Canada: Winning Strategies Before The Canadian International Trade Tribunal: Procedure And Practice*

Canadian Institute's Public Procurement Seminar - February 21 & 22, 2012

For a more complete review of some of the concepts discussed in the presentation please see the paper entitled Procurement Review Process at http://www.citt.gc.ca/publicat/guide_e.asp

Introduction

As part of Canada's obligations under the North American Free Trade Agreement¹ ("NAFTA"), the Agreement on Government Procurement² ("AGP"), the Canada-Chile Free Trade Agreement³ ("CCFTA"), and the Agreement on Internal Trade⁴ ("AIT"), Canada is required to establish an independent bid challenge authority.

Canada established the Canadian International Trade Tribunal (CITT), under the Canadian International Trade Tribunal Act, as the bid challenge authority for Canada.⁵

The CITT provides potential suppliers with a forum where they can bring complaints related to the government procurement process for contracts under NAFTA, AGP, CCFTA, and AIT⁶

CITT's Mandate and Powers

The CITT receives complaints pertaining to any aspect of the procurement process. It conducts inquiries into such complaints, considers extension requests, and makes determinations with respect to the complaints.⁷

However, the CITT's jurisdiction is limited to those complaints arising out of a designated contract under NAFTA, AGP, CCFTA, AIT, the Canada-Peru Fee Trade Agreement ("CPFTA") and the Canada-Colombia Free Trade Agreement ("CCOFTA") (collectively the "Agreements").⁸ The CITT must determine if the government procurement process under review complied with the requirements of the Agreements and other procedural requirements under the Canadian International Trade Tribunal Procurement Inquiry Regulations.⁹

The CITT has all the powers of a superior court of record with respect to attendance, swearing and examination of witnesses, the production and inspection of documents, the enforcement of its orders and other matters necessary or proper for the due exercise of its jurisdiction.¹⁰

Making a Complaint

Generally, a potential supplier must file a complaint within 10 working days after the day on which the basis of the complaint became known or reasonably should have become known to the potential supplier.¹¹

The 10 day time limit may be extended to a maximum of 30 days in situations where the failure to file the complaint within the time limits was beyond the control of the complainant or when the complaint raises issues of a systemic nature.¹² The reasons for seeking this extended time period should be laid out in the materials submitted to the CITT (The granting of this extension is separate from any extension the CITT may grant on the time limits set out in the Canadian International Trade Tribunal Rules pursuant to its overarching discretion to ensure fairness).¹³

It is important to take great care to work within the time lines of the CITT because the CITT strictly enforces the time lines. Regardless of the merit of the complaint, the CITT frequently dismisses complaints not brought within the 10 day time limit for filing a complaint.¹⁴

Complaint Format

While there is no prescribed format for filing a complaint with the CITT¹⁵, the complaint must be in writing and must include the following information:¹⁶

1. the complainant's identity, the designated contract concerned and the government institution that awarded or is to award the contract;
2. a clear and detailed statement of the substantive and factual grounds of the complaint;
3. the form of relief requested;
4. the address of the complainant to which notices and other communications respecting the complaint may be sent; and
5. all information and documents relevant to the complaint that are in the complainant's possession.

Along with the written complaint, the complainant must provide any additional information and documents required by the rules and the required application fees.¹⁷

Conditions for the CITT Accepting an Inquiry

The CITT must decide within 5 working days whether or not they will conduct an inquiry into the complaint based on the following considerations:¹⁸

• the complainant must be a potential supplier;
• • under the AIT, the potential supplier must be a "Canadian supplier": Northrop Grumman Overseas Services Corp. v. Canada (Attorney General), 2009 SCC 50;¹⁹
  • if there is nothing in the procurement process which prevents a supplier from bidding on the contract, they did not bid on the contract and the time for bidding has expired, then the supplier does not have standing before the CITT to bring subsequent complaints about the procurement process because they are not a "potential supplier": Canada (Attorney General) v. Enterasys Networks of Canada Ltd., 2011 FCA 207; ²⁰

• the complaint must concern a designated contract; and
• the information provided by the complainant must disclose a reasonable indication that the procurement has not been conducted in accordance with the applicable Agreement.

