Review of complaint: Acquisition of services for the inventory of bat populations on islands in the Saint Lawrence river by Public Services and Procurement Canada

March 2021

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The complaint

1. On September 9, 2020, the Office of the Procurement Ombudsman (OPO) received a written complaint from a supplier (the Complainant) regarding a contract awarded by Public Services and Procurement Canada (PSPC) on behalf of Environment and Climate Change Canada (ECCC). The contract was for bat inventory services on islands in the Saint Lawrence River. The contract was awarded as a call-up under Regional Individual Standing Offer (RISO) EE517-173360, established by PSPC for environmental services in Quebec. The contract was awarded on July 3, 2020 and valued at $56,487.28, including taxes.

2. The Complainant contacted OPO stating it believed there were several irregularities with PSPC’s contract award for the bat inventory services. The Complainant claimed that the contract was awarded to a lesser qualified company for a higher price than what it had quoted. The Complainant also alleged PSPC had acted as though the contract was going to be awarded on a sole source (that is non-competitive) basis since the solicitation process was done informally and through a private sector company. Lastly, the Complainant noted a competitive process was not required as its proposal price was below the threshold of $40,000, including taxes.

3. The complaint raised the following issues:

  • Did the bat inventory services fall within the scope of the RISO, and was PSPC permitted to award the contract to one of the 6 qualified suppliers under the RISO by way of a call-up?
  • Did PSPC have an obligation to award the contract to the Complainant?

4. On September 11, 2020, OPO confirmed the complaint met the requirements of the Procurement Ombudsman Regulations (the Regulations) and it was considered filed.

Mandate

5. This review of complaint was conducted under the authority of paragraph 22.1(3)(b) of the Department of Public Works and Government Services Act and sections 7 to 14 of the Regulations.

6. Pursuant to subsection 9(2) of the Regulations, the Procurement Ombudsman requested PSPC provide all departmental records associated with the procurement of the contract in question, as well as PSPC’s procurement policies and guidelines in effect at the time of the solicitation. The Procurement Ombudsman also requested the Complainant provide any additional information not submitted as part of the complaint.

7. In accordance with subsection 11(2) of the Regulations, PSPC requested the use of the expanded review process. This allows for additional submissions on the part of both the Complainant and the contracting department (PSPC). It also extends the time periods allowed for the Parties to make their submissions, while still maintaining the standard review schedule. OPO granted the request and the expanded review process was used.

8. The findings in this report are based on the records provided by the Complainant and PSPC, as well as relevant publicly available information. Any relevant records or information not disclosed by either the Complainant or PSPC could, if disclosed later, impact the findings of this report.

Chronology of events

9. In January 2018, PSPC established the RISO with 6 qualified suppliers to provide environmental services throughout Quebec. The qualified suppliers were ranked based on the scores achieved during the evaluation process, with work being allocated on a sliding scale depending on the ranking, that is the top-ranked supplier would perform more work than the second-ranked supplier… etc. The Complainant is not one of the 6 qualified suppliers under the RISO.

10. On February 28, 2020, PSPC contacted the top-ranked RISO holder (hereafter referred to as “RISO Holder 1”) to confirm its interest and capacity to conduct an inventory of amphibians, reptiles, migratory birds and plants on certain islands of the Saint Lawrence River between Montreal and Lac Saint-Pierre.

11. On March 16, 2020, PSPC sent RISO Holder 1 a draft Statement of Work (SOW). The same SOW was also sent to ECCC for review the next day. PSPC told RISO Holder 1 to expect certain changes to the draft SOW following ECCC’s comments. PSPC advised RISO Holder 1 the draft SOW should permit it to plan and prepare a quote. PSPC also confirmed a meeting would take place later that week.

