RYER J.A.
BETWEEN:
The Attorney General of Canada
and
Heard at Ottawa, Ontario, on February 6, 2007.
Judgment delivered at Ottawa, Ontario, on March 6, 2007.
REASONS FOR JUDGMENT BY: MALONE J.A.
CONCURRED IN BY: NADON J.A.
RYER J.A.
Date: 20070306
Docket: A-278-05
Citation: 2007 FCA 89
CORAM: NADON J.A.
MALONE J.A.
RYER J.A.
BETWEEN:
The Attorney General of Canada
Applicant
and
Trust Business Systems
Respondent
REASONS FOR JUDGMENT
I. Introduction
[1] This is an application for judicial review of a decision of the Canadian International Trade Tribunal (Tribunal) dated May 13, 2005 (reported as [2005] C.I.T.T. No. 33), which upheld two procurement complaints advanced by Trust Business Systems (Trust). Both procurements were issued by the Department of Public Works and Government Services Canada (Public Works) on behalf of the Department of Fisheries and Oceans and related to the purchase of certain replacement components for installation in the Information System on Marine Navigation (INNAV).
[2] The INNAV Information System is based in Quebec City and monitors and controls marine navigation by connecting fifteen Coast Guard centres. These centres cover the East Coast, the Great Lakes and 90% of Canada’s inland waters. The system was initiated in 1995 and was constructed through a series of open competitive procurement processes. It operates much like a marine version of an air traffic control system.
[3] The core issue to be decided in this appeal is whether Public Works in its procurement process breached articles of the Agreement on Internal Trade (AIT) by limiting the replacement components to specific manufacturers (i.e. Hewlett Packard, Cisco Systems Inc. and NEC) and by not allowing for the consideration of equivalent products alleged by Trust to be compatible, cheaper and more effective.
[4] For the reasons that follow, I would allow this application for judicial review with costs.
II. Factual Background
[5] On February 15, 2005, Public Works issued a Request for Proposal (RFP) with respect to Solicitation no. F7047-040176/A (the first RFP). The closing date was initially March 3, 2005 but was later amended to March 8, 2005. On February 17, 2005, Public Works issued an RFP with respect to Solicitation no. T8211-040003/A (the second RFP), in which Public Works requested additional quantities of some of the components included in the first RFP. The closing date for this solicitation was March 7, 2005.
[6] Both RFPs contained the following statement of work:
3. Proliant Server, 2 HP Workstation xw6200, some other components, NEC monitors and Cisco equipment. No substitutes will be considered for compatibility purpose. This is an upgrade. Actual equipment is working in a very critical environment for controlling movement of vessels on St. Laurent River. A substitute product could put the Canadian Coast Guard in a very bad situation.
[7] Nothing prevented Trust from entering proposals using the brand-name products specified by Public Works.
[8] On February 28, 2005, Trust sent several e-mails regarding each solicitation to Public Works objecting to the fact that neither RFP contained a provision considering equivalent products. More specifically, Trust requested that Public Works remove the “no substitute” clauses in the RFPs and asked to receive a network diagram. Trust did not hear from Public Works until March 7, 2005, when they informed Trust that its inquiries had been sent to their Senior Legal Counsel. On March 8, 2005, Trust received a letter from Public Works in which they stated that they did not consider Trust a potential supplier within the meaning of the AIT and therefore, would not be responding to Trust’s inquiries or objections. That same day, the first RFP closed.
[9] Public Works awarded a contract to Compugen, one of the two compliant bidders, for the first RFP on March 9, 2005, and for the second RFP on March 15, 2005.
[10] On March 22, 2005, Trust filed two complaints with the Tribunal in respect of both RFPs. More specifically, Trust alleged that Public Works:
1. breached the AIT and North American Free Trade Agreement (NAFTA) by failing to follow its own procedure for addressing enquiries during the solicitation stage;
2. breached NAFTA by not providing Trust with the information it had requested in order to submit a bid; and
3. breached NAFTA and the AIT by limiting the procurements to brand-name products and not allowing for equivalent products.
