Acquisition of vessel disposal services by Transport Canada

April 2024

Summary

On this page

• The complaint
• Mandate
• Chronology of events
• Issue 1: Did the Department properly evaluate the Complainant’s bid?
  • Analysis—Issue 1
• Issue 2: Should the contract have been awarded to the Complainant?
  • Analysis—Issue 2
• Conclusion
• Compensation
• Recommendations

The complaint

1. On October 18, 2023, the Office of the Procurement Ombud (OPO) received a written complaint from a supplier (the Complainant) regarding a contract awarded by Transport Canada (TC). The contract was for vessel disposal services in the Mitchinamecus River, and was awarded under Stream 2 of the Small Vessel Disposal services supply arrangement (SA) issued by Public Services and Procurement Canada (PSPC). The contract was awarded on October 6, 2023, and was valued at $74,158.88.

2. The Complainant stated it believed TC’s evaluation of its bid did not follow the criteria listed in the Request for Proposal (RFP).

“The Vessel Disposal Plan we submitted was formatted to and specifically addressed each item (a)—(j) of the Methodology section of the RFP Annex B Vessel Disposal Plan…. Within the Methodology section there was no mention of a request for workforce information and we are unable to determine how the evaluation team had reason to question whether adequate workforce would be assigned.”

3. This complaint raised the following issues:

• Did the Department properly evaluate the Complainant’s bid?
• Should the contract have been awarded to the Complainant?

4. On October 23, 2023, 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 Ombud requested TC provide all departmental records associated with the procurement and the award of the contract in question, as well as TC’s procurement policies and guidelines in effect at the time of the solicitation. The Procurement Ombud also requested the Complainant provide additional information not submitted as part of the complaint.

7. As described under section 11 of the Regulations, a review of a complaint may be performed under a ‘simple process’ or an ‘expanded process’. This complaint was reviewed under an expanded process on the request of the contracting department (TC). In accordance with subsection 11(4) and following of the Regulations, under an expanded process the contracting department is given 25 working days to comment on the complaint. These comments are then shared with the Complainant, which then has 10 working days to respond to the comments. If the Complainant raises new arguments or evidence in its response, the contracting department then has another 10 working days to provide additional information.

8. The chronology of events and the findings in this report are based on the records provided by the Complainant and TC, as well as relevant publicly available information. The failure by either the Complainant or TC to disclose any relevant records or information could impact the findings of this report.

Chronology of Events

9. On February 16, 2022, PSPC issued a supply arrangement (SA) to qualified suppliers, including the Complainant, for small vessel disposal.

10. On July 31, 2023, the solicitation was sent to 9 suppliers that were qualified under the SA.

11. On August 11, 2023, the bidding period closed. 3 bids were received, including a bid from the Complainant.

12. In late August and September 2023 3 TC evaluators completed individual technical evaluations of the 3 bids received.

13. On September 27, 2023, a consensus technical evaluation was completed by 3 TC evaluators. 2 of the 3 bids (including the Complainant’s) were found to be non-compliant with a mandatory requirement of the bid solicitation.

14. On October 6, 2023, the contract was awarded.

15. On October 6, 2023, result letters were sent to the 3 bidders. For the 2 bids deemed non-compliant, the letters stated that “Unfortunately, the evaluating team determined that the Vessel Disposal Plan did not comply with all the requirements of the solicitation, including the following: Plan did not contain the information to determine if adequate workforce was assigned.”

16. On October 9, 2023, the Complainant requested more information about the disqualification of its bid.

“As we would like to be the successful bidders going forward (our bid was less than half of the winning proposal) we’d like to better understand what is meant by  ‘Plan did not contain the information to determine if adequate workforce was assigned’.

We made an effort to structure our response per the form of the Annex B and C provided with RFP and we would like to know what we should have done differently or what we should have included to address your concerns.

We would never bid a job for which we didn’t have adequate workforce or subcontractors.”

17. On October 10, 2023, TC’s Contracting Authority asked TC’s Business Owner for more information about the Complainant’s disqualification.

18. On October 18, 2023, TC’s Business Owner provided TC’s Contracting Authority with an explanation of the evaluation results . There was no record indicating this explanation was provided to the Complainant.

“First, there was a lack of detailed explanation of your operations in the submission. A description of each step of the action plan would have been more optimal.