12. After receiving RISO Holder 1’s quote on April 27, 2020, ECCC sent PSPC an e-mail on May 7, 2020, which contained 3 additional requirements, 1 of which was to conduct the inventory of bat populations on those same islands. The other 2 requirements (regarding an inventory of invasive plants and a characterization of plant associations) were unrelated to the subject-matter of this review. PSPC forwarded these additional requirements to RISO Holder 1. RISO Holder 1 then requested a proposal from a potential subcontractor, the Complainant, for the inventory of bat populations.

13. On May 22, 2020, the Complainant provided its proposal to RISO Holder 1, in the amount of $45,431.22, including taxes. RISO Holder 1 provided the amount of the proposal to PSPC the week of May 25, 2020.

14. On June 3, 2020, PSPC requested RISO Holder 1 to forward the Complainant’s proposal which RISO Holder 1 did that same day. Also that day, PSPC contacted RISO Holder 1 to suggest RISO Holder 1 set up a 3-way conference call with the Complainant to discuss some of the costs as well as other elements of the proposal.

15. On June 4, 2020, RISO Holder 1, the Complainant and PSPC held a 3-way conference call.

16. On June 5, 2020, the Complainant e-mailed a detailed explanation of its proposal directly to PSPC, with RISO Holder 1 copied on the e-mail (that is included as a c.c.).

17. On June 7, 2020, the Complainant sent a revised proposal for $34,000.89, including taxes, to RISO Holder 1, which, in turn, forwarded it to PSPC on June 8, 2020.

18. On June 12, 2020, PSPC advised RISO Holder 1 that the bat inventory aspect of the requirement was removed from the SOW.

19. On June 15, 2020, RISO Holder 1 advised the Complainant that PSPC and ECCC had decided not to retain the Complainant’s services to conduct the bat inventory work, as they had obtained a better offer from a competitor and decided to remove the bat inventory work from RISO Holder 1’s requirements.

20. Between June 22 and June 23, 2020, the Complainant sent 4 e-mails to PSPC to request the name of the selected supplier and the value of the call-up for the inventory of bat populations, without receiving a response. Shortly afterwards, the Complainant submitted a request under the Access to Information Act to ECCC, seeking information pertaining to the award of the contract.

21. On July 3, 2020, PSPC issued call-up 700520992 to another RISO-qualified supplier (“RISO Holder 2”) for the bat inventory services, in the amount of $56,487.28, including taxes.

22. On August 21, 2020, the Complainant received a response letter from ECCC dated August 19, 2020, stating that no documents were found related to his request and suggesting the Complainant submit an access to information and privacy (ATIP) request to PSPC since they were the contracting authority.

23. On August 24, 2020, the Complainant submitted a request under the Access to Information Act to PSPC.

24. On September 8, 2020, the Complainant received a response from his ATIP request from PSPC who provided the name of RISO Holder 2, the date of contract award and the contract amount.

25. On September 9, 2020, the Complainant submitted its complaint to OPO.

26. On September 21, 2020, OPO advised the Complainant and PSPC there would be a formal complaint review.

Analysis of issues and findings

Issue 1: Did the bat inventory services fall within the scope of the Regional Individual Standing Offer, and was Public Services and Procurement Canada permitted to award the contract to one of the 6 qualified suppliers under the Regional Individual Standing Offer by way of a call-up?

27. The Complainant stated that a competitive process was not required as its proposal price was below the threshold of $40,000, including taxes. Since a RISO was in place for environmental services in Quebec, this raises the larger issue of whether the bat inventory work fell within the RISO’s scope and whether PSPC acted properly in awarding the contract as a call-up under the RISO.

28. OPO does not have the jurisdiction to review the process under which the 6 suppliers were qualified under the RISO due to limitations in the Procurement Ombudsman’s legislative mandate. However, OPO can review call-ups (that is contracts) awarded under the RISO as well as whether the bat inventory work falls within the scope of the RISO.