[11] On April 8, 2005, Public Works filed a motion before the Tribunal requesting that it dismiss both of Trust’s complaints on the basis that Trust was not a potential supplier pursuant to the AIT. In its material, Public Works sought to rely on information it derived from a previous procurement process in relation to a 2004 complaint filed by Trust. This 2004 complaint had been withdrawn prior to its completion on February 25, 2005, only three days before the current complaint.
[12] On April 25, 2005, the Tribunal dismissed Public Works’ motion stating that reasons would be issued at a later date. On May 13, 2005, the Tribunal issued its decision with respect to Trust’s complaints and on May 18, 2005, the Tribunal issued its reasons with respect to both Trust’s complaints as well as Public Works’ motion to dismiss.
III. The Tribunal’s Decision
[13] The Tribunal found that Trust met the low threshold for determining if a supplier is a potential supplier within the meaning of the AIT; more specifically, that Trust had the financial, technical and commercial capacity to fulfill the requirements of the procurements at issue. As such, the Tribunal was able to commence its inquiry into the substance of Trust’s complaints.
[14] No breach of NAFTA was determined by the Tribunal (see reasons at para. 22).
[15] In respect of Trust’s allegation that Public Works did not follow its own procedure for addressing enquiries during the solicitation stage, the Tribunal held that Public Works was only obliged to respond to questions posed by Trust with respect to the second RFP. As provided for in the solicitation materials, bidders that submitted an enquiry to Public Works more than four calendar days prior to the bid closing date could reasonably expect a response. Since questions dealing with the second solicitation were submitted more than four days prior to the bid closing date, Public Works was found to have breached Article 504(3)(c) of the AIT. That provision requires that the timing of events in the tender process not be structured so as to prevent suppliers from submitting bids.
[16] On the issue of whether Public Works acted improperly by not providing Trust with the information that it requested in order to submit a bid (i.e. a network diagram), the Tribunal concluded that Public Works also breached Article 504(3)(c) by not providing Trust and all potential suppliers with information that Trust considered necessary.
[17] Finally, in respect of Trust’s complaint that Public Works incorrectly limited the procurements to brand-name products, the Tribunal found that it breached Articles 504(3)(b), 506(7) and 506(9) of the AIT. The Tribunal found that the solicitation documents could have been written in such a way as to allow for equivalent products to be proposed. The Tribunal also found that Public Works had breached Article 504(3)(g) of the AIT on the grounds that there was insufficient evidence to demonstrate that the true purpose of the no substitute requirement was to maintain public security, or to protect human, animal or plant life and the environment.
V. Standard of Review
[18] The Supreme Court has consistently stressed that the appropriate standard to be applied is determined by taking the pragmatic and functional approach (See Dr. Q. v. College of Physicians and Surgeons of British Columbia, (2003) 1 S.C.R. 226) The factors to be considered in applying the pragmatic and functional approach are well known: (1) presence or absence of a privative clause or statutory right of appeal; (2) expertise of the tribunal; (3) purpose of the legislation and the provision; and (4) nature of the question.
[19] Decisions of the Tribunal in relation to procurement matters are not protected by a privative clause. This factor in the pragmatic and functional analysis, although not dispositive in itself, suggests less deference to the Tribunal (see Canada (Attorney General) v. McNally Construction Inc., 2002 FCA 184).
[20] The next question in the pragmatic and functional analysis is whether the decision-making body has greater expertise than the reviewing court with respect to the question under review. This expertise may be derived from specialized knowledge about a topic or from experience and skill in the determination of particular issues. Expertise is the most important factor in the pragmatic and functional approach and as long as the impugned decision falls within that expertise, this factor weighs heavily in favour of the highest level of deference to Tribunal decisions. In my view, there is no doubt that the Tribunal is an expert tribunal within the matters of procurement (McNally supra at para. 19)
[21] The second step requires consideration of the Tribunal’s purpose and its constituent legislation. The Tribunal is responsible for ensuring that government contracting is carried out in an open and fair manner. This responsibility flows from the NAFTA and AIT, each of which requires Canada to offer fair and open access to government procurement contracts for goods and services. Procurement disputes, however, are primarily bipartite in nature and include little policy or broad economic consideration, beyond the general goal of ensuring that government procurement is fair and open. In addition, the subject matter of procurement disputes is often indistinguishable from private sector tendering litigation, a traditional area of expertise for superior courts. Consequently, the purpose of the Tribunal in the context of making procurement decisions is a factor that favours little deference.
