Date: 20020704
Docket: A-173-02
A-178-02
Neutral citation: 2002 FCA 284
CORAM: RICHARD C.J.
A-173-02
BETWEEN:
IBM CANADA LTD.
Applicant
and
HEWLETT-PACKARD (CANADA) LTD. and the
MINISTER OF PUBLIC WORKS AND GOVERNMENT SERVICES
Respondents
A-178-02
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
HEWLETT-PACKARD (CANADA) LTD. and
IBM CANADA LTD.
Respondents
Heard at Ottawa, Ontario, on June 25, 2002.
Judgment delivered at Ottawa, Ontario, on July 4, 2002.
REASONS FOR JUDGMENT BY: DÉCARY J.A.
CONCURRED IN BY: RICHARD C.J.
NADON J.A.
Date: 20020704
Docket: A-173-02
A-178-02
Neutral citation: 2002 FCA 284
CORAM: RICHARD C.J.
A-173-02
BETWEEN:
IBM CANADA LTD.
Applicant
and
HEWLETT-PACKARD (CANADA) LTD. and the
MINISTER OF PUBLIC WORKS AND GOVERNMENT SERVICES
Respondents
A-178-02
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
HEWLETT-PACKARD (CANADA) LTD. and
IBM CANADA LTD.
Respondents
REASONS FOR JUDGMENT
[1] These are two applications for judicial review of a determination by the Canadian International Trade Tribunal (the Tribunal) reported at [2001] C.I.T.T. No. 20. They were heard together and will both be disposed of on the basis of these reasons. These reasons will be filed in Court file A-173-02 and copy thereof in file A-178-02.
[2] The impugned determination relates to two complaints filed by Hewlett-Packard (Canada) Ltd. (Hewlett-Packard). The first complaint (File No. PR-2001-030) was filed on October 9, 2001. It alleges that the mandatory partitioning requirements of the Request for Proposal (RFP) had not been properly evaluated and that the structure of the RFP resulted in price discrimination. The Tribunal found that the first part of the complaint (the partitioning issue) was valid, but it dismissed the second part (the price discrimination issue) as being untimely. It recommended that the contract awarded to IBM Canada Ltd. (IBM) be terminated and that a new solicitation issue. Both IBM and the Attorney General of Canada on behalf of the Minister of Public Works and Government Services sought judicial review of the determination. Hewlett-Packard did not challenge the finding of the Tribunal with respect to the price discrimination issue.
[3] The second complaint (File No. PR-2001-040) was filed on November 15, 2001. It relates to the alleged destruction by the Crown of documentation relating to the procurement. The complaint was found valid by the Tribunal. That finding is not in issue in these proceedings.
[4] In allowing the first ground of the first complaint, the Tribunal found that the government procurement was unclear and, consequently, breached the requirements of Article 506(6) of the Agreement on Internal Trade (AIT) and Article 1013 of the North American Free Trade Agreement (NAFTA). Before making that finding, the Tribunal had rejected the submission made by Public Works and Government Services Canada (Public Works) that the first ground of the complaint was not timely.
[5] As I have reached the conclusion that the first ground of the complaint was time-barred, I will express no view on the merit of that first ground.
The facts
[6] On April 2, 2001, Public Works issued a RFP for the planning and acquisition of computer equipment for Human Resources Development Canada's existing UNIX-based computer operations in Canada. The incumbent contractor at the time was Hewlett-Packard.
[7] Following the issuance of the RFP, some 135 questions posed by bidders seeking information were answered by Public Works in Solicitation Amendments published from time to time. The purpose of these amendments was 1) to "modify the RFP" and 2) to "provide answers to the bidders' questions relating to this RFP". All bidders were advised of these questions (but not of the identity of their author) and answers through the MERX computer system.
[8] The main argument between the parties revolved around how the term "partitioning" was to be interpreted in the following sections of the RFP:
4.4 SOFTWARE
4.4.4 System Management Software (M)
Each system must come with installed system management software meeting the following requirements:
4.4.4.5 Partition a single server into multiple partitions
...
4.4.4.7 Allow an administrator to balance workloads across processors and platforms
4.4.5 Additional System Management Software Requirements
Each system in the Power, Enterprise and Internet classes as specified in Sections 2 and 3 of this document, must come installed with system management software meeting the following requirements:
4.4.5.1 Allow for dynamic system domains, or independent partitions, each running its own operating system, that are isolated from other domains, or partitions, to provide protection and insulation between applications running in different domains without any hardware changes.
