Review of complaint: Acquisition of Construction Services by the Parks Canada Agency

Issue 1—Was the contract awarded in accordance with the applicable laws, regulations and policies and in accordance with the methodology set out in the solicitation document?

14. PCA’s internal approval process identified the budget for the project as being below the monetary thresholds of Canada’s trade agreements. Accordingly, PCA did not use an “open” ITT solicitation process as would have been required by the trade agreements. Instead, PCA directly contacted multiple suppliers to see if they were interested in bidding on the project. PCA ultimately sent the ITT to 9 suppliers between January 6 and January 12, 2022.

15. PCA advised OPO it excluded the Complainant from its supplier list because the Complainant:

1. was found to be in default of a previous PCA contract and PCA had to give the work to another contractor; and
2. had delivered poor performance under 5 other PCA contracts.

16. On January 13, 2022, the Complainant became aware of the project and contacted PCA by e-mail, asking to be invited to submit a bid. The PCA contact person did not respond to the Complainant, instead deciding with other PCA employees that the Complainant should not be invited to submit a bid.

17. On January 14, 2022, there was an optional site visit attended by 3 potential bidders.

18. On January 18, 2022, the Complainant again e-mailed PCA, asking if the Complainant’s January 13, 2022 e-mail had been received. PCA advised the Complainant: (1) they had missed that e-mail; (2) bids were due the next day; and (3) as PCA had used a suppliers list, the Complainant would not be invited to submit a bid.

19. On January 19, 2022, PCA received 2 bids, and awarded the contract to the lower of the 2 bidders on January 20, 2022.

20. On January 21, 2022, the Complainant asked to be advised of the winning bid and asked for a copy of PCA’s policy regarding sourcing for construction projects under $100,000.

21. On January 31, 2022, PCA advised the Complainant that suppliers lists are compiled based on of a variety of factors including past experience and expertise. PCA also advised that this particular tender and the invitee list followed all Government Contracts Regulations (GCRs) and Contracting Policy rules. On that same date, the Complainant again asked if the contract had been awarded.

22. On February 1, 2022, PCA advised the Complainant of the name of the winning supplier and the value of the contract. PCA did not provide any policies. As part of this review of complaint process, OPO asked PCA if it had any internal policies regarding the creation and maintenance of suppliers lists for construction projects valued at less than $100,000. PCA advised it did not have such a policy at present but that it would be developing guidance over the 2022-23 fiscal year owing to the circumstances of this complaint.

23. Sections 5 and 7 of the GCRs state:

• 5. Before any contract is entered into, the contracting authority shall solicit bids therefor in the manner prescribed by section 7.
• 7. A contracting authority shall solicit bids by
  1. giving public notice, in a manner consistent with generally accepted trade practices, of a call for bids respecting a proposed contract; or
  2. inviting bids on a proposed contract from suppliers on the suppliers list.

24. Sections 9.1 and 10.7 of the Treasury Board Contracting Policy (TBCP), which governed most departmental contracting, including PCA’s, states:

• 9.1.1 As stated in the policy, the objective of government procurement contracting 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 or, if appropriate, the optimal balance of overall benefits to the Crown and the Canadian people…
• 10.7.1 Equal opportunity for all contractors. In accordance with the policy statement to reflect fairness in spending public funds and the requirements under the trade agreements, the method of procurement used for a particular acquisition must, within the limits of practicality, give all qualified firms an equal opportunity for access to government business.

25. Section 6.1 of PCA’s Procurement Desk Guide, which addresses “Solicitation Methods” states:

• 6.1. Traditional competitive: The solicitation method where you directly invite suppliers to bid on an opportunity. This method may only be used when trade agreements are not applicable.
  […]
• An Invitation to Tender is used where selection is based on the lowest price, typically in construction. It should be used when all of the following criteria apply:
  • Two or more sources are considered capable of supplying the requirement;
  • The requirement is adequately defined to permit the evaluation of tenders against clearly stated criteria;
  • The market conditions are such that tenders can be submitted on a common pricing basis;
  • It is intended to accept the lowest-price[d] responsive tender without negotiations; and
  • The evaluation of tenders will exclude any product, resource, operation and contingency costs or socio-economic considerations other than the employment equity provisions.

26. The ITT stated:

• SI05 Bid results
• 2. The responsive Bid carrying the lowest price will be recommended for contract award.

Issue 2—Was the Complainant treated fairly when prevented from submitting a bid after requesting to do so, and did the Department attempt to cause the Complainant financial and reputational harm?

32. The Complainant claimed PCA had refused to allow it to participate in the tendering process and attempted to cause both financial and reputational harm to the Complainant. It submitted it had performed similar scopes of work for PCA over the last 2 years.