[22] The fourth step in the pragmatic and functional approach requires consideration of the nature of the decision in question. The questions before this Court involve the application of the AIT to the facts of the case, with a more fact intensive characterization. This type of question calls for a greater degree of deference. (See Dr. Q. v. College of Physicians and Surgeons of British Columbia, (2003) 1 S.C.R. 226)
[23] Therefore, weighing the various factors to be considered under the pragmatic and functional approach, I have concluded that they favour the more deferential standard of patent unreasonableness. This means that, unless the Tribunal’s decision is clearly irrational, it must stand.
VI. Analysis
Preliminary Issue: Is the applicant time-barred from attacking the Tribunal’s determination that Trust is a potential supplier under the AIT?
[24] The issue raised in Public Works’ motion to dismiss was whether or not Trust was a potential supplier. This issue related to Trust’s substantive right to bring a complaint and was within the Tribunal’s jurisdiction to decide pursuant to section 7 of the Canadian International Trade Tribunal Procurement Inquiry Regulations, SOR/93-602. If Trust was not a potential supplier, then the Tribunal would have lacked jurisdiction and could not have proceeded with an inquiry.
[25] The Tribunal’s decision dismissing Public Works’ motion was issued on April 25, 2005; however, it was not until June 13, 2005 that Public Works filed its notice of application for judicial review. Pursuant to subsection 18.1(2) of the Federal Courts Act, R.S.C. 1985, c.F-7 (FCA), an application for judicial review must be made within thirty days of a decision or order of a federal administrative tribunal.
[26] Subsection 18.1(2) of the FCA reads as follows:
|
18.1(2) An application for judicial review in respect of a decision or an order of a federal board, commission or other tribunal shall be made within 30 days after the time the decision or order was first communicated by the federal board, commission or other tribunal to the office of the Deputy Attorney General of Canada or to the party directly affected by it, or within any further time that a judge of the Federal Court may fix or allow before or after the end of those 30 days [Emphasis added] |
18.1(2) Les demandes de contrôle judiciaire sont à présenter dans les trente jours qui suivent la première communication, par l'office fédéral, de sa décision ou de son ordonnance au bureau du sous-procureur général du Canada ou à la partie concernée, ou dans le délai supplémentaire qu'un juge de la Cour fédérale peut, avant ou après l'expiration de ces trente jours, fixer ou accorder [Je souligne]
|
[27] It has been held that the phrase ‘first communicated’ signifies some positive action on the part of the decision-maker in order to communicate its decision to the parties directly affected (see Atlantic Coast Scallop Fisherman’s Assn v. Canada (Min. of Fisheries & Oceans) (1995), 189 N.R. 220 (F.C.A.) at paragraph 7). Waiting for reasons is not an acceptable excuse for failure to file an application in time (see Westinghouse Canada Inc. v. Canada (Canadian International Trade Tribunal) (1989), 104 N.R. 191 (F.C.A.); Goodwin v. Canada (Minister of Fisheries and Oceans), 2005 FC 1185 (T.D.) (2005), 279 F.T.R. 100; Berkeley v. Canada (Minister of Citizenship and Immigration, 2001 FCT 35, (2001) 103 A.C.W.S. (3d) 584 (T.D.)).