[my emphasis]
[9] Within the Question and Answer program, bidders had asked various questions regarding this issue. The three questions and answers that are relevant to the case at hand are found in Amendments No. 006, 009 and 013, dated, respectively, May 7, 2001, May 18, 2001 and June 5, 2001:
Q. 63. 4.4.4.5 and 4.4.4.7 refer to partitioning of a system into multiple partitions. Vendors implement this in various ways - some with physical hardware partitioning and others with software partitioning. In many cases it is the application which allows partitioning to occur. Please confirm that the following 2 types of partitioning will result in full compliance to 4.4.4.5 and 4.4.4.7:
1. Available applications with the capability to be partitioned, and
2. An Operating System which allows workload to be partitioned across CPU/memory\IO resources based on static and dynamic parameters. The amendment removed the requirement that the system must be able to provide for internal disk storage not the referenced requirement. There is still a requirement for 1 Terabyte of storage and this is to be usable storage after RAID configuration.
A. 63. The question is not understood. The requirement of 4.4.4.5 is that a single server must be able to be partitioned so that multiple applications, with their own allocated resources, can be run in isolation from each other. The requirement of 4.4.4.7 is for the ability to balance workloads across processors (CPUs) and platforms (different systems). This does not necessarily have to be a function of the operating system; it could be handled by a separate software package.
(Amendment No. 006, 7 May 2001)
Q. 77. Annex A: Section 4.4.5.1
Paragraph 4.4.5.1 requests a very specific set of partitioning capabilities, not found in all major UNIX vendors platforms. All vendors implement partitioning in different fashions - physical, logical, dynamic and static partitioning. Partitioning is a relatively new technology, as evidenced by the limited number of products partitionable in each vendors product set.
Given that partitioning is not implemented on any of HRDC's current servers, will the Crown remove 4.4.5.1 since vendors will outline their specific implementation of server consolidation in the design phase, as requirements dictate?
A. 77. While partitioning may not currently be in widespread use within HRDC, it is envisioned that partitioning would be extremely beneficial in any server consolidation effort and in implementing an application hosting environment.
Given the above, delete Article 4.4.5.1 in its entirety and replace with:
4.4.5.1 Allow for independent partitions, each running its own operating system, that are isolated from other partitions, to provide protection and insulation between applications running in different partitions without any hardware changes.
(Amendment No. 009, 18 May 2001)
Q. 95. Reference: Annex A: Section 4.4.5.1
Paragraph 4.4.5.1 requests a very specific type of partitioning. Vendors implement partitioning in different fashions - physical, logical, dynamic and static partitioning. Some use multiple operating systems and some partition within a single operating system. All requirements of Section 4.4.5 can be met with either a single operating system environment or a multiple system operating environment. Please confirm that either a single operating system environment for partitions or a multiple operating system environment for partitions can be proposed?
A. 95. Both a single operating system environment and a multiple operating system environment are acceptable approaches to meet the partitioning requirement.
(Amendment No. 013, 5 June 2001)
[10] IBM and Hewlett-Packard were both found to have compliant bids. IBM was identified as the successful bidder on September 12, 2001. On September 17 and 21, Hewlett-Packard delivered two formal written notices of objection to Public Works, alleging that IBM's solution could not meet the RFP requirements and that its pricing was artificially low. Public Works responded on September 26 by stating that the Crown was satisfied that IBM met all the requirements and denied Hewlett-Packard's allegation that it had been prejudiced by pricing.
[11] On October 9, 2001, as previously noted, Hewlett-Packard filed complaint No. PR-2001-030. Before the Tribunal, Public Works submitted, as a preliminary argument, that Hewlett-Packard's allegations with respect to the interpretation of "partitioning" were not made within the time frame set out in subsection 6(1) of the Canadian International Trade Tribunal Procurement Inquiry Regulations (SOR/93-602) (the Regulations), which reads in part:
...a potential supplier who files a complaint...shall do so no later than 10 working days after the day on which the basis of the complaint became known or reasonably should have become known to the potential supplier.
