Curing compliance irregularities

From the December 2023 print edition

To avoid bid compliance disputes, public institutions are increasingly adopting post-bid compliance rectification procedures. However, to be legally defensible, rectification procedures must operate outside of the “bid repair” restrictions of Contract A bidding rules. Further, rectifications must be administered in a fair and procedurally correct manner.

For example, in its May 2019 determination in Accipiter Radar Technologies Inc. v. Department
of Public Works and Government Services, the Canadian International Trade Tribunal determined that the government’s unequal application of rectification and clarification procedures resulted

Paul Emanuelli is the general counsel of The Procurement Office and can be reached at [email protected].

in a biased evaluation process.

The dispute dealt with a request for proposal for coastal radar equipment for the Canadian Coast Guard. The complainant alleged that the government gave preferential treatment to competing bidders during
a rectification period and biased the evaluation process through the unequal use of clarifications. While the Tribunal found that the government did not apply biased procedures in its rectification process,
it agreed with the complainant that the use of clarifications unfairly favoured competing bidders and biased the evaluation.

The Tribunal determined that the inconsistent use of clarifications prior to engaging in a rectification process gave the other bidders a material advantage in responding to the compliance requirements and placed the complainant at a disadvantage. As this case illustrates, post-bid compliance rectifications must be administered in a fair and procedurally correct manner and should be distinguished from the broader clarification rights