[28] In Canada v. Berhad, 2005 FCA 267, Létourneau J.A. wrote that the thirty-day limit for commencing judicial review applications is in the best interest of the public because it brings finality to administrative decisions and security to those who comply with the decision or who enforce compliance with it. At paragraph 60 he stated:
The importance of that public interest is reflected in the relatively short time limits for the commencement of challenges to administrative decisions -- within 30 days from the date on which the decision is communicated, or such further time as the Court may allow on a motion for an extension of time. That time limit is not whimsical. It exists in the public interest, in order to bring finality to administrative decisions so as to ensure their effective implementation without delay and to provide security to those who comply with the decision or enforce compliance with it, often at considerable expense. [Emphasis added]
[29] Accordingly, when the Tribunal issued its determination on the motion on April 25, 2005, the applicant was required under subsection 18.1(2) of the FCA to file its notice of application for judicial review within thirty days, as Trust’s substantive right to its complaint were finally decided. As the applicant did not do so within the allotted time frame, it is now time-barred to challenge this issue. The authorities relied on by the applicant in Ernst Zündel and Canadian Association for Free Expression Inc., [2000] 4 F.C. 255 and R. v. Seaboyer; R. v. Gayme, [1991] 2 S.C.R. 577 are distinguishable as they deal with interlocutory issues as opposed to those that have the potential to bring finality to the proceedings.
[30] While an adjudication of the issue of the status of Trust as a potential supplier is time-barred, the approach of the Tribunal to this important issue is troubling. The record indicates that Public Works was concerned about the ability of Trust to meet the requirements of the definition of supplier in Article 518 of the AIT. While Public Works may have based these concerns upon its experience with Trust in a previous procurement process, that experience occurred in late 2004, which was only a few months before March 22, 2005, the date upon which Trust filed its complaint in relation to the first RFP. In my view, the reliance that Public Works placed upon this relatively recent experience was entirely reasonable and the evidence from that recent experience that was tendered by Public Works should have been considered by the Tribunal.
[31] In paragraph 25 of its decision, the Tribunal stated that the threshold for determining whether a “supplier” is a “potential supplier” is relatively low. However, it is not apparent that the Tribunal had any evidence before it that would have supported its finding that even a low threshold had been met. For example, there was no evidence before the Tribunal as to the financial capacity of Trust. Indeed, before this Court, Trust’s representative advised that its former legal counsel was discharged because of the financial strain that was occasioned by the legal fees charged by that counsel.
[32] Moreover, on the matter of the “so-called” industry alliances, the evidence consisted of little more than statements from two corporations that Trust was permitted to sell their products. Those documents could hardly be said to constitute alliances and, indeed, they were likely not legally enforceable contracts. The paucity of evidence as to the capability of Trust is amply demonstrated by the reliance of the Tribunal on the mere assertion by Trust that it had the means to take on much larger procurements than the ones at issue. Nowhere can any substantiation of that assertion be found on the record. The acceptance by the Tribunal of that assertion as proof of the capacity of Trust to fulfill the requirements of the definition of supplier in article 518 is indicative of a failure to meet even a low threshold, and may very well have constituted a factual finding that was patently unreasonable.
[33] The foregoing observations are not intended to suggest that small enterprises should be precluded from participating in the procurement process. Rather, they are intended only to reinforce the obligations of the Tribunal to address, in an objective and reasonable manner, the issue of whether or not any given enterprise meets the legitimate requirements of the definition of supplier, that is to say, a person capable of fulfilling the requirements of procurement.
Issue 1: Did the Tribunal err in concluding that Public Works had failed to demonstrate that its specification of particular products in the RFP (and not allowing for the use of substitute products) was permissible?
[34] While the AIT establishes a general principle of non-discrimination between suppliers or goods in any government procurement (Article 401), it allows for exceptions to this general rule for legitimate operational objectives. These legitimate operational objectives are reflected in Articles 200, 404, and 506(11)(e) of the AIT.
[35] These three articles read as follows:
|
Article 200: Legitimate objective means any of the following objectives pursued within the territory of a Party:
(a) public security and safety; … (c) protection of human, animal or plant life or health;
(d) protection of the environment; ...
considering, among other things, where appropriate, fundamental climatic or other geographical factors, technological or infrastructural factors, or scientific justification.