[12] According to Public Works, the ten-day time limit for filing a complaint with respect to the "partitioning" issue ran, at the latest, from the date when amendment No. 013 was published, June 5, 2001. The amendment contained the answer to question 95 whereby Public Works advised all bidders that "both a single operating system environment and a multiple operating system environment are acceptable approaches to meet the partitioning requirement". It is important to note that Hewlett-Packard was able to provide both environments and that IBM was only able to provide a single operating system environment. Were it to be decided that the RFP required a multiple operating system environment, IBM would not, of course, qualify.
[13] The Tribunal dealt with the timeliness issue in the following words:
Before doing so, the Tribunal needs to consider PWGSC's submission that the first ground of complaint was not timely. PWGSC argued that the time for filing this ground of complaint ran, at the latest, from the date on which amendment No. 013 was published on June 5, 2001. In amendment No. 013, PWGSC responded to a question concerning the partitioning requirements of article 4.4.5 of the SOR.
However, the Tribunal considers that Hewlett-Packard could only reasonably have become aware of this ground of complaint concerning the evaluation of bids after it received the relevant information concerning the evaluation process and its results. Hewlett-Packard received some information in this regard on September 12, 2001, and filed objections with PWGSC regarding the procurement in letters dated September 17 and 21, 2001. Further, the Tribunal notes that Hewlett-Packard received a denial of its objection in a letter from PWGSC dated September 26, 2001, and filed the first complaint with the Tribunal on October 9, 2001. Consequently, the Tribunal considers that this ground of complaint was filed within the time limit for filing complaints, as established in section 6 of the Regulations.
[Appeal Book, p. 19]
The standard of review
[14] It is "settled law in this Court that questions of fact and law decided by the Tribunal in the course of determining a procurement matter are reviewable on the most deferential administrative law standard, namely, patent unreasonableness" (Profac Facilities Management Services Inc. v. FM One Alliance Corp., 2001 FCA 352, per Evans J.A. at para. 14). However, the Court has acknowledged, as a result of the decision of the Supreme Court of Canada in Canada (Deputy Minister of National Revenue) v. Mattel Canada Inc., [2001] 2 S.C.R. 100, that the same standard of review does not necessarily apply to all legal questions decided by the Tribunal. Where particular legal issues emerge that are within the jurisdiction of the Tribunal but outside its broad area of expertise, the correctness standard may apply, but, as observed by Malone J.A. in Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services Canada) (2001), 202 D.L.R. (4th) 610 (F.C.A.) at para. 20, "this...would occur only rarely". Furthermore, where deference is owed to the Tribunal, this entitlement will be weakened by the absence of a reasoned explanation for the Tribunal's decision (BCE Nexxia Inc. v. Canada (Commissioner of Corrections), 2002 FCA 9, at para. 11).
[15] In the case at bar, counsel for IBM argues that a less deferential standard should be applied because in deciding that a complaint is, or is not, time-barred, the Tribunal makes a decision regarding its own jurisdiction.
[16] I disagree. The temptation to qualify certain issues as "jurisdictional" for the purpose of attracting a less deferential standard is to be resisted (see Canada v. McNally Construction Inc. and Abco Industries Limited, 2002 FCA 184, per Stone J.A. at para. 23). It is within the Tribunal's jurisdiction to decide whether a complaint is time-barred; there is no legal issue as to the interpretation of subsection 6(1) of the Regulations; the determination in the case at bar of the starting point is a pure question of fact; and the Tribunal's knowledge of the procurement process places it in the best position to decide when a complainant became aware or reasonably should have become aware of the basis of a complaint.
[17] The standard of review, therefore, is patent unreasonableness. I note that the same standard was applied by this Court, without much discussion, in circumstances similar to the present ones (Jastram Technologies Inc. v. The Minister of Public Works and Government Services, March 14, 2000, F.C.A. A-406-98).
Timeliness in general
[18] In procurement matters, time is of the essence. The time limits for the filing of a complaint are governed by section 6 of the Regulations. Subsection 6(1) requires potential suppliers to file complaints "not later than ten working days after the day on which the basis of the complaint became known or reasonably should have become known" to them (my emphasis). Subsection 6(2) provides for the delivery of formal objections to the contracting authority within ten working days of the potential suppliers knowing or having objective knowledge of the basis for an objection. If an objection is made, then the ten-day time limit in subsection 6(1) to complain is extended to a further ten working days from the time that a written answer is given to the objection.