At this time, the CITT may also order that the government institution delay the awarding of a contract that has not yet been awarded until the outcome of the inquiry is decided.²¹

Time to Respond

The government institution subject to the complaint has 25 days from the date it receives notice that the CITT has accepted the complaint for inquiry to respond by filing a Government Institution Report (GIR).²² The GIR must set out the following information:²³

• the complaint;
• the solicitation;
• all other documents relevant to the complaint;
• a statement that sets out all findings, actions and recommendations of the government institution and responds fully to all allegations of the complaint; and

• any additional evidence or information that may be necessary in order to resolve the complaint.

The complainant has 7 days from the day they receive the GIR to provide the CITT with their comments on the GIR or make request that the case be decided on the basis of the existing record.²⁴

Confidentiality

Competitors of a potential supplier often seek leave to intervene in a CITT inquiry.²⁵ Therefore, the CITT has established very specific and detailed rules respecting confidentiality to ensure that information is only disclosed to the CITT, the government institution and legal counsel.²⁶

The Inquiry

The evidence presented to the CITT is based on written submissions.²⁷ Complaints will generally be decided solely on the basis of these written submissions.²⁸ A public hearing is only held if a written request is made by a party or the CITT decides to hold a hearing on its own initiative.²⁹ Usually, a hearing will be held where the written submissions provided to the CITT are insufficient or disputed.³⁰

If a public hearing is held, then witnesses may be called to testify under oath and a transcript of the proceedings is maintained.³¹

Keep in mind that the CITT may grant an interested party the right to participate in the CITT proceedings.³²

The Decision

Generally, a complaint will be decided within the time limit of 90 days.³³ However, any party may request in writing, within 3 days of filing their complaint, to opt for an express option which will result in a decision being made within 45 days.³⁴ The CITT will decide whether or not a complaint is suitable for an express option based on the reasons provided by the applicant, the complexity of the complaint and the CITT's workload.³⁵

If an extension of a time limit has been granted, the CITT must still finish the inquiry process and issue its findings and recommendations within 135 days.³⁶

Complaint Valid

If the CITT determines that a complaint is valid, the CITT may recommend a remedy.³⁷ These remedies can include, but are not limited to:³⁸

• the issuance of a new solicitation;
• the re-evaluation of the bids;
• the designated contract be terminated;
• the designated contract be awarded to the complainant; or
• the complainant be compensated by an amount specified by the CITT.
• • The CITT has released the Canadian International Trade Tribunal Procurement Compensation Guidelines to help assist the parties in cases where the CITT has recommended that compensation be paid and to inform them as to the principles that may guide the CITT at arriving at the appropriate amount of compensation.³⁹

In determining which remedy to recommend, the CITT must consider all the relevant circumstances to the procurement, including:⁴⁰

• the seriousness of any deficiency in the procurement process found by the CITT;
• the degree to which the complainant and all other interested parties were prejudiced;
• the degree to which the integrity and efficiency of the competitive procurement system was prejudiced;
• whether the parties acted in good faith; and
• the extent to which the contract was performed.

While the remedy proposed by the CITT is only a recommendation, recommendations are to be implemented by the government institution to the greatest extent possible.⁴¹ The government institution must advise the CITT of the extent to which it will implement the recommendations or, if the government decides not to implement the recommendations, it must provide the CITT with reasons as to why it will not implement them.⁴²

Complaint Dismissed

The CITT may decide to dismiss a complaint at any time where:⁴³

• the complaint has no valid basis;
• the complaint does not concern a procurement by a government institution;

• the complaint breaches the applicable time limits; or
• the complainant fails to file with the CITT the necessary information in support of its complaint.

Costs

The winner of the CITT inquiry may be awarded its nominal costs.⁴⁴

Judicial Review?

Parties may appeal the CITT's determination to the Federal Court of Appeal.⁴⁵

Case Example: Canada (Attorney General) v. Enterasys Networks of Canada Ltd., 2011 FCA 207⁴⁶

Issue: When is it permissible for a procurement tender to specify the item to be procured by brand name?