Article 404: Where it is established that a measure is inconsistent with Article 401, 402 or 403 [articles dealing with non-discrimination], that measure is still permissible under this Agreement where it can be demonstrated that: a. the purpose of the measure is to achieve a legitimate objective; b. the measure does not operate to impair unduly the access of persons, goods, services or investments of a Party that meet that legitimate objective;
c. the measure is not more trade restrictive than necessary to achieve that legitimate objective; and d. the measure does not create a disguised restriction on trade.
Article 506(11) An entity of a Party may use procurement procedures that are different from those described in paragraphs 1 through 10 in the following circumstances, provided that it does not do so for the purpose of avoiding competition between suppliers or in order to discriminate against suppliers of any other Party: e. where compliance with the open tendering provisions set out in this Chapter would interfere with a Party's ability to maintain security or order or to protect human, animal or plant life or health;
|
Article 200 : « objectif légitime »L'un des objectifs suivants, poursuivis sur le territoire d'une Partie : a. la sécurité du public; … c. la protection de la vie ou de la santé des humains, des animaux ou des végétaux;
d. la protection de l'environnement …
compte tenu notamment, s'il y a lieu, des facteurs géographiques fondamentaux, dont les facteurs climatiques, des facteurs technologiques ou liés à l'infrastructure, ou des justifications scientifiques.
Article 404 : Lorsqu'il est établi qu'une mesure est incompatible avec l'article 401, 402 ou 403, cette mesure est néanmoins permise par le présent accord si les conditions suivantes sont réunies :
Article 506(11) : Une entité d'une Partie peut, dans les circonstances suivantes, utiliser des procédures de passation des marchés publics différentes de celles décrites aux paragraphes 1 à 10, à la condition que ce ne soit pas dans le but d'éviter la concurrence entre les fournisseurs ou d'exercer de la discrimination contre les fournisseurs des autres Parties :
|
[36] In Xwave Solution Inc. v. Canada (Public Work and Government Services) 2003 FCA 301, 310 N.R. 164 (C.A), Evans J.A. stated that there are exceptions to the general civil rule that he who makes an allegation has the burden of proof. In circumstances where it would be unfair to place a burden of proof that would be impossible to discharge on the complainant, the burden may shift on the party against whom an allegation is made. According to Evans J.A, this exception is justified when, for instance, only one of the parties has access to the relevant information and knowledge (at paras. 39 and 40).
[37] In response to these two complaints, Public Works assumed the burden of proof related to legitimate operational objectives and brought to the attention of the Tribunal its own objectives as specified in the statement of work (see para. 6, supra) and detailed correspondence from James Harrison, INNAV’s Engineering Manager, to an official of Public Works dated April 8, 2005 (Applicants Record, Volume 1, page 206-208).
[38] The basis for the no substitute’s requirement and the importance of the INNAV was explained in the correspondence from Mr. Harrison. INNAV’s operational purposes include the following:
(a) it tracks and monitors vessels operating in Canadian waters and provides navigational information back to those vessels, thereby allowing the vessels to operate safely and avoid collisions, accidents or other major incidents;
(b) by avoiding collisions of ships on coastal and inland waters, risk to the safety of passengers and crews and environmental damage that could result from a spillage of fuel or cargo posing major threat to the public is avoided;
(c) it informs vessels of other potential navigational hazards, such as bridges, faulty aids to navigation and dredging operations;
(d) it keeps watch for the approach of unidentified or suspect vessels, which is of vital importance to security and immigration agencies, as well as Canada’s international partners.
[39] Accordingly to Mr. Harrison, given the significance of the operational purposes of the INNAV system, the system must always be maintained at a high level of operational readiness, with minimum allowances for system fault or other down-time. It must operate and provide information for security, shipping and other interests on an immediate real-time basis without any risk of failure. It must also maintain standardized, uniform and consistent tools to allow a Marine Communication and Traffic System Officer to keep track at all times of a global traffic image of his responsibility zone.