The elaboration, both in terms of the adequate manpower you will use, and the way in which you demonstrate that the operations will be carried out in an eco-responsible manner would have greatly enhanced your offer.

In addition, to maintain healthy competition in the wreck removal market and maximize the success of all, we believe that we may meet with you via an online meeting (teams) or otherwise to provide feedback.”

19. On October 18, 2023, the Complainant submitted a complaint to OPO, and indicated that it had still not heard back with regard to its request for more information on October 9, 2023.

20. On October 27, 2023, the Complainant had a debriefing with TC regarding its disqualified bid. According to the Complainant:

“They declined our proposal for not providing specifics on personnel and equipment. […]

Regarding their request for more details on the workforce we’d use [they] stated that in the future we should reference the personnel section of the Mandatory Evaluation Criteria we submitted when we initially applied to and were accepted into the program (2022). We find it hard to understand why we would reference a document we know they have access to and should have formed the basis of our selection into the Supply Arrangement.

In conjunction with this, we were asked to be specific in describing how the workforce would be deployed. I kid you not, they actually said that when mentioning we would inspect the vessel using a workboat, that we SHOULD HAVE mentioned that a captain would be on the boat. Note, the boat is not an autonomous vessel and we don’t operate it from the bank by remote control. A captain aboard it is implied. […]”

Issue 1: Did the Department properly evaluate the Complainant’s bid?

21.The Complainant stated that:

“the Vessel Disposal Plan we submitted was formatted to and specifically addressed each item (a)—(j) of the Methodology section of the RFP Annex B Vessel Disposal Plan[…]. Within the Methodology section there was no mention of a request for workforce information and we are unable to determine how the evaluation team had reason to question whether adequate workforce would be assigned. […] We submitted a bid price of [xxx] excluding taxes[….] The awarded contract was $64,500 excluding taxes.[…]”

22. The Department’s response to OPO stated that:

“As per the bid solicitation process under the SA, bidders must complete Part 2 of the Service Request form and provide the Vessel Disposal Plan, the Pricing Schedule and any other mandatory information, documentation and/or certification requested in Part 1 with their bid.

Annex B – Vessel Disposal Plan of solicitation T3999-230007 indicates to bidders that the Vessel Disposal Plan must include a list of subcontractors to be used to complete any part of the Work. The list must include the subcontractor’s name and specific work to be conducted.

Transport Canada does not challenge the capability of the Bidder key personnel since it was verified through its qualification under the SA. However, Transport Canada must also make its due diligence if and when the work is performed by subcontractors’ key personnel which have not been prequalified under the SA.

During the technical bid evaluation of the competitive process, the bid evaluation team found that there was not enough detail in the bid provided to ascertain if the requirement could be met by the bidder as the plan did not contain sufficient information to determine if adequate workforce was assigned.

Section C6.20, Environmental Protection Article 4 of the SA specifies that the Contractor must have environmental emergency response plans and/or procedures in place. Contractor and subcontractor employees must have received the appropriate training in emergency preparedness and response. Contractor personnel engaging in activities which may cause environmental impacts or potential non-compliance situations, must be competent to do so on the basis of appropriate education, training, or experience.

The proposal from the Bidder did not include sufficient information to demonstrate that they had the qualified resources to deliver the project (list of contractors/subcontractors being proposed); therefore, Transport Canada deemed the bid to be non-compliant.”

Analysis—Issue 1

23. On May 13, 2021, Treasury Board’s Directive on the Management of Procurement, which replaced the Treasury Board Contracting Policy, came into effect and was applicable at the time of this procurement. The Directive states the following regarding evaluation criteria during the solicitation and bid evaluation process:

• 4.3.1 states that contracting authorities are responsible for “conducting procurements on behalf of the department or agency, and establishing contracts and contractual arrangements based on sound procurement principles, including fairness, openness and transparency to obtain best value.”

• Further,

• 4.5.7 states that contracting authorities are responsible for “designing and conducting the bid evaluation process, financial assessment and due diligence.”

24. In its July 2017 decision in Valcom Consulting Group Inc. v. Department of National Defence, the Canadian International Trade Tribunal (CITT) emphasized that the evaluation of mandatory criteria is an issue of strict compliance. The CITT stated “The standard for evaluating bids against mandatory criteria is not one of a balance of probabilities. […] Bids must be evaluated thoroughly and strictly for compliance. It is not enough that a bid ‘may have been’ compliant or was ‘more likely than not’ compliant. A bid is either compliant or it is not.”

