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Procurement
Determinations
File No.: PR-98-046
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Ottawa, Tuesday, May 4, 1999
File No.: PR-98-046
IN THE MATTER OF a complaint filed by Deloitte & Touche Consulting Group under subsection 30.11(1) of the Canadian International Trade Tribunal Act, R.S.C. 1985, c. 47 (4th Supp.), as amended;
AND IN THE MATTER OF a decision to conduct an inquiry into the complaint under subsection 30.13(1) of the Canadian International Trade Tribunal Act.
DETERMINATION OF THE TRIBUNAL
Pursuant to section 30.14 of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal determines that the complaint is not valid.
Patricia M. Close
_________________________
Patricia M. Close
Member
Michel P. Granger
_________________________
Michel P. Granger
Secretary
Date of Determination: May 4, 1999
Tribunal Member: Patricia M. Close
Investigation Manager: Randolph W. Heggart
Counsel for the Tribunal: John L. Syme
Complainant: Deloitte & Touche Consulting Group
Counsel for the Complainant: Richard A. Wagner
Sally Gomery
Government Institution: Department of Public Works and Government
Services
STATEMENT OF REASONS
COMPLAINT
On February 11, 1999, Deloitte & Touche Consulting Group (D&T) filed a complaint with the Canadian International Trade Tribunal (the Tribunal), under subsection 30.11(1) of the Canadian International Trade Tribunal Act [1] (the CITT Act), concerning the procurement by the Department of Public Works and Government Services (the Department) for the provision of a resource review of the Royal Canadian Mounted Police (Solicitation No. 24062-8-0320/A) for the Treasury Board Secretariat of Canada (the TBS).
D&T alleged that, contrary to the provisions of the North American Free Trade Agreement [2] (NAFTA), the Agreement on Government Procurement [3] (the AGP) and the Agreement on Internal Trade [4] (the AIT), the Department improperly declared its proposal non-responsive, when, in fact, it met all the mandatory requirements contained in the Request for Proposal (RFP). D&T submitted that, to the extent that there was an ambiguity in its proposal concerning compliance with mandatory requirement 3.1.1.1D)iii) of Annex B of the RFP, the Department should have asked D&T for clarification.
D&T requested, as a remedy, an order from the Tribunal directing the Department to postpone finalizing the contract with PricewaterhouseCoopers (PwC) or to prohibit PwC from beginning any work, pending the Tribunal’s inquiry into this complaint. D&T further requested that the contract awarded to PwC be cancelled and awarded to D&T. As an alternative, D&T requested cancellation of the contract awarded to PwC and an order that the Department re-evaluate the bids presented by D&T and PwC in conformity with the trade agreements. As further alternatives, D&T requested that the RFP be re-issued or that it be compensated in an amount equal to the profit that it would have earned, had it been awarded the contract. In any event, D&T requested the costs that it incurred in preparing its bid and its costs of proceeding with this complaint.
On February 15, 1999, the Tribunal informed the parties that the complaint had been accepted for inquiry, as it met the conditions for inquiry set out in section 7 of the Canadian International Trade Tribunal Procurement Inquiry Regulations [5] (the Regulations). On March 15, 1999, the Department filed a Government Institution Report (GIR) with the Tribunal in accordance with rule 103 of the Canadian International Trade Tribunal Rules. [6] On March 26, 1999, D&T filed its comments on the GIR with the Tribunal.
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 December 4, 1998, the Department issued an RFP for this solicitation.
The RFP reads, in part:
SECTION I: BIDDER INSTRUCTIONS AND INFORMATION
0.5 SECURITY REQUIREMENTS
2. Contractor personnel who require access to CLASSIFIED information/assets or sensitive work sites shall EACH BE A CANADIAN CITIZEN and each hold a valid personnel security screening at the level of SECRET granted or approved by ISD [the Industrial Security Division of the Department].
1.8 RIGHTS OF CANADA
Canada reserves the right to:
a) seek clarification or verify all information provided by the bidder with respect to this RFP;
ANNEX B
PREPARATION OF PROPOSAL
1.0 GENERAL COMMENTS
It is essential that the elements contained in your bid be stated in a clear and concise manner.
2.1 EVALUATION OF TECHNICAL PROPOSAL:
To be considered responsive, a bidder’s technical proposal must (a) meet all the mandatory criteria set out in Article 3.1.1.1 MANDATORY REQUIREMENTS of this solicitation,
Bids not meeting (a), (b) or (c) above will be given no further consideration.