[40] As a result, operational requirements for INNAV have been established such that no part of the system is permitted to be inoperable for a period greater than thirty minutes at any one time (or for a total of four hours over one year). In the event of a fault or other requirement for replacement of a component in the system, there must be the highest level of confidence that replacement parts are on hand and that they will work seamlessly with the rest of the established network. There would be no time for testing, modifications or reconfigurations of any allegedly equivalent product. It was for this reason that no substitutes to the products specified were permissible.
[41] The Tribunal rejected Public Works submissions that the content of the RFPs were justified under Article 506(11)(e) and further found that they did not have a legitimate operational requirement as mandated by Article 404. The Tribunal stated as follows:
PWGSC attempted to exempt the procurements on the basis of Articles 506(11)(e) and 506(12)(a) of the AIT. However, the Tribunal notes that these exemptions would only excuse discriminatory tendering procedures, rather than discriminatory technical specifications. While there is some overlap between those provisions and Article 404, there is insufficient evidence before the Tribunal to show that the true purpose of the "no-substitute" requirement was to maintain public security, or to protect human, animal or plant life and the environment, rather than to avoid the obligations of the AIT. Further, PWGSC failed to persuade the Tribunal that the discrimination against equivalent products does not unduly impair the access of persons or goods and services that would achieve the same legitimate objective. On the contrary, it appears to the Tribunal that the restriction is unduly and unnecessarily restrictive. Therefore, the Tribunal finds that PWGSC failed to demonstrate that the breach of Article 504(3)(b) is permissible, and the Tribunal must also find that Trust was unjustifiably excluded from tendering, in breach of Article 504(3)(g) [Emphasis added].
…
With respect to this breach of Article 506 of the AIT, the Tribunal considered the merits of PWGSC's claims under Article 506(11)(e). The Tribunal notes that the chapeau to Article 506(11) entitles a procuring entity to use procurement procedures that differ from, among others, Articles 506(7) and (9), "provided that it does not do so for the purpose of avoiding competition between suppliers or in order to discriminate against suppliers". If this condition is satisfied, then, according to Article 506(11)(e), the procuring entity must demonstrate that compliance with the open tendering provisions would interfere with the ability to maintain security, or to protect human, animal or plant life or the environment. In the Tribunal's view, PWGSC's argument fails to satisfy any of these conditions. The Tribunal is not persuaded that the purpose of having a qualification process that discriminated in favour of brand names and against equivalent products was other than to discriminate against equivalent products or suppliers thereof. As mentioned, it appears that equivalent products may have been able to meet the performance requirements of the DFO, perhaps at a better price. Indeed, in the Tribunal's opinion, PWGSC failed to demonstrate that an open qualification process would negatively affect the DFO's ability to maintain security, or to protect human, animal or plant life or the environment (Tribunal reasons at paras. 56 and 59).
[42] The Tribunal’s analysis of Article 506(11)(e) of the AIT is based on its conclusion that the specification of particular products is for the purpose of avoiding competition between or in order to discriminate against suppliers. As indicated above, the RFPs statement of work and correspondence from Mr. Harrison clearly indicate that specific goods were required for use in the INNAV system and for legitimate operational requirements. In short, there is simply no evidence upon which the Tribunal could properly have concluded that the specification of particular products in the RFPs was done for the purpose of avoiding competition and discriminating between suppliers. In my analysis, it is patently unreasonable for the Tribunal to simply infer a purpose of avoiding competition or discrimination between suppliers on the part of Public Works without any evidence to demonstrate such an intention.
[43] In my view, the Tribunal’s interpretation of Article 506(11)(e) of the AIT, while ignoring evidence of legitimate operational objectives, is clearly irrational and therefore, patently unreasonable. On this record, there is no basis upon which the Tribunal could have properly found a breach of Article 504(3)(g), i.e. the unjustifiable exclusion of a supplier from tendering.