29. The PSPC Supply Manual (Manual) includes policies and procedures written for the use by PSPC contracting officers to assist them in carrying out procurement services as a common service provider. Section 3.5 of the Manual is particularly relevant to the complaint before OPO as it describes the process of deciding if an existing procurement instrument (for example RISO) should be used, or if a different method of supply is required. Section 3.5.a. states “[b]efore determining a new method of supply for the requirement, the contracting officer should first ensure that the good or service is not already available from an existing procurement instrument. Clients should be encouraged to use mandatory or non-mandatory standing offers/supply arrangements to satisfy their requirements, whenever possible”.

30. As noted above, both RISO Holder 1 and RISO Holder 2 qualified under the RISO in question. The duration of the RISO was for 2 years, and included two 1-year option periods to be exercised at PSPC’s discretion. Both option periods have been exercised and the end-date for the RISO is October 31, 2021.

31. Standing offers are established for a variety of goods and services. Some are for use by all departments in all provinces and territories, while others are more limited in scope. In this case, the RISO was set up only for use by PSPC and on behalf of other departments for specified environmental services in Quebec.

32. Standing offers are also identified as either mandatory or non-mandatory. If a standing offer is mandatory, it must be used to purchase goods and services that fall within its scope. In the case at hand, the RISO is non-mandatory.

33. With regard to the types of work that can be procured under the RISO, the RISO includes:

“C 1.3 Inventory of one or more species of various environments, such as:

  • terrestrial wildlife
  • aquatic wildlife
  • terrestrial flora
  • aquatic flora

1.3.1 Preparation of the inventory protocol and plan;
1.3.2 Execution of the inventory and, upon request, preparation of a results presentation document (tables, figures, etc.);
1.3.3 Execution of the analysis or interpretation of the inventory results and preparation of an expert opinion or a report.”

Analysis of issue 1

34. The RISO was established to provide, upon request, environmental services in locations across Quebec. As PSPC is the only authorized user of the RISO, it acts at the coordinator for other agencies and departments and is charged with issuing the call-ups on behalf of those other organizations. In the case at hand, PSPC issued the call-up on behalf of ECCC.

35. ECCC’s original requirement was to conduct an inventory of amphibians, reptiles, migratory birds and plants. It is unclear why ECCC did not include the bat inventory work in its original requirement or why this additional work was added after RISO Holder 1 had submitted its proposal.

36. The bat inventory portion of the requirement, as explained in the SOW for call-up 700520992, requires the following work to be done [translated from the original French-only SOW]:

1. Background and context

[…]

PSPC requires the services of a consultant to conduct inventories of bats. As part of these inventories, special attention should be paid to species at risk, that is species at risk protected under the Species at Risk Act (SARA) and species designated as threatened or vulnerable in Quebec under the Act respecting threatened or vulnerable species.

[…]

1.1 Zone of study

The study area includes 25 islands located between Montreal and Lake Saint-Pierre, spread over three archipelagos: the Boucherville archipelago, the Varennes-Verchères archipelago and the Lake Saint-Pierre archipelago. […]

[…]

4. Requirement

The consultant will be required to carry out bat inventories in the territory targeted by the project, with particular attention to species with precarious status. The inventory results will provide a current picture of the targeted archipelagos and islands and guide the decision-making process in the creation of the [National Wildlife Reserves].

[…]

The bat inventory will be carried out according to the standardized protocol. Inventory periods should cover the breeding and nesting period.

The consultant will do the following work to identify species and habitats associated with bats:

  • Make an inventory of bats in the study territory;
  • Characterize the habitat of the species present;
  • Obtain clues of relative abundance for each species;
  • Locating species at risk;
  • Describe the habitats used by species at risk.

37. Section 12(2) of the Regulations states “[t]he Procurement Ombudsman shall not substitute his or her opinion for the judgment of the persons involved in the acquisition process for the contract in relation to the assessment of any bid, unless there is insufficient written evidence to support that assessment or the assessment is unreasonable.” While this standard is intended to apply to the assessment of bids, it remains a useful standard to assess the actions of PSPC in this case.