33. PCA objected to the Complainant’s claim PCA was attempting to cause financial and reputational harm and asserted the procurement process was conducted in a fair and reasonable manner, respecting all applicable legislative, policy and procedural requirements.

34. PCA stated it is permitted, in accordance with the GCRs, to create and manage its own suppliers list of qualified companies and to invite bids directly from those companies. PCA advised OPO that it had excluded the Complainant from this, and other opportunities below the trade agreement monetary thresholds, due to the Complainant’s poor performance under other contracts it had with PCA, including one which had been terminated for default and for which the work had had to be taken over by another contractor. PCA also submitted the ITT contained a clause which would have allowed it to reject a bid based on evidence of previous performance issues.

35. After finding out about the opportunity, the Complainant contacted PCA by e-mail on January 13, 2022 to ask to submit a bid. PCA responded on January 18, 2022, to advise the Complainant it would not be invited to bid as the requirement was below the thresholds for the trade agreements and so PCA was using a pre-determined suppliers list, which would not be opened to allow the Complainant to bid.

36. Section 10.7 of the TBCP discusses the use of source lists:

• 10.7.1 Equal opportunity for all contractors. In accordance with the policy statement to reflect fairness in spending public funds and the requirements under the trade agreements, the method of procurement used for a particular acquisition must, within the limits of practicality, give all qualified firms an equal opportunity for access to government business. ... Therefore, contracting authorities should ensure that potential contractors are identified. Whenever projects are advertised, the area of coverage should not be so narrow that it inhibits free competition. If fewer than three respondents are reached by established advertising practices, the advertising coverage or bid solicitation should be increased. Contracting authorities that keep source lists from which bids are invited, may find it in their interests to establish a regular way to inform industry of this practice. This might take the form of periodic briefings to industry associations accompanied by adequate publicity, departmental public information brochures adequately circulated, newspaper and trade journal advertisements, electronic media advertisements, etc. For example, a contracting authority can use, inter alia, the electronic bidding system, and may supplement this by direct solicitation in order to maximize the involvement of the most qualified suppliers of goods and services.

37. PCA does not have its own policy regarding the creation, maintenance and use of suppliers lists. In its response to OPO, PCA referenced Public Services and Procurement Canada’s (PSPC) Supply Manual, which PCA characterized as a comprehensive procurement procedural reference document:

• 1.5. About the Supply Manual
  3. Other government departments and agencies are encouraged to use this Supply Manual as reference material for general procurement knowledge. However, for guidance on their own procurement practices, they should refer to their own organizations' policy and guidance procedures as well as Treasury Board contracting policies and directives. Other government departments and agencies should seek advice from their own internal policy group as some Supply Manual policies and procedures are applicable only to Public Works and Government Services Canada (PWGSC) Acquisitions Branch and the regional acquisitions offices.
• 4.75.45.1. Solicitation by Direct Invitation
  1. Source lists are generally the basis for requesting suppliers to bid/provide an offer or arrangement when a competitive procurement is not publicly advertised.
  2. Normally, where source lists are used, other than rotational source lists:
     1. Any other supplier making a request may be provided with a bid solicitation and be considered for evaluation [emphasis added].
     2. These lists may be supplemented by a contracting officer's knowledge of potential sources and recommendations made by the client.
• 4.75.45.10. Requirements not subject to trade agreements
  1. For requirements which are not subject to trade agreements and where open competition is not appropriate, due to the nature of the requirement, bids/offers/arrangements may be solicited directly from a list of suppliers. If a source list for the particular good or service does not exist, contracting officers should consider using the Supplier Registration Information service to identify potential sources of supply, especially for low dollar value goods and services. In preparing the source list, the contracting officer may include suppliers suggested by the client department.
  2. Automated Source Lists such as the Automated Vendor Rotation System (AVRS) and SELECT, provide a systematic rotation of vendors in order to ensure equity of opportunity for suppliers, and must be used where they apply.
  3. Whenever a supplier requests an opportunity to submit a bid/offer/arrangement on a specific requirement, that supplier must be given the opportunity, provided that it is not necessary to cancel the existing solicitation and issue a new one [emphasis added]. This provision does not generally apply to rotational source lists such as SELECT, which typically limits the solicitation to those suppliers selected for a particular requirement.
  4. Contracting officers are reminded that an effort should be made to ensure best value to Canada in terms of who is invited, and also that the principle of "fairness and access" be displayed in a practical manner by rotating opportunities to submit a bid/offer/arrangement within the suppliers on any given list.
• 8.135.40. Adjustment to Source Lists
  1. Terminations for convenience by Canada should not result in any adjustment of the source lists, while terminations by mutual consent may require correction of source lists. Terminations for default are usually the cause for the deletion or suspension of the contractor from the source list.

