Procurement

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TABLE OF CONTENTS

• DECISION
• STATEMENT OF REASONS
• • DECISION

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IN THE MATTER OF a complaint filed pursuant to subsection 30.11(1) of the Canadian International Trade Tribunal Act, R.S.C. 1985 (4th Supp.), c. 47

BY

ZYLOG SYSTEMS (OTTAWA) LTD.

AGAINST

THE DEPARTMENT OF PUBLIC WORKS AND GOVERNMENT SERVICES

Pursuant to subsection 30.13(1) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal has decided not to conduct an inquiry into the complaint.

Dominique Laporte
Dominique Laporte
Secretary

1. Subsection 30.11(1) of the Canadian International Trade Tribunal Act ¹ provides that, subject to the Canadian International Trade Tribunal Procurement Inquiry Regulations, ² a potential supplier may file a complaint with the Canadian International Trade Tribunal (the Tribunal) concerning any aspect of the procurement process that relates to a designated contract and request the Tribunal to conduct an inquiry into the complaint. Subsection 30.13(1) of the CITT Act provides that, subject to the Regulations, after the Tribunal determines that a complaint complies with subsection 30.11(2) of the CITT Act, it shall decide whether to conduct an inquiry into the complaint.

2. The complaint relates to a procurement (Solicitation No. EN578-055605/C) by the Department of Public Works and Government Services (PWGSC) on behalf of various government departments for the provision of task-based informatics professional services (TBIPS).

3. Zylog Systems (Ottawa) Ltd. (Zylog) alleges that PWGSC improperly refused to accept its purported legal entitlement to a proposal submitted by Brainhunter (Ottawa) Inc. (Brainhunter Ottawa), therefore unfairly rejecting the said proposal.

4. In order to initiate an inquiry into the present complaint, the Tribunal must consider the conditions set out in section 7 of the Regulations.

5. More specifically, paragraph 7(1)(c) of the Regulations requires that the Tribunal determine whether the information provided by the complainant discloses a reasonable indication that the procurement has not been conducted in accordance with whichever of Chapter Ten of the North American Free Trade Agreement, ³ Chapter Five of the Agreement on Internal Trade, ⁴ the Agreement on Government Procurement, ⁵ Chapter Kbis of the Canada-Chile Free Trade Agreement ⁶ or Chapter 14 of the Canada-Peru Free Trade Agreement ⁷ applies.

6. In this case, the AIT, NAFTA, the AGP and the CCFTA apply. ⁸

7. On July 24, 2009, PWGSC issued an RFSA for the yearly refresh of the standing offers and supply arrangements. Under this refresh, existing standing offer holders and supply arrangement holders are able to update their current rates and submit proposals against additional service categories.

8. On October 30, 2009, Brainhunter Ottawa submitted a proposal in response to the RFSA.

9. On December 2, 2009, Brainhunter Inc. and its subsidiaries, which include Brainhunter Ottawa, received an order from the Ontario Superior Court of Justice allowing protection for its entities under the Companies’ Creditors Arrangement Act. ⁹

10. Following this order, a process was undertaken to sell all the assets of Brainhunter Inc. and its subsidiaries.

11. On January 18, 2010, Zylog Systems (Canada) Ltd. and Zylog Systems (India) Limited entered into an asset purchase agreement with Brainhunter Inc. and its subsidiaries. ¹⁰

12. On February 1, 2010, the Ontario Superior Court of Justice issued a vesting order approving the sale and vesting title and interest in Brainhunter Inc.’s assets in Zylog Systems (Canada) Ltd. and Zylog Systems (India) Limited.

13. On March 29, 2010, Zylog requested that PWGSC confirm that the refresh proposal originally submitted by Brainhunter Ottawa would be evaluated under Zylog’s name based on the represented continuity of operations. ¹¹

14. On April 8, 2010, PWGSC advised Zylog that it would not consider Zylog to be Brainhunter Ottawa for the purposes of its refresh proposal. ¹²

15. On April 22, 2010, Zylog filed its complaint with the Tribunal.

16. In its complaint, Zylog notes that “[a]t the time [of the] filing of this complaint, PWGSC has still not completed the evaluation of the TBIPS Refresh proposals” [emphasis added]. ¹³

17. Given that PWGSC has not completed the evaluation of submitted proposals in relation to this procurement process, the Tribunal finds that, at this time, there can be no violation of the applicable trade agreements with respect to the evaluation of the proposal submitted by Brainhunter Ottawa, notwithstanding any considerations for or against purported legal entitlement put forward by Zylog.

18. In light of the foregoing, the Tribunal does not find a reasonable indication that the procurement was not conducted in accordance with the applicable trade agreements, as directed by paragraph 7(1)(c) of the Regulations. Therefore, the Tribunal will not conduct an inquiry into the complaint and considers the matter closed.

DECISION

19. Pursuant to subsection 30.13(1) of the CITT Act, the Tribunal has decided not to conduct an inquiry into the complaint.

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¹ . R.S.C. 1985 (4th Supp.), c. 47 [CITT Act].

² . S.O.R./93-602 [Regulations].

³ . North American Free Trade Agreement between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, 17 December 1992, 1994 Can. T.S. No. 2 (entered into force 1 January 1994) [NAFTA].

⁴ . 18 July 1994, C. Gaz. 1995.I.1323, online: Internal Trade Secretariat <http://www.ait-aci.ca/index_en/ait.htm> [AIT].

⁵ . 15 April 1994, online: World Trade Organization <http://www.wto.org/english/docs_e/legal_e/final_e.htm> [AGP].

⁶ . Free Trade Agreement between the Government of Canada and the Government of the Republic of Chile, 1997 Can. T.S. No. 50 (entered into force 5 July 1997) [CCFTA]. Chapter Kbis, entitled “Government Procurement”, came into effect on September 5, 2008.

⁷ . Free Trade Agreement between Canada and the Republic of Peru, online: Department of Foreign Affairs and International Trade <http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/peru-perou/chapter-chapitre-14.aspx> (entered into force 1 August 2009) [CPFTA].

⁸ . The CPFTA does not apply, as it came into effect on August 1, 2009, which was after the date of issuance of the Request for a Supply Arrangement (RFSA).

⁹ . R.S.C. 1985, c. C-36.

¹⁰ . The Tribunal notes that the complaint was filed by Zylog.

¹¹ . Confidential complaint, tab F.

¹² . Confidential complaint, tab G at 4.

¹³ . Confidential complaint at 4.