Issue 2: Is there a breach of Article 504(3)(c) of the AIT?
[44] In the course of its analysis, the Tribunal considered Article 504(3)(c) of the AIT. This provision provides:
|
Article 504(3): Except as otherwise provided in this Chapter, measures that are inconsistent with paragraphs 1 and 2 include, but are not limited to, the following … c. the timing of events in the tender process so as to prevent suppliers from submitting bids;
|
Article 504(3) : Sauf disposition contraire du présent chapitre, sont comprises parmi les mesures incompatibles avec les paragraphes 1 et 2 : …
c. l'établissement du calendrier du processus d'appel d'offres de façon à empêcher les fournisseurs de présenter des soumissions;
|
[45] The Tribunal found that with respect to the second RFP, Public Works breached this provision of the AIT in not providing timely information to Trust, thereby preventing it from submitting a bid. This breach stemmed from the Tribunal’s finding that Public Works had improperly failed to respond to questions submitted by Trust in a timely fashion with respect to the possibility of allowing for equivalent products in the second RFP and also failed to provide a network diagram.
[46] Any breach of Article 504(3)(c) arises when Public Works is unable to demonstrate that brand-name products were required to meet legitimate operational objectives in accordance with Article 404. Having already determined that Public Works demonstrated a legitimate operational objective (supra, at para. 40) Public Works was, in my analysis, under no obligation to answer the questions posed by Trust. As a result, the Tribunal’s interpretation of Article 504(3)(c) of the AIT is patently unreasonable.
Issue 3: Did the Tribunal err in its interpretation of Article 506(9) of the AIT?
[47] Article 506(9) of the AIT provides as follows:
|
Article 506(9): If a procurement exempted from the obligations of this Chapter under paragraph 11 or 12 or Article 507 or 508 is publicly tendered in a daily newspaper or on an electronic tendering system, the tender notice shall indicate the restrictions and highlight the practices that do not conform with this Article or Article 504. |
Article 506(9) : Si un marché public exempté, en vertu du paragraphe 11 ou 12 ou de l'article 507 ou 508, des obligations prévues par le présent chapitre fait l'objet d'un appel d'offres public dans un quotidien ou au moyen d'un système électronique d'appel d'offres, l'avis d'appel d'offres doit indiquer les restrictions applicables et souligner les pratiques non conformes au présent article ou à l'article 504. |
[48] The applicant argues that the Tribunal erred when it found that both RFPs did not adequately make a clear reference to Article 506(11)(e) and did not properly justify non-compliance with Article 504. At paragraph 57, the Tribunal stated:
In the Tribunal’s opinion, the RFPs do not draw adequately clear references to Articles 506(11)(e) and 506(12)(a) and how they justify non-compliance with Article 504. Therefore, the Tribunal finds that PWGSC breached Article 506(9).
[49] Public Works argues that it met both requirements by specifically identifying the particular products that it would accept and by indicating that no substitutes would be considered. They further argued that Article 506(9) does not require them to make specific reference to Article 506(11) or explain justification of its non-compliance with Article 504.
[50] To date, the jurisprudence has not established a clear interpretation of the obligations listed in Article 506(9). On its face, the article seems to only require that notice of an exclusion be given to potential suppliers. Specifically, Article 506(9) requires that RFPs provide notice of any restrictions and practices that do not conform to it or Article 504. No where in the provision does it specify that a justification for an exclusion must be given.
