CITT: May 2007 Determinations
Re Marathon Management Company (CITT File No. PR-2006-041)
This was a complaint filed by Marathon Management Company (“Marathon”) alleging that the Department of Public Works and Government Services (“PWGSC”) incorrectly awarded a contract for the provision of extreme cold winter boots by incorrectly applying the Canadian content provision. Marathon requested the Tribunal terminate the contract with the successful bidder and award the contract to Marathon.
The Request for Proposal (“RFP”) stated that the procurement was subject to a preference for Canadian Goods and/or Services if there were three or more bids with valid certification. This was defined in clause K4000D, Canadian Content Definition, as being no less than 80 percent of the bid price.
Three Canadian companies submitted bids with valid certification. Marathon and one other bidder, Chaussures Régence Inc. (“Régence”), did not include certification of Canadian content in their bids, and were therefore not considered. Marathon asserted that there was only one Canadian company who qualified as the three bids considered were from companies using the same supplier. Marathon also argued that as rubber is not a raw material found in Canada and because 60 percent of the cost of the boots is the cost of the rubber, no bid could satisfy the 80% Canadian content requirement.
PWGSC contended that if Marathon's assertion was correct, the term “supplier” should be restricted to the meaning of “manufacturer”. However, article 518 of the Agreement on Internal Trade defines “supplier” more broadly. PWGSC also argued that it is not responsible for verification of the Canadian content certification and has the right to rely on the certification provided by bidders. PWGSC further contended that Marathon's assertion that Canadian content means that 80 percent of the cost of the product should be Canadian was incorrect because the 80% refers to Goods and/or Services and not narrowly to 80% of the cost of each individual good.
In respect of the first allegation, the Tribunal held that Marathon had mistaken the term “supplier” to mean “manufacturer”. In terms of whether the Canadian content provision was a reasonable requirement, the Tribunal held that it could not make a determination on this issue because such a complaint was out of time. However, assuming that it was a reasonable requirement, the Tribunal held that PWGSC was justified in setting aside the proposals that did not have a certification of Canadian content. The Tribunal was also of the view that PWGSC was not obligated to verify the validity of the certification provided by each bidder. Accordingly, the Tribunal was satisfied that there was no evidence to indicate that the evaluation was conducted in any manner that was in violation of the terms of the RFP. (Date of Determination: April 26, 2007)
Re: EDS Canada Inc.( CITT File No. PR-2006-042)
This was a complaint by EDS Canada Inc. ("EDS") with respect to the procurement by the Department of Public Works and Government Services ("PWGSC"), on behalf of the Department of Human Resources and Skills Development, for the provision of services in support of the Canada Student Loans Program ("CSLP"). The procurement was for services in support of the CSLP for "loan services" made pursuant to several federal and provincial student loans programs.
EDS alleged that PWGSC evaluated its proposal using secret, undisclosed or unexplained criteria, or alternatively the application of the criteria was arbitrary, unfair and unreasonable. PWGSC submitted that CITT did not have jurisdiction to conduct an inquiry with respect to this complaint. They argued that the services that were to be provided were "financial services" and therefore exempt from coverage under NAFTA, WTO and the AIT. EDS responded that the central requirement was for an experienced administrator with key information technology and administrative management capabilities, therefore not related to "finance" in any way.
Upon review, the CITT concluded that they did not have jurisdiction to inquire into the complaint. Annex 502.1B of AIT states that financial services respecting the management of government financial assets and liabilities (i.e. treasury operations), including ancillary advisory and information services, whether or not delivered by a financial institution are not covered by Article 502 of AIT. The CITT thus needed to determine whether "loan services" as outlined within the original proposal fell within this definition. The CITT found that "all services respecting loans" was the best interpretation of "loan services" and thus the services being referred to in the proposal were "financial services." The CITT also found that the funds used to make the loans were "government financial assets" given that the government has the right to receive repayment. The CITT therefore did not have jurisdiction.
The CITT also considered its jurisdiction under NAFTA, which specifically states that all "Financial and Related Services" are excluded. The CITT held that the services being procured were either "financial in nature" or "relate to financial services". Accordingly, the CITT found that the procurement was excluded under NAFTA.
The CITT thus dismissed the complaint and awarded to PWGSC reasonable costs incurred in responding to the complaint. (Date of Determination: May 1, 2007)