3.1 PART I. TECHNICAL PROPOSAL:
3.1.1 Evaluation Criteria:
3.1.1.1 Mandatory Requirements:
Proposals which fail to meet the following mandatory requirements will be set aside at this stage without further consideration for this requirement and the bidder’s proposal will be considered to be non-responsive :
D) Firm/Project Leader
iii) All key members of the proposed team must hold Government of Canada security clearances to the level of Secret at the time of response to this Request for Proposal . . . In order to demonstrate this requirement, the key team members must be listed, along with clearance level, when clearance was received and when it expires.
On December 21, 1998, a bidders’ conference was held in Hull, Quebec. Thirty-two requests for clarification were submitted, some concerning the security requirements of the “key member.” As a result, the RFP was amended on December 22, 1998, and again on January 8, 1999.
Amendment No. 001 to the solicitation dated December 22, 1998, reads, in part, as follows:
At Annex B, item 3.1.1.1D)iii)
Add: The following sentence:
For the purpose of this study, a “key member” of the project team is any person who will have direct access to classified information to the level of secret, either written or oral. It should be noted that when completed the final report will be treated as “secret”.
On December 16, 1998, D&T electronically submitted a request through the Department to obtain a “Secret” security clearance for one of its team members.
On January 8, 1999, the Department issued amendment No. 002 to the solicitation which reads, in part, as follows:
Q1. It is my understanding that only the Key individual consultants must be cleared to the Secret level …
A1. At time of bid the Key personnel have to be cleared to secret. The bidder must comply with section 1, item 0.5 of the RFP.
Four proposals were received by the Department by the bid closing date on January 13, 1999, including one proposal from D&T and one from PwC.
D&T’s proposal includes the following entries with respect to the security clearance of the key members of the proposed team.
On page 27, under “Document Review,” the proposal reads, in part:
We understand and accept that only key team members with a minimum of “Secret” security clearances will be permitted access to these documents [critical documents as identified by the TBS Project Authority].
On page 29, under “Security,” the proposal reads, in part:
We have taken the following measures to ensure appropriate security for the study: all key members of the proposed team hold Government of Canada secret security clearances.
On page 33, under “Team Structure,” the proposal reads, in part:
We have structured our project team into smaller ‘issue’ teams to review specific aspects of the organization where we expected the major issues to lie, and we have assembled three general types of personnel to populate these teams. Each type of resource is represented by the horizontal rows . . . . [i.e. “Key” Team Members, Team Members and Technical Specialists].
On page 35, the proposal reads, in part:
All “Key” Team Members possess current Secret level security clearances, with one exception, where clearance is pending. Technical Specialists are senior professionals with extensive in-depth experience in policing and law enforcement. They will play a key role in steering and focusing review and data gathering activities on the appropriate areas and towards key issues.
Page 36 of the proposal lists the team members by name according to the type of resources and “issue” teams. The name of the individual for whom a security clearance was requested on December 16, 1998, shows up as a technical specialist of the information technology issue team.
On page 42 of the proposal, there is a table that shows the professional experience of the team members and indicates the security clearance for the individual mentioned above as “Secret (Pen).”
On page 43 of the proposal, [[[{A href=table1.gif}]]]Table 1[[[{/A}]]] , “MANDATORY REQUIREMENTS,” reads, in part:
|
(iii) All key members of the proposed team hold Government of Canada security clearances. |
Terms Accepted |
On page 44, under “Security Requirements,” the proposal reads, in part:
|
All key members of the team who will have access to CONFIDENTIAL files or who will be involved in preparation of the deliverables (considered CONFIDENTIAL documents) are either cleared to the level of Secret or, in one case, secret clearance is pending. |
Accepted |
Page A.20 of the proposal, which contains the résumé of the individual mentioned previously reads, in part, as follows:
|
Information Management and Technology |
[Name of individual] SENIOR MANAGER |
|
Security Clearance: Received Expires Secret Pending |
Bilingual Profile: n/a |
An evaluation team comprised of seven people, six from the TBS and the procurement officer from the Department, assessed the proposals, first, against the mandatory requirements of the RFP.
On January 27, 1999, the TBS informed the Department that D&T’s proposal had been deemed non-responsive because it had failed to comply with the mandatory security requirements of the RFP.
On February 1, 1999, D&T received a letter from the Department dated January 29, 1999, advising it that its bid had been deemed non-responsive for failing to meet one of the mandatory requirements of the RFP. The Department further advised D&T that a contract had been awarded to PwC, which had submitted the only valid bid.