38. The ITT included PSPC’s Standard Acquisition Clauses and Conditions (SACC) clause R2410T by reference. It states in part:

1. GI09 (2013-04-25) Rejection of bid
   1. Canada may accept any bid, whether it is the lowest or not, or may reject any or all bids.
   2. Without limiting the generality of paragraph 1) of GI09, Canada may reject a bid if any of the following circumstances is present:
      5. evidence satisfactory to Canada that based on past conduct or behavior, the Bidder, a sub-contractor or a person who is to perform the Work is unsuitable or has conducted himself/herself improperly;
      6. with respect to current or prior transactions with Canada
         1. Canada has exercised, or intends to exercise, the contractual remedy of taking the work out of the contractor's hands with respect to a contract with the Bidder, any of its employees or any subcontractor included as part of its bid; or
         2. Canada determines that the Bidder's performance on other contracts is sufficiently poor to jeopardize the successful completion of the requirement being bid on.

39. PSPC’s Supply Manual section 4.75.45.1 is broken into 3 subsections; (1) subsection 4.75.45.1, which includes the general statement that, when a source list other than a national source list, is used, a supplier who requests it may be allowed to bid [emphasis added]; (2) subsection 4.75.45.5, provides the rules respecting the use of source lists when trade agreements apply, which is not applicable in this review; and (3) subsection 4.75.45.10, which sets out specific rules respecting the use of source lists where trade agreements do not apply, which is directly relevant to this review.

40. The general provision noted above, i.e., subsection 4.75.45.1.b. states that other suppliers requesting to bid may be allowed to do so. However, more specifically, where trade agreements do not apply, as in this case, subsection 4.75.45.10.c states that when a supplier makes a request to bid and it would not be necessary to cancel the existing solicitation and issue a new one, that supplier must be given the opportunity to submit a bid.

41. The Complainant had asked to be included on January 13, 2022. OPO notes this was 1 day after PCA had invited 2 (of 3) suppliers who were not originally included from PCA’s January 6, 2022 phone call list for this project. OPO also notes the optional site visit had yet to take place; it had been rescheduled from January 12 to January 14, 2022. Thus, in the circumstances related to this case, i.e., 6 days before the due date for bids, 1 day after 2 other suppliers had been invited to bid, and 1 day prior to the optional site visit, OPO does not believe the solicitation would have had to have been cancelled or re-issued if the Complainant had been added to the suppliers list and allowed to submit a bid.

42. PCA also noted the ITT included General Instructions clause GI09, which would have allowed PCA to reject any bid submitted by a supplier who “… with respect to current or prior transactions with Canada … Canada has exercised, or intends to exercise, the contractual remedy of taking the work out of the contractor's hands with respect to a contract with the Bidder…”. PCA stated, given its tenuous relationship with the Complainant, while it could have rejected the Complainant’s bid had the Complainant submitted one and had it been the lowest bid, this would have further aggravated the relationship with the Complainant.

43. PCA indicated it has the right to exclude the Complainant from all under-$100,000 construction project opportunities, including this one, because of the Complainant’s poor past performance. PCA provided OPO with information about 6 contracts it had awarded to the Complainant, worth a combined $4.8M. According to PCA, all of them were late in completion and 1, worth over $3M, was terminated for default, meaning there was a breach of a contractual obligation on the part of the Complainant , with the remaining work being given to another contractor.

44. Regarding the Complainant’s allegation that PCA attempted to cause the Complainant financial and reputational harm, OPO found nothing in the evidence provided by either Party to substantiate this allegation. OPO notes, if PCA knew in advance it would not accept a bid from the Complainant, by not inviting the Complainant to submit a bid PCA actually saved the Complainant from expending resources on what would ultimately be a rejected bid. In addition, OPO did not see any indication that PCA broadcast its issues with the Complainant to the industry-at-large in an attempt to denigrate the Complainant’s reputation. The decision to not invite the Complainant to submit a bid appears to be a business one based on the PCA-defined past performance issues.

Issue 3—Did Parks Canada Agency meet its obligations with respect to “transparency” in the award of the contract?

47. On January 13, 2022, the Complainant asked PCA by e-mail to be invited to submit a bid.

48. On January 14, 2022, the PCA contact person sent the Complainant’s request to colleagues asking if PCA should invite the Complainant to bid. After these consultations, PCA decided to not invite the Complainant to bid.

49. On January 18, 2022, the Complainant asked if PCA had received that January 13, 2022 e-mail. PCA stated they “…must have missed it”. PCA also advised the Complainant: (1) bids were due the next day; and (2) PCA would not be opening the source list for the project.

50. On January 21, 2022, the Complainant asked PCA to advise it when the contract was awarded and at what value. The Complainant also requested PCA’s internal policy regarding sourcing lists for under-$100,000 construction projects. On January 27, 2022, the Complainant re-asked for the PCA policy.