38. A key principle of contract interpretation in Common Law is that words are given their “plain and ordinary” meaning. The Canadian Oxford Dictionary defines a bat as a “mammal of the order of Chiroptera“footnote 1. Further review of literature, including a Statistics Canada Environmental Report on endangered species and the Species at Risk Act, indicates that bats are considered terrestrial mammals. Based on a review of relevant publicly available information, OPO accepts the categorization of bats as “terrestrial wildlife” as reasonable, and, therefore, agrees that the bat inventory work falls within the scope of services of the RISO.

39. Considering that: (1) the bat inventory work pertained to RISO-covered terrestrial wildlife; (2) the work was to take place in Quebec; and (3) PSPC issued the call-up on behalf of ECCC, PSPC was within its rights to award the contract under the RISO. Given PSPC’s Supply Manual encourages its contracting officers to use existing standing offers wherever possible, it follows PSPC could have awarded the contract to one of the 6 qualified RISO holders.

Finding—Issue 1

40. OPO finds the scope of work of call-up 700520992 for the inventory of bat populations on islands in the Saint Lawrence River does fall within the scope of the RISO and, therefore, PSPC was permitted to award the contract to one of the 6 qualified suppliers under the RISO, in this case RISO Holder 2.

Issue 2: Did Public Services and Procurement Canada have an obligation to award the contract to the Complainant?

41. The Complainant claimed PSPC awarded the contract for bat inventory services to a lesser qualified company (RISO Holder 2) that charged a higher price. The Complainant further alleged that PSPC had acted as though the contract was going to be awarded on a sole source (that is non-competitive) basis since the solicitation process was done informally and through a private sector company (RISO Holder 1). The Complainant also noted that a competitive process was not required as its proposal price was below the threshold of $40,000, including taxes.

42. In its submissions to OPO, PSPC stated that the Complainant had misunderstood the contracting process, and that one of the RISO’s qualified suppliers (RISO Holder 1) had sought the Complainant’s services as a potential subcontractor, as opposed to PSPC contacting the Complainant directly as a potential contractor. PSPC added that RISO Holder 1 had previously qualified under the Request for Standing Offer (RFSO) process, and that it is both common and allowable for qualified suppliers to contact potential subcontractors to obtain quotes.

43. The Complainant acknowledged it understood its role was to be that of a subcontractor to RISO Holder 1. However, it claimed that since RISO Holder 1 could not offer bat inventory services, the Complainant began dealing directly with PSPC. The Complainant also stated a second solicitation should have been launched specifically for the bat inventory work since RISO Holder 1 was unable to perform the work.

44. The objective of the Treasury Board Contracting Policy (TBCP) is to “acquire goods and services and to carry out construction in a manner that enhances access, competition and fairness and results in best value […]”.

45. Section 3.5.a. of PSPC’s Supply Manual states the first step for buyers (for example contracting officers) when receiving a new requirement from a client is to determine if that good or service is already available from an existing procurement instrument. If so, clients are to be encouraged to use mandatory or non-mandatory standing offers/ supply arrangements to satisfy their requirements whenever possible.

46. As previously mentioned, while PSPC is encouraged to use the existing procurement instrument (that is the RISO) to satisfy the requirement, the RISO in question is not mandatory, and PSPC is not obligated to use it. Specifically, the RISO incorporates Standard Acquisition Clauses and Conditions (SACC) manual General Conditions 2005 (2016-04-04), which state, in part:

2005 02 (2006-08-15) General

The Offeror acknowledges that a standing offer is not a contract and that the issuance of a Standing Offer and Call-up Authority does not oblige or commit Canada to procure or contract for any goods, services or both listed in the Standing Offer. The Offeror understands and agrees that Canada has the right to procure the goods, services or both specified in the Standing Offer by means of any other contract, standing offer or contracting method.

47. The RISO’s General Conditions also address RISO Holders’ ability to subcontract:

2010B 06 (2013-06-27) Subcontracts

The Contractor may subcontract the supply of goods or services that are customarily subcontracted by the Contractor. In any other instance, the Contractor must obtain the prior consent in writing of the Contracting Authority. The Contracting Authority may require the Contractor to provide such particulars of the proposed subcontract as he considers necessary.