25. TC issued the RFP under the Small Vessel Disposal SA. The evaluation procedures and the selection methodology were described in B6.5—Basis of Selection: “a bid must comply with all requirements of the bid solicitation and meet all mandatory evaluation criteria to be declared responsive. The responsive bid with the lowest estimated price will be awarded the Contract.”

26. The RFP had 2 Annexes that bidders were required to complete. These were identified as:

• Annex B—Vessel Disposal Plan and
• Annex C—Pricing Schedule

27. Annex B—The Vessel Disposal Plan was divided in 3 sections:

• Section 1 required bidders to propose a step-by-step methodology
• Section 2 required bidders to provide a preliminary work schedule detailing the work breakdown structure with specific dates and
• Section 3 required bidders to list the subcontractors that would be used.

The 3 sections of the Vessel Disposal Plan are provided below.

Vessel Disposal Plan

28. Annex C—Pricing Schedule set out that bidders must insert the price of each applicable expense category, and provided a table for bidders to insert such information. This section included pricing information that was required in the Vessel Disposal Plan:

29. The Complainant’s bid was first evaluated individually by each member of the evaluation team. These individual evaluations were followed by a collective evaluation of the bid, commonly referred to as a consensus evaluation, by the same evaluation team.

30. During the individual evaluation of bids, evaluators determined the Complainant’s bid did not meet some of the mandatory requirements. In particular, the evaluators assessed the Complainant’s bid as not providing evidence of an adequate workforce. The following criteria were used by the 3 TC evaluators for their individual evaluations:

• Proposed work method
• Physical resources deployed
• Adequate work force
• Demonstrate that operations will be carried out in an environmentally responsible manner
• Security Requirements demonstrated
• Site approved for disposal

31. OPO noted there were inconsistencies between the mandatory requirements included in the RFP and the evaluation grid used by evaluators to perform their individual evaluations. Firstly, there are only 6 criteria listed in the evaluators’ grid whereas there are 10 criteria in the methodology, 4 criteria in the work schedule, and 1 criteria for subcontractors in the RFP. In addition, the RFP does not contain any mandatory criteria regarding an “adequate workforce” on the part of the bidder, whereas the evaluators’ grid does.

32. Further, none of the criteria in the individual evaluators’ grid match the wording of the criteria in the RFP. For example, the evaluation grid includes a criterion to “Demonstrate that operations will be carried out in an environmentally responsible manner,” while the RFP includes a criterion for “identifying environmental considerations, if any.” Despite the common focus on the environment, the outcome of these criteria is wholly different as the former tests for an operational requirement whereas the latter requires the identification of environmental considerations, if any.

33. On September 27, 2023, the TC bid evaluation team made its final determination through a consensus evaluation of bids. The documented results from the consensus evaluation indicated the Complainant’s proposal had been assessed as having failed to address the “adequate workforce” criterion. TC provided a single reason for this finding: “No mention therefore impossible to determine if the workforce is adequate.”

34. Further, the consensus evaluation does not provide a full summary of the criteria that were evaluated. The consensus evaluation does not include the same grid that was used during individual evaluations, but rather relies on a summary of whether the bid was compliant or non-compliant. Therefore, TC cannot demonstrate that it evaluated all the criteria included in the bid solicitation appropriately.

35. The Procurement Ombud finds there is sufficient evidence to conclude that the evaluators used criteria that were not disclosed to the bidders in the solicitation in their evaluation of the Complainant’s bid. Further, one of these undisclosed criteria (that is, “adequate workforce”) was used to disqualify the Complainant’s bid. Sections 4.3.1 and 4.5.7 in the Directive on the Management of Procurement require due diligence and sound principles based on fairness, openness, and transparency in solicitations and evaluations of bids. To accomplish this bidders must be told the criteria that will be used to evaluate their bids and award the contract. Based on the above, the Procurement Ombud finds that the Department did not properly evaluate the Complainant’s bid.

Issue 2: Should the contract have been awarded to the Complainant?

36. Section 12(2) of the Regulations states:

“The 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.”