Facts: Federal Government released a tender asking for the desired equipment to be specified by brand name or equivalent. The applicable provision in NAFTA allows the government to require items to be specified by brand names only when there is no sufficiently precise or intelligible way of otherwise describing the procurement requirements and, in any event, the government must still use words such as "or equivalent" in the tender documentation. Enterasys brought a complaint to the CITT alleging that there were other ways of describing the procurement requirements other than by brand name and thus, the federal government was not allowed to specify its requirements by brand name. The government presented a substantial body of evidence explaining their reasons for requiring brand names.

CITT Decision: Majority and dissenting member differed on the legal relevance of the evidence forwarded by the government.

Majority disregarded the evidence and found the government violated NAFTA because they had made the use of brand names their default position whenever they requested equipment that was to be integrated into their existing network. The majority stated:

The dissenting member found the evidence relevant stating:

FCA Decision: If the FCA concluded that the CITT had the authority to determine the Enterasys complaints (see previous discussion of case), then the FCA would have found the conclusion of the majority unreasonable and the conclusions of the dissenting member reasonable.

The CITT Limitations and Your Decision to Proceed with a Complaint

A fairly recent case of the Ontario Superior Court of Justice affirmed that, notwithstanding the creation of the CITT, courts still have jurisdiction over actions against the federal crown in tort and breach of contract arising out of the tendering process: Envoy Relocation Services Inc. v. Canada (Attorney General), [2008] O.J. No. 1789 (S.C.J.).⁴⁷

Proceeding in court may become important given the limitations in the CITT process, which include:⁴⁸

• the scope of the CITT's jurisdiction is limited in so far as they can only hear complaints relating to whether or not Canada breached its obligations under specified trade agreements, but not all federal contracts are caught by these agreements;
• actions in tort, breach of contract or other legal obligations borne out of the common law are also outside of the CITT's jurisdiction given that these causes of action are not caught by the terms of the relevant trade agreements;
• extremely short time limits in the CITT inquiry process, as listed above;
• unlike a notice of civil claim, the written complaint provided to the CITT must include all of the evidence the complainant seeks to rely on;
• no right to oral or documentary discovery;
• generally little opportunity for an oral hearing;
• the remedy that is obtained from the CITT is not the equivalent of an enforceable order of the court; and
• the remedy of the CITT is simply a recommendation and should the government institution decline to implement the recommendation, there is nothing the CITT can do.

Other Matters Outside the CITT's Jurisdiction

The CITT does not have jurisdiction to consider complaints relating to:⁴⁹

• subcontract awards unless the award is made by or for the government institution;
• • (Notably, the government institution will only owe a duty of care to the bidding party and not a potential subcontractor to that bidding party: Design Services Ltd. v. Canada, 2008 SCC 22);
• the performance or administration of the contract; and
• matters in the jurisdiction of other bodies.

Why You Want to Go Before the CITT

Despite the CITT's limitations, the percentage of successful complaints heard under the CITT is high.⁵⁰ Furthermore, the CITT provides quick and inexpensive results when compared to regular court proceedings.⁵¹

* Presentation and materials prepared by Daniel Kiselbach with help from Leanna Krause and Nicholas Peterson, Articled Students.

Footnotes

^{1. NAFTA at tab A-6, pg. 16, art. 1017.}

^{2. AGP at tab A-8, pg. 17, art. XX.}

^{3. CCFTA at tab A-9, pg. 6-7, art. Kbis-13(2).}

^{4. AIT at tab A-7, pg. 31, art. 514.}

^{5. Procurement Review Process Paper at tab C-3, pg. 1.}

^{6. Procurement Review Process Paper at tab C-3, pg. 1.}

^{7. CITT Act, ss. 16 and 30.11(1) at tab A-1.}

^{8. CITT Procurement Inquiry Regulations, s. 3(1) at tab A-4 and Procurement Review Process Paper at tab C-3, pg. 3.}