48. This is further amplified in section D of the RISO’s SOW:

Subcontracting

The tasks, roles and responsibilities of the project director and the project manager cannot be carried out or assumed by a subcontractor. Furthermore, the Bidder commits to minimizing the percentage of the work to be subcontracted out. The Bidder alone will remain responsible for the quality of the work and adherence to the budget and timeline with respect to the tasks to be completed under sub-contract.

The Contractor may subcontract the supply of goods or services that are customarily subcontracted by the Contractor. In any other instance, the Contractor must obtain the prior consent in writing of the Contracting Authority. The Contracting Authority may require the Contractor to provide such particulars of the proposed subcontract as he considers necessary.

Analysis of issue 2

49. The initial work required by ECCC (not including the bat inventory services) fell within the scope of an existing RISO, and PSPC appropriately opted to use that RISO to satisfy ECCC’s requirement. According to PSPC, when ECCC submitted its initial requirement, RISO Holder 1 was the next-in-line qualified supplier, so PSPC contacted it to confirm its availability and ability to perform the work. RISO Holder 1 then submitted a proposal to PSPC.

50. The requirement was then amended to include the bat inventory work. Since the RISO allows for subcontracting, and, according to PSPC, RISO Holder 1 did not have the in-house expertise to conduct this work, RISO Holder 1 requested a proposal from the Complainant.

51. After receiving the Complainant’s proposal on May 22, 2020, RISO Holder 1 advised PSPC of the proposal value of $45,431.22, including taxes. PSPC then requested a copy of the proposal, which RISO Holder 1 forwarded to PSPC on June 3, 2020. PSPC subsequently suggested RISO Holder 1 set up a 3-way conference call with the Complainant to discuss several elements of the Complainant’s proposal.

52. That conference call was held on June 4, 2020. There is no formal record of what was discussed during that call, however, following the call:

  • on June 5, 2020, the Complainant e-mailed a detailed explanation of its proposal directly to PSPC, and included RISO Holder 1 in the e-mail (in “c.c.”); and
  • on June 7, 2020, the Complainant sent RISO Holder 1 a revised proposal with a reduced price of $34,000.89, including taxes. RISO Holder 1, in turn, forwarded the new proposal to PSPC on June 8, 2020.

53. PSPC advised OPO that the review of a subcontractor’s proposal is part of its usual evaluation process when issuing a call-up. It stated the evaluation of any bid under a call-up is based on the technical and financial proposal of all services required to fulfill the SOW, including subcontracting. As noted above, the RISO’s General Conditions allow a contractor to subcontract for work it does not usually perform; however, PSPC’s written approval is required to subcontract for work usually performed by the contractor. In this case, based on the records provided by PSPC it was not clear: whether RISO Holder 1 had the internal capacity and usually performed bat inventory work; whether PSPC’s approval to subcontract was required; and accordingly, whether it was appropriate for PSPC to meet directly with a potential subcontractor prior to either contract being in place.

54. According to PSPC, after the Complainant’s second proposal was submitted, RISO Holder 1 and the Complainant were unable to reach a formal contractual agreement which would have enabled the Complainant to become a subcontractor. On June 12, 2020, after discussing the situation with RISO Holder 1, PSPC removed the bat inventory aspect of the requirement from the SOW.

55. In a June 15, 2020 e-mail to the Complainant explaining why it was not going to get the subcontract, RISO Holder 1 stated PSPC and ECCC had obtained other proposals and received a better offer. PSPC advised OPO that, after removing the bat inventory requirement from RISO Holder 1’s SOW on June 12, 2020, it moved on to the next-in-line RISO Holder but that it did not have a financial quote for the services until the end of June.