37. Regarding the evaluation of bids, in its September 2014 decision in CAE Inc. v. Public Works and Government ServicesPR—2014—007, the CITT stated:

“[…] the Tribunal has accorded a large measure of deference to evaluators in their evaluation of proposals. It has stated that a government entity’s determination will be considered reasonable if it is supported by a tenable explanation, regardless of whether the Tribunal itself finds that explanation compelling.

Conversely, the Tribunal has been clear that it will find an evaluation to be unreasonable and will substitute its judgment for that of the evaluators when the evaluators have not applied themselves in evaluating a bidder’s proposal, have ignored vital information provided in a bid, have wrongly interpreted the scope of a requirement, have based their evaluation on undisclosed criteria or have otherwise not conducted the evaluation in a procedurally fair way.”

Analysis—Issue 2

38. Sufficient written evidence was provided by TC to support its assessment of the mandatory criteria. The procurement file is well documented and includes the RFP, bids, the individual and consensus evaluations, and resulting contract.

39. However, the Procurement Ombud finds that TC’s assessment of the Complainant’s bid was unreasonable because TC based its evaluation on undisclosed criteria, namely the adequacy of the bidder’s workforce. As noted under Issue 1 above, the RFP and evaluators’ grids contained inconsistent criteria and evaluators did not evaluate all requirements of the bid solicitation (that is, RFP) and therefore did not appropriately apply themselves in evaluating the bids.

40. In its analysis, OPO noted that TC stated that the Complainant failed to provide a list of subcontractors in its bid. The requirement from section 3 of the Vessel Disposal Plan in the RFP read: “The Vessel Disposal Plan must include a list of subcontractors to be used to complete any part of the Work. The list must include the subcontractor’s name and specific work to be conducted.” [emphasis added]

41. The Complainant provided its Vessel Disposal Plan for Annex B and addressed each of the criteria in the methodology (a-j). However, there is no mention in the Complainant’s Vessel Disposal Plan of either having or not having subcontractors.

42. In its pricing schedule submitted for Annex C, the Complainant included a price and the following information about subcontractors: “marina for hoisting and using their yard.” The following is a partial reproduction of the Complainant’s Annex C Pricing Schedule:

43. The above indicates that there was an intention to use subcontractors to perform part of the work, however, the requirement in Annex B was to name and list subcontractors in the Vessel Disposal Plan. Since the pricing schedule was not part of the Vessel Disposal Plan, and there was no mention of a specific subcontractor by name in the Vessel Disposal Plan, the Procurement Ombud finds that the Complainant’s bid was unclear or inconsistent regarding the use of subcontractors.

Conclusion

44. The Procurement Ombud found merit in the first issue raised by the Complainant. TC relied on undisclosed mandatory criteria when evaluating the Complainant’s bid, and deemed the bid non-compliant using the undisclosed mandatory criteria.

45. The Procurement Ombud did not find merit in the second issue raised by the Complainant. However, the Procurement Ombud found the evaluators’ assessment of the Complainant’s bid to be unreasonable, pursuant to Section 12(2) of the Regulations. In assessing whether the Complainant should have been awarded the contract, the Procurement Ombud found that its bid was unclear and inconsistent regarding compliance with a mandatory criteria in Annex B, i.e., the requirement to provide a list of subcontractors in the Vessel Disposal Plan. Therefore, the Complainant should not have been awarded the contract.

Compensation

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

"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."

47. As a competitive process was held and the Complainant submitted a bid, the Ombud may recommend payment of compensation in accordance with the Regulations.

48. As the Complainant should not have been awarded the contract, the Procurement Ombud cannot recommend payment of compensation based on lost profits. However based on the Ombud’s finding in Issue 1, the complainant is entitled to be compensated for its bid costs associated with its participation in the solicitation process.

49. At OPO’s request, the Complainant provided the costs it incurred to prepare and submit its bid, in the amount of $3,276.97.

Recommendations

50. In accordance with Paragraph 13(1)(b) of the Regulations, the Procurement Ombud recommends payment of $3,276.97 as compensation for the Complainant’s bid submission costs.

51. Further, the Procurement Ombud recommends that TC establish a framework which will ensure that evaluation grids match those included in solicitation documents, and that no criteria are included in the evaluation grids which are not explicitly stated in the solicitation and that all criteria in the solicitation are evaluated and that the basis of selection set-out therein is followed.

Date modified:

2024-10-08