[51] In interpreting similar provisions, the Tribunal has conducted a plain meaning analysis of the Article and has not read in further requirements. For example, in Trac Industries Ltd. (Re) [1997] C.I.T.T. No 121 [Trac], the Tribunal was faced with the interpretation of Article 508(1), which allows for the exclusion of a procurement for regional and economic development purposes. Specifically, at issue was subsection 508(1)(c) which states:
|
c. notice of all such excluded procurements is provided by one or more of the methods specified in Article 506(2) and the notice provides details of the exceptional circumstances; |
c. un avis des marchés publics ainsi exclus indiquant le détail des circonstances exceptionnelles est donné par une ou plusieurs des méthodes précisées au paragraphe 506(2);
|
[52] In its analysis, the Tribunal concluded that the obligations imposed on Public Works by this provision, were minimal. At paragraph 14, the Tribunal stated:
While clearly not a requirement, the Tribunal is of the view that the government should, whenever exclusions are going to be invoked under NAFTA, AGP or AIT procurement provisions, insure that these exclusions are posted on all documentation relative to the tender. This can be done with little effort and may ensure that potential suppliers, coming into the tendering process without seeing or being aware of the notice after it was issued, are fully aware of those exclusions.
[53] In the present case, when interpreting Public Works’ obligation under 506(9), the Tribunal held that it was required to draw a clear reference to Article 506(11)(e) and to justify its non-compliance with Article 504 (supra, at para. 48). However, in my analysis, these requirements have been read into Article 506(9) by the Tribunal without any basis for doing so. Nowhere in Article 506(9) does it state that Public Works was obliged to specify that its RFPs were exempt under Article 506(11); nor on the face of the provision does it require Public Works to refer to that article in its RFPs or to justify its non-compliance with Article 504.
[54] Adopting the Tribunal’s analysis in Trac, I am of the view that the requirements imposed by Article 506(9) also impose a low threshold on the part of Public Works. In keeping with that Article, Public Works identified the RFPs restrictions as the acceptance of HP Workstation, NEC monitors and Cisco equipment only. In addition, they stated that no substitutes for compatibility purposes would be considered, which highlight practices that do not conform to the Article. This certainly ensures that potential suppliers are aware of the exclusions; Trust’s own objections to the exclusions demonstrate that the RFPs made it clear that Public Works practices did not conform. Therefore, I can only conclude that on a correct reading of Article 506(9), Public Works complied with and did not breach this Article. Accordingly, the Tribunal’s interpretation of Article 506(9) is patently unreasonable.
Issue 4: Is there a breach of Article 506(7) of the AIT?
[55] Article 506(7) of the AIT provides that:
An entity may limit tenders to goods, services or suppliers qualified prior to the close of call for tenders. However, the qualification process must itself be consistent with Article 504. An invitation to qualify must be published at least annually by a method referred to in paragraph 2(a) or (b) or shall be distributed to suppliers listed on a source list referred to in paragraph 2(c).
[56] In concluding that Public Works had breached this provision of the AIT, the Tribunal stated that, in its view,
in the present case, PWGSC effectively limited the procurement to certain brand-name goods qualified prior to the close of call for tenders. As such, the qualification process was itself inconsistent with Article 504 and, therefore, constitutes a breach of Article 506(7).
[57] In essence, the Tribunal found that a breach of that article occurred as the direct result of Public Works’ breach of Article 504. However, absent a breach of Article 504, as is the case here, the Tribunal could not have found a breach of Article 506(7), and consequently, committed a patently unreasonable error in its interpretation of Article 506(7).
VII. Conclusion
[58] In light of the foregoing analysis, Public Works has established a legitimate objective under Article 404 and a valid exception to the general principle of non-discrimination as outlined in Articles 506(11)(e) of the AIT. Therefore, the purported breaches of Articles 504(3)(b), 504(3)(g), 506(7) and 506(9) as determined by the Tribunal are invalid being based on patently unreasonable errors.
[59] Accordingly, I would allow the application for judicial review and set aside the decision of the Tribunal dated May 13, 2005, with costs to the applicant.
"I agree
M. N."
"I agree
CMR"
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-278-05
STYLE OF CAUSE: Attorney General of Canada v.
Trust Business Systems
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: February 6, 2007
REASONS FOR JUDGMENT BY: Malone J.A.
CONCURRED IN BY: Nadon J.A.
Ryer J.A.
APPEARANCES:
|
|
FOR THE APPLICANT
|
|
FOR THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Deputy Attorney General of Canada
|
FOR THE APPLICANT
|