VALIDITY OF THE COMPLAINT
Department’s Position
The Department submitted that article 3.1.1.1D)iii) of Annex B of the RFP required that all key members of the proposed team hold Government of Canada security clearances to the level of “Secret” at the time of response to the RFP and that these clearances be maintained throughout the life of the project. To demonstrate this requirement, the key members had to be listed along with their clearance levels, with an indication of when clearances were received and when they expired. If D&T had followed the required format, the problem, the Department submitted, would not have occurred in this case.
According to the GIR, in evaluating D&T’s proposal, the evaluators noted the following: (1) only key members had their security clearances listed in their résumés; (2) several statements in the body of the proposal indicated that all but one key member had their “Secret” security clearances; and (3) the individual whose security clearance was pending would be “playing a key role in steering and focusing review and data gathering activities on the appropriate areas and towards key issues.”
Furthermore, the Department submitted that there is no ambiguity in D&T’s proposal. In the Department’s submission, “[w]hatever the draftsperson intended by ‘‘Key’ Team members’ as used on page 36 [of D&T’s proposal] can be interpreted as a category rather than as employing the definition provided in the RFP and if this is done the alleged contradiction disappears.”
The Department submitted that the specific sections of the trade agreements and the Supply Manual, upon which D&T relies, have no application to this procurement and are irrelevant. Indeed, the Department submitted that neither the AGP nor NAFTA applies in this instance because the requirement falls under the national security exception provisions of NAFTA and the AGP, Article 1018(1) and Article XXIII(1) respectively.
In addition, the Department submitted that, while it may elect, in certain circumstances, to seek clarifications from bidders, it is under no obligation to do so. The Department noted that D&T has not referred to any jurisprudence or any provision in the Supply Manual or any section in the applicable trade agreements (or, indeed, even the inapplicable trade agreements) to support the proposition that there is a duty to clarify perceived ambiguities. In this context, the Department noted that, in the two Tribunal cases [7] cited by D&T in its complaint, the Tribunal did not itself find there to be such a duty.
The Department requested the opportunity to make further submissions with respect to the award of costs in this matter.
D&T’s Position
D&T submitted that the GIR contains errors concerning the contents of its proposal and also contains unwarranted inferences of fact.
Specifically, D&T submitted that the request transmitted on December 16, 1998, for security clearance for the individual in question did not indicate that the said person was to be a team member or key team member in the proposal nor that the individual would be involved in the proposal at all. D&T submitted that there is no requirement to provide any reason for the security clearance in the standard application form, that the timing of the request for this person is irrelevant since he was a new employee at D&T and that D&T routinely requests security clearances for all new employees.
D&T also submitted that the Department’s suggestion that D&T’s statement on page 27 of its proposal that only key team members with a minimum “Secret” security clearance would be permitted to access critical documents meant that D&T was proposing key team members that did not have “Secret” security clearances is an unwarranted inference. D&T submitted that the Department and the TBS acted unreasonably in assuming that a bidder would use an RFP term, especially one that is part of a mandatory requirement, to mean something other than it did in the RFP. Moreover, the Department and the TBS acted illogically when they suggested that the adjective “key” in D&T’s proposal to qualify the words “role” and “issues” implied that some personnel who were specifically identified as technical specialists were, nonetheless, intended to be key team members. Since five technical specialists in D&T’s proposal were covered by this description (i.e. “key”), five individuals should have been identified as not meeting the mandatory requirement of a “Secret” security clearance, but only one was so identified. As well, D&T submitted that a reasonable interpretation of the chart on page 42 of its proposal is that the chart contains merely a listing of capabilities and does not identify “key” team members or override the table on page 36.
Moreover, D&T submitted that no precise format was prescribed for the proposal and, therefore, that the Department cannot use D&T’s failure to adhere to a given format as a reason to disqualify its proposal. In any event, this reason was not invoked by the Department when it disqualified D&T’s proposal and, more importantly, D&T submitted, its proposal meets the mandatory requirements of the RFP.
D&T submitted that the Department’s underlying argument in the GIR is that the Department has no obligation to read proposals carefully. It is submitted that such a position is contrary to the good faith and public interest principles contained in NAFTA, the AGP and the AIT.
Concerning the Department’s assertion that NAFTA and the AGP do not apply in this instance because of the national security exception, D&T submitted that this statement is not supported by evidence that the Government of Canada considered or considers that this solicitation relates to national security as required by those agreements. D&T submitted that, without sufficient evidence that the exclusionary provisions of NAFTA or the AGP are complied with, the Tribunal must consider that those agreements apply.