56. RISO Holder 1 was not party to this complaint, therefore OPO did not receive any submissions directly from it. OPO does not know why RISO Holder 1 told the Complainant the reason it would not receive the subcontracting work was because PSPC and ECCC received a better offer from a competitor. PSPC told OPO that it removed the bat inventory work from the SOW and moved on to the next qualified supplier because RISO Holder 1 and the Complainant could not reach a contractual agreement. Regardless, the facts as they relate to this complaint do not change: the bat inventory work was removed from the RISO Holder 1’s SOW and, on July 3, 2020, a call-up for that work was issued to RISO Holder 2 in the amount of $56,487.28, including taxes.

57. OPO agrees with the Complainant’s assertion that PSPC could have opted to award a bat inventory services contract directly without soliciting proposals from other suppliers, provided that the estimated value of the service was in fact below the $40,000 threshold, including taxes. However, as noted above, PSPC was justified in opting to award the contract to a qualified supplier (that is RISO Holder 2) using the RISO method of contracting.

Finding—Issue 2

58. OPO finds that PSPC had no obligation to award the contract to the Complainant. Although PSPC could have opted to award the bat inventory services contract directly to a non-RISO qualified supplier (such as the Complainant), they were justified in opting to award the contract to a qualified supplier (that is RISO Holder 2) using a call-up under the RISO.

Other observations

59. OPO notes the amount of call-up 700520992 ($56,487.28, including taxes) is over $22,000 more than the Complainant’s second quote. However, the financial information of both the Complainant and RISO Holder 2 was redacted by PSPC prior to submitting it to OPO, since it contained third party information and is considered commercially confidential. OPO is therefore unable to determine why there was a significant price difference between the 2 proposals, and whether the contract awarded for bat inventory work represented best value to the Crown.

60. OPO also notes that PSPC’s participation in 3-way discussions with a potential contractor (RISO Holder 1) and its proposed subcontractor (the Complainant) may have blurred the lines regarding the roles of the parties. It is not a recommended practice for federal departments to liaise directly with, and receive documentation directly from, a potential subcontractor prior to contracts being in place unless the rationale for doing so is clearly spelled out to the parties in writing. The confusion regarding the relationships between the parties is further exacerbated by:

  • RISO Holder 1 simply forwarding the Complainant’s initial proposal to PSPC without clearly labelling it as its own proposal in its capacity as a prime contractor;
  • The Complainant (who acknowledged it understood its role as a subcontractor to RISO Holder 1) sending the detailed explanation of its proposal directly to PSPC rather than to RISO Holder 1; and
  • PSPC receiving the Complainant’s detailed explanation of its proposal directly from the Complainant, and not instructing the Complainant to submit such information through RISO Holder 1.

61. The blurring of lines resulting from the communications between the Department, contractor and potential subcontractor could have been avoided and each party bears some responsibility for the confusion that led to this complaint.

62. OPO stresses the need for timely and accurate communications with suppliers either through the bidding process or through regret letters. In this particular case, as the Complainant was considered a potential sub-contractor, the circumstances did not require a formal response, that is a regret letter, from PSPC. This led the Complainant to submit a request under the Access to Information Act to obtain the information sought.

Conclusion

63. The Procurement Ombudsman concludes neither of the issues raised in the complaint have merit:

  • Given the requirement for conducting bat inventory services on islands in the Saint Lawrence River falls within the scope of an existing RISO, PSPC was justified in awarding the contract to one of the 6 qualified suppliers under the RISO, including RISO Holder 2, to which the contract was ultimately awarded. Consequently, PSPC was not obligated to award the contract in question to the Complainant.
  • Notwithstanding the above, OPO notes that PSPC’s participation in 3-way discussions with a potential contractor (RISO Holder 1) and its proposed subcontractor (the Complainant) may have blurred the lines regarding the roles of the parties and created false expectations on the part of the Complainant. It is not a recommended practice for federal departments to liaise directly with, and receive documentation directly from, a potential subcontractor prior to contracts being in place unless the rational for doing so is clearly spelled out to the parties in writing which, in this case, it was not.
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