^{9. Procurement Review Process Paper at tab C-3, pg. 3.}

^{10. CITT Act, s. 17(2) at tab A-1.}

^{11. CITT Procurement Inquiry Regulations, s. 6(1) at tab A-4.}

^{12. CITT Procurement Inquiry Regulations, s. 6(3)-(4) at tab A-4.}

^{13. Procurement Review Process Paper at tab C-3, pg. 5-6.}

^{14. Overview of Canadian Government Procurement Law at tab C-4, pg. 5.}

^{15. Procurement Review Process Paper at tab C-3, pg. 4-5.}

^{16. CITT Act, s. 30.11 at tab A-1.}

^{17. CITT Act, s. 30.11 at tab A-1.}

^{18. CITT Procurement Inquiry Regulations, s. 7 at tab A-4.}

^{19. Tab B-4. Important because it shows that if you want to bid through a Canadian entity if you want the protections of the AIT. Read the article "Jurisdiction for procurement claims" at the back of this tab.}

^{20. Canada (Attorney General) v. Siemens Enterprise Communications Inc. (formerly, Enterasys Networks of Canada Ltd.), 2011 FCA 251, where the Federal Court of Appeal came to the same conclusion.}

^{21. CITT Act, s. 30.13(3) at tab A-1.}

^{22. CITT Rules, s. 103 at tab A-2.}

^{23. CITT Rules, s. 103 at tab A-2.}

^{24. CITT Rules, s. 104 at tab A-2.}

^{25. Overview of Canadian Government Procurement Law at tab C-4, pg. 5.}

^{26. CITT Act, ss. 44-49 and Guideline: Designation, Protection, Use and Transmission of Confidential Information in the back folder of the binder.}

^{27. Procurement Review Process Paper at tab C-3, pg. 7 and see also CITT Rules, s. 25 at tab A-2.}

^{28. Procurement Review Process Paper at tab C-3, pg. 7 and Overview of Canadian Government Procurement Law at tab C-4, pg. 5.}

^{29. CITT Rules, s. 105 at tab A-2.}

^{30. Procurement Review Process Paper at tab C-3, pg. 7.}

^{31. Procurement Review Process Paper at tab C-3, pg. 7.}

^{32. CITT Act, s. 30.17 at tab A-1.}

^{33. CITT Procurement Inquiry Regulations, s. 12 at tab A-4.}

^{34. CITT Rules, s. 107 at tab A-2 and CITT Procurement Inquiry Regulations, s. 12 at tab A-4.}

^{35. Procurement Review Process Paper at tab 3, pg. 6.}

^{36. CITT Procurement Inquiry Regulations, s. 12 at tab A-4.}

^{37. CITT Act, s. 30.15(2) at tab A-1.}

^{38. CITT Act, s. 30.15(2) at tab A-1 and Procurement Review Process Paper at tab C-3, pg. 8.}

^{39. CITT Procurement Compensation Guidelines at tab A-5.}

^{40. CITT Act, s. 30.15(3) at tab A-1.}

^{41. CITT Act, s. 30.18(1) at tab A-1.}

^{42. CITT Act, s. 30.18(2) at tab A-1 and CITT Procurement Inquiry Regulations, s. 13 at tab A-4.}

^{43. CITT Procurement Inquiry Regulations, s. 10 at tab A-4.}

^{44. CITT Act, ss. 30.15(4) and 30.16 at tab A-1 and Procurement Review Process Paper at tab C-3, pg. 8.}

^{45. Procurement Review Process Paper at tab C-3, pg. 8 and Overview of Canadian Government Procurement Law at tab C-4, pg. 5. I cannot find where this is in the CITT Act, Rules or Regulations.}

^{46. Canada (Attorney General) v. Siemens Enterprise Communications Inc. (formerly, Enterasys Networks of Canada Ltd.), 2011 FCA 251, where the Federal Court of Appeal came to the same conclusion.}

^{47. Canadian Procurement Litigation Update 2008 at tab C-5, pg. 114 and Envoy Relocation Services Inc. v. Canada (Attorney General) at tab B-5. Envoy is currently being appealed. See article "Lingering doubt for aggrieved" at the back of tab B-5.}

^{48. Canadian Procurement Litigation Update 2008 at tab C-5, pg. 114-115 and see also Overview of Canadian Government Procurement Law at tab C-4, pg. 5.}

^{49. Procurement Review Process Paper at tab C-3, pgs. 9-10.}

^{50. verview of Canadian Government Procurement Law at tab C-4, pg. 5.}

^{51. Overview of Canadian Government Procurement Law at tab C-4, pg. 5.}

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.