D&T conceded that there were two statements in its proposal which clearly indicate that the “Secret” security clearance for one key team member was pending. In the circumstances, D&T submitted, seeking clarification would not have been difficult, nor would it have been an unusual course of action to take during the evaluation process. D&T submitted that a government institution must seek clarification where, as in this case, clearly, there is an ambiguity in a proposal that gives rise to doubt about whether a mandatory requirement in an RFP is met. Although an evaluation team has considerable discretion in assessing the relative merits of competing tenders, it does not have untrammelled power to eliminate a responsive tender from competition merely because it contains an inconsistency.
Finally, D&T submitted that the fact that one member of the evaluation committee reached an erroneous conclusion on the admissibility of its proposal without reading the entire proposal — and without reading a key chart in the proposal — is, by itself, sufficient grounds to overturn the Department’s decision in this case.
TRIBUNAL’S DECISION
Section 30.14 of the CITT Act requires that, in conducting an inquiry, the Tribunal limit its considerations to the subject matter of the complaint. Furthermore, at the conclusion of the inquiry, the Tribunal must determine whether the complaint is valid on the basis of whether the procedures and other requirements prescribed in respect of the designated contract have been observed. Section 11 of the Regulations provides that the Tribunal is required to determine whether the procurement was conducted in accordance with the requirements of NAFTA, the AGP and the AIT.
The Tribunal will consider, first, the assertion made by the Department in the GIR that NAFTA and the AGP do not apply in this case because of the national security exception.
Article 1018(1) of NAFTA reads: “Nothing in this Chapter shall be construed to prevent a Party from taking any action or not disclosing any information which it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defense purposes.” Article XXIII(1) of the AGP contains exactly the same provisions.
In a recent decision, [8] the Tribunal indicated that “[t]he Tribunal, as the bid challenge authority under the trade agreements, must be satisfied that a national security exception has actually been invoked and that it has been invoked by a Party, for purposes of NAFTA and the AGP, and the Federal Government, for purposes of the AIT. If these conditions have not been satisfied, then the Tribunal would not be fulfilling its responsibility, under the trade agreements, of ensuring that government procurement subject to the agreements is carried out in a manner consistent with the provisions of those agreements. [9] ”
The Tribunal adopts this position and will determine whether, in this instance, the national security exception has been invoked by a Party.
The Tribunal observes that the only instance where the national security exception is mentioned in this case is at paragraph 8 of Part III of the GIR, which reads: “NAFTA and WTO-AGP do not apply because of the national security exemption.” The Tribunal is of the opinion that this reference in the GIR does not amount to an invocation by a Party. The Tribunal finds that the national security exception has not been invoked in this instance. Therefore, as the service requirement of this solicitation is covered by the trade agreements, the Tribunal will review the merits of this complaint under the AIT, as well as under NAFTA and the AGP.
The Tribunal must decide whether the Department and the TBS acted in accordance with the provisions of the trade agreements when they declared D&T’s proposal non-responsive for failing to meet mandatory requirement 3.1.1.1D)iii) of Annex B of the RFP.
Article 506(6) of the AIT, reads, in part: “The tender documents shall clearly identify the requirements of the procurement, the criteria that will be used in the evaluation of bids and the methods of weighting and evaluating the criteria.”
Article 1015(4)(a) of NAFTA reads: “to be considered for award, a tender must, at the time of opening, conform to the essential requirements of the notices or tender documentation and have been submitted by a supplier that complies with the conditions for participation.” Article XII(4)(a) of the AGP includes, among other things, exactly the same provisions.
Article 3.1.1.1D)iii) of Annex B of the RFP requires that all key members of the proposed team hold Government of Canada security clearances to the level of “Secret” at the time of response to the RFP. This requirement is identified as a mandatory requirement of the RFP. The RFP also indicates that failure to meet a mandatory requirement will render a bidder’s proposal non-responsive.
After careful examination of all the evidence, the Tribunal finds that D&T’s proposal contained contradictory statements in respect of mandatory requirement 3.1.1.1D)iii) of Annex B of the RFP.
On the one hand, in two instances, on page 35 under “‘Key’ Team Members” and on page 44 under “Security Requirements,” D&T’s proposal affirms that all key members of the team are cleared to the “Secret” level, except in one case where “Secret” clearance is pending. In the résumés of the team members, where members of the team did not hold “Secret” security clearances, it was clearly mentioned at the top of their résumés that they were non “key” team members. This notation was not put into the résumé of the team member whose “Secret” security clearance is pending.
