAD business. Therefore, it did not, at the time of the RFP, have an OMS and CAD that would have complied with the requirements of the RFP.
9 . Xwave's position is that Unisys is a system integrator and does not itself, or with its partners, have a product that could meet the requirements of the RFP.
10 . Xwave's submissions dated January 18, 2002, Tab B.
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Initial publication: July 31, 2002