[19] Time limits are also imposed on the Tribunal. The Tribunal must determine whether the conditions for inquiry are met within five working days after the filing of a complaint (section 7) and it must issue its findings and recommendations within 90 days or, at the latest, within 135 days after the filing of a complaint (section 12).
[20] Complaints, on the other hand, may be filed "concerning any aspect of the procurement process that relates to a designated contract" (ss. 30.11(1) of the Canadian International Trade Tribunal Act, R.S.C. 1985 (4th Supp.), c. 47). Therefore, potential suppliers are required not to wait for the attribution of a contract before filing any complaint they might have with respect to the process. They are expected to keep a constant vigil and to react as soon as they become aware or reasonably should have become aware of a flaw in the process. The whole procurement process, as is illustrated by the Question and Answer method which ensures that potential suppliers equally know at all times what conditions have to be met, is meant to be as open as it is meant to be expeditious. It is focussed on achieving finality of contracts in the best possible time.
[21] The Tribunal has made it clear, in the past, that complaints grounded on the interpretation of the terms of an RFP should be made within ten days from the moment the alleged ambiguity or lack of clarity became or normally ought to have become apparent.
[22] In Complaint by Brent Moore & Associates (PR-99-040), the Tribunal dismissed a complaint as follows:
With respect to BMA's allegation that the Department failed to define in the RFSO, the terms ‘prime' and ‘back-up' as these apply to the successful bidders, the Tribunal finds that this ground of complaint was not filed within the prescribed time frame and, as such, the Tribunal will not address it on its merits. In the Tribunal's opinion, it was clear that the RFSO did not include specific definitions for the terms "prime" and "back-up". If BMA found that situation objectionable, it could have raised the matter with the Department or the Tribunal within the time frame prescribed within section 6 of the Regulations, i.e., within a 10-working-day period after July 29, 1999, the date on which the NPP was published on MERX and the RFSO made available to potential suppliers. However, BMA only filed its complaint with the Tribunal on December 21, 1999.
[my emphasis]
[23] Similarly, in the case of Jastram Technologies Inc. (PR-98-008), the Tribunal rejected the complaint on the following basis:
In reviewing the information provided, it is the Tribunal's view that the basis of the complaint was that the RFP failed to clearly identify the criteria that would be used in the evaluation of whether a proposed good fell within the description of item 2 of the RFP.... It is also the Tribunal's view that the basis from the complaint should have become known to Jastram on or about October 7, 1997, when it received the solicitation documentation. Therefore, any complaint to the Tribunal or objection to PWGSC should have been filed on or about 10 working days after October 7, 1997.... Accordingly the Tribunal cannot accept the complaint for inquiry and the matter is hereby concluded.
[my emphasis]
An application for judicial review, in Jastram, was dismissed by this Court (supra, para. 17).
[24] However, where there is a latent ambiguity, i.e. an ambiguity that only comes to one's attention at a later stage in the process, the Tribunal has held that the time for filing complaints does not begin to run until something triggers a potential supplier's awareness of the existence of the latent ambiguity.
[25] In Re Cifelli Systems Corp., [2001] C.I.T.T. No. 47, the Tribunal noted as follows:
The Tribunal finds that the language used in the section of Appendix "A" to the RFP that describes the required combination of pairs of DVD/CD and floppy or hard drives to be embedded in the notebook computers is ambiguous and lends itself to more than one reasonable interpretation, that of Cifelli and of DND. The Tribunal notes that the ambiguity was latent and only came to the attention of the Department and DND after the period for submitting proposals had elapsed.
[my emphasis]
[26] In Re Telus Integrated Communications Inc., [2000] C.I.T.T. No. 102, reversed on other grounds (see BCE Nexxia Inc., supra, para. 13), the Tribunal found a latent ambiguity in the RFP and as a result of it, concluded that a complaint was timely notwithstanding that it was made after an award of contract. The Tribunal noted:
With respect to the grounds in the first complaint, the Tribunal is satisfied that the meaning of the contract award rule in the RFP was readily perceptible by potential suppliers adopting a particular interpretation, but it would not necessarily be the case of a potential supplier adopting a different interpretation as did Telus. Because the contract award rule, read in context, arguably lent itself to more than one reasonable interpretation, the Tribunal will not conclude that its meaning was immediately perceptible. This ground of complaint is therefore timely and the Tribunal will consider its merits.