On the other hand, D&T’s proposal identifies on page 29, under “Security,” that all key members of the proposed team hold Government of Canada “Secret” security clearances. The specific individual identified in two areas (a summary table and the individual’s résumé) as having a pending security clearance was listed as a “technical specialist” in the table on page 36 of D&T’s proposal.
The Tribunal must consider, in light of the above, whether the Department and the TBS acted reasonably in accordance with the applicable provisions of the trade agreements when they determined that D&T’s proposal failed to meet mandatory requirement 3.1.1.1D)iii) of Annex B of the RFP.
The Tribunal observes that D&T is the author of its proposal. It alone controlled the contents. Furthermore, the Tribunal observes that the RFP instructed bidders, in article 1.0 of Annex B, that “[i]t is essential that the elements contained in your bid be stated in a clear and concise manner” (emphasis added). Furthermore, article 3.1.1.1D)iii) of Annex B required that bidders demonstrate compliance with the said requirements by providing a list of the key members along with clearance levels, when clearances were received and when they expired.
The Tribunal is of the opinion that the Department and the TBS did not act unreasonably when they concluded that D&T’s proposal failed to meet mandatory requirement 3.1.1.1D)iii) of Annex B of the RFP. Although careful examination reveals that an ambiguity existed in D&T’s proposal in respect of mandatory requirement 3.1.1.1D)iii), the Tribunal is not persuaded that the ambiguity was readily apparent. The Tribunal agrees with D&T that the Department and the TBS had to review with care all the commitments made by bidders in their proposals, especially those relating to mandatory requirements. In the Tribunal’s opinion, this, however, does not mean that the Department and the TBS were obliged to conduct an in-depth examination of such commitments and to cross-reference various parts of the proposal in order to determine its true meaning. By failing to demonstrate its commitment to mandatory requirement 3.1.1.1D)iii) as stated in the RFP, D&T undermined its own proposal. In the Tribunal’s opinion, the pronouncements made by D&T on pages 35 and 44 of its proposal were unequivocal and were sufficient on their own to permit the Department and the TBS to conclude that the proposal was non-responsive and, as indicated in paragraph 3.1.1.1 of the RFP, to set it aside without further consideration.
On balance, the Tribunal finds that the Department and the TBS acted reasonably when they determined that D&T’s proposal failed to meet mandatory requirement 3.1.1.1D)iii) of Annex B of the RFP and, on that basis, declared D&T’s proposal non-responsive. This was the consequence announced in the RFP for proposals failing to meet a mandatory requirement and, therefore, the Tribunal finds that the Department and the TBS acted according to the applicable provisions of the trade agreements in declaring D&T’s proposal non-responsive.
The Department requested in the GIR the opportunity to make further submissions with respect to the award of costs in this matter. The Tribunal has decided that the circumstances of this case do not warrant costs against D&T. While D&T’s complaint is not valid, it was not without merit. [. Canadian International Trade Tribunal, Flolite Industries, File No. PR-97-045, Addendum, August 7, 1998.] Therefore, submissions on this matter are not necessary, and no costs will be awarded.
RECOMMENDATION OF THE TRIBUNAL
In light of the foregoing, the Tribunal determines, in consideration of the subject matter of the complaint, that the procurement was conducted in accordance to the requirements set out in NAFTA, the AGP and the AIT and that, therefore, the complaint is not valid.
1. R.S.C. 1985, c. 47 (4th Supp.).
2. Done at Ottawa, Ontario, on December 11 and 17, 1992, at Mexico, D.F., on December 14 and 17, 1992, and at Washington, D.C., on December 8 and 17, 1992 (in force for Canada on January 1, 1994).
3. As signed at Marrakesh on April 15, 1994 (in force for Canada on January 1, 1996).
4. As signed at Ottawa, Ontario, on July 8, 1994.
5. SOR/93-602, December 15, 1993, Canada Gazette Part II, Vol. 127, No. 26 at 4547, as amended.
6. SOR/91-499, August 14, 1991, Canada Gazette Part II, Vol. 125, No. 18 at 2912, as amended.
7. EDS Canada, File No. PR-96-020, Determination of the Tribunal, January 10, 1997, and Bell Canada, File No. PR-96-023, Determination of the Tribunal, February 21, 1997.
8. Canadian International Trade Tribunal, Lotus Development Canada Limited, Novell Canada, Ltd. and Netscape Communications Canada Inc., File Nos. PR-98-005, PR-98-006 and PR-98-009, Decision of the Tribunal, August 14, 1998.
9. Ibid. at 11.
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Initial publication: May 4, 1999