51. In its complaint to OPO, the Complainant stated that PCA “indicated” the Complainant will not be invited to tender projects under $100,000 and that PCA will not open or include the Complainant in its sourcing lists.

52. The ITT included Public Services and Procurement Canada’s (PSPC) Standard Acquisition Clauses and Conditions (SACC) clause R2410T by reference. It states in part:

• GI09 (2013-04-25) Rejection of bid
  2. Canada may accept any bid, whether it is the lowest or not, or may reject any or all bids.
  3. Without limiting the generality of paragraph 1) of GI09, Canada may reject a bid if any of the following circumstances is present:
     5. evidence satisfactory to Canada that based on past conduct or behavior, the Bidder, a sub-contractor or a person who is to perform the Work is unsuitable or has conducted himself/herself improperly;
     6. with respect to current or prior transactions with Canada
        1. Canada has exercised, or intends to exercise, the contractual remedy of taking the work out of the contractor's hands with respect to a contract with the Bidder, any of its employees or any subcontractor included as part of its bid; […]

53. OPO notes that PCA misled the Complainant on two occasions between January 13 and 18, 2022:

• Regarding the Complainant’s initial e-mail of January 13, 2022, the PCA contact person told the Complainant they “…must have missed it”. In fact, they had received it and shared it with colleagues, and a decision was made to not send the ITT to the Complainant.
• Additionally, when the Complainant followed up on January 18, 2022, PCA advised the Complainant it would not be opening the source list for this requirement. However, PCA had already opened the source list to allow 3 suppliers which were not part of a 9-supplier group PCA initially contacted on January 6, 2022.

54. The Complainant also requested a copy of the internal PCA policy regarding sourcing for construction projects under $100,000, presumably to verify if PCA was allowed to not invite the Complainant to bid on this project. While PCA did explain to the Complainant it felt the decision to not open the source list met the requirements of the GCRs and the Contracting Policy, PCA does not have its own internal policy, but it did not explain this fact to the Complainant.

55. As of May 30, 2022, OPO notes PCA had not yet informed the Complainant it will be debarred from bidding on future under-$100,000 construction projects. Given this, the Complainant has not had the opportunity to defend itself or explain its situations vis-à-vis the other 6 contracts noted by PCA.

56. In the tendering processes for all the contracts awarded to the Complainant (and the ITT at issue), a Contractor Performance Evaluation Report Form (CPERF), or CPERF, was referenced. CPERFs are PSPC forms used to evaluate the performance of the contractor during and upon the completion of work. In order for PCA to have been fully transparent with the Complainant, it should have:

1. filled out CPERFs for all 6 previous contracts;
2. shared the CPERFs with the Complainant; and
3. informed the Complainant that, due to the issues with the Complainant’s performance, the Complainant would be debarred from bidding on under-$100,000 projects.

57. The lack of transparency was exacerbated by PCA misleading the Complainant about having “missed” the January 13, 2022 e-mail.

Compensation

65. In order to recommend the payment of compensation to the Complainant, subsection 13(2) of the Regulations requires the following:

• 13 (2) If a competitive process was held, the complainant must have submitted a bid in respect of the contract to which the complaint relates, unless it was prevented from doing so because of the actions of the contracting department.

66. As noted above, the Complainant did not submit a bid, however, this is because it was directly prevented from doing so by the department, i.e. PCA.

67. Given this, the Procurement Ombudsman must consider the Regulations to determine the quantum of compensation due the Complainant:

• 12 (1) For the purpose of his or her review, the Procurement Ombudsman shall take into consideration any relevant factors, including the following:
  1. whether the complainant would have had a reasonable prospect of being awarded the contract, but for the actions of the contracting department;
  2. the seriousness of any deficiency in complying with the regulations made under the Financial Administration Act;
  3. the failure or refusal of the complainant to provide information about its goods and services at the request of the contracting department;
  4. the degree to which the complainant was prejudiced;
  5. the degree to which the fairness, openness or transparency of the procurement process was prejudiced; and
  6. whether any of the parties acted in bad faith.

68. In this case, it is unknown whether the Complainant would have been awarded the contract if allowed to bid, but it is fair to say that it would have had a reasonable chance of winning. In addition, the lack of fairness afforded to the Complainant in denying it the opportunity to bid and the lack of transparency on the part of PCA in deliberately misleading the Complainant could be construed as acting in bad faith. Overall, the actions on the part of PCA prejudiced the Complainant and compromised the fairness and transparency of the solicitation process.

Recommendation

69. In accordance with paragraph 13 of the Regulations, the Procurement Ombudsman recommends PCA pay compensation to the Complainant in the amount of one third of 10% of the value of the contract, or $2,325.00 to represent their one third chance to be awarded the contract.