[my emphasis]
Timeliness in the case at bar
[27] The reasons of the Tribunal with respect to timeliness are reproduced supra at para. 13. With respect, I am of the view that they do not address the very issue that was before it: was the answer to question 95 (supra, para. 9) an information that should, at that time, have attracted the attention of Hewlett-Packard and incited it to take immediate action? In the absence of a reasoned explanation, the Tribunal's claim for deference is weakened.
[28] Answer 95 cannot be clearer: both a single operating system environment and a multiple operating system environment were acceptable to Public Works. If Hewlett-Packard was of the view that such a clear answer contradicted the procurement requirements, it should have filed a complaint then and there. It chose, rather, to ignore answer 95, to adopt a wait-and-see attitude and to make its challenge once the procurement process was over. This is precisely the type of attitude that the procurement process and Regulations seek to discourage.
[29] The sequence of events leading to the publication, on June 5, 2001, of amendment No. 013 containing answer 95 and the very clear words of answer 95 made it impossible for the Tribunal to conclude that there was, on June 5, 2001, a latent ambiguity, let alone a latent ambiguity that ought not have been noticed then by the complainant. It is patently beyond reason for the Tribunal to have found that Hewlett-Packard "became aware of this ground of complaint" only on September 12, 2001.
[30] I note that in their reply to the Government Institution Report, on November 26, 2001, counsel for the complainant recognized that "In fact, if PWGSC's Answer to Question 95 produced some form of amendment, it created a serious ambiguity and inconsistency within the RFP" (App. record of IBM, vol. 7, p. 1886). If there was some doubt as to the effect of Answer 95 on the requirements of the procurement, the issue should have been raised then. If there was no doubt as to its effect and if it was indeed an amendment, the fact that it might create "a serious ambiguity and inconsistency" was then known to the complainant. Either way, one cannot speak in terms of latent ambiguity as of June 5, 2001.
[31] I conclude, therefore, that it was patently unreasonable for the Tribunal not to dismiss the first ground of complaint No. 1 as being time-barred. In the circumstances, I need not deal with the merits of that complaint, except to note that despite the fact that the Tribunal defined the first ground of the complaint as relating to the compliance of IBM's proposal, it did not in the end conclude that IBM's proposal was non-compliant.
[32] I would allow with costs the two applications for judicial review, I would set aside that part of the determination of the Canadian International Trade Tribunal dated February 21, 2002 which relates to the first ground of the complaint in File No. PR-2001-030 and I would refer the matter back to the Tribunal for determination on the basis that the first ground of that complaint should also be dismissed as being time-barred. As a result, the recommendation by the Tribunal that the contract awarded to IBM on September 12, 2001 be terminated and that a new solicitation be issued should be quashed.
"Robert Décary"
J.A.
"I agree.
J. Richard, C.J."
"I agree.
M. Nadon, J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-173-02 & A-178-02
STYLE OF CAUSE:
A-173-02
IBM Canada Inc. v. Hewlett-Packard (Canada) Ltd. and others
A-178-02
AGC v. Hewlett-Packard (Canada) Ltd. and others
PLACE OF HEARING: OTTAWA, ONTARIO
DATE OF HEARING: June 25, 2002
REASONS FOR JUDGMENT : Décary J.A.
CONCURRED IN BY: Richard C.J.
Nadon J.A.
DATED: July 4, 2002
APPEARANCES:
Mr. Michael Ciavaglia
Ms. Suzanne Pereira REPRESENTING THE ATTORNEY GENERAL OF CANADA
Mr. Bruce Carr-Harris
Mr. David Sherriff-Scott REPRESENTING HEWLETT-PACKARD (CANADA) LTD.
Mr. Ronald D. Lunau
Ms. Phuong Ngo REPRESENTING IBM CANADA INC.
SOLICITORS OF RECORD:
Mr. Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Ontario
REPRESENTING THE ATTORNEY GENERAL OF CANADA
Borden Ladner Gervais LLP
Ottawa, Ontario
REPRESENTING HEWLETT-PACKARD (CANADA) LTD.
Gowling Lafleur Henderson LLP
Ottawa, Ontario
REPRESENTING IBM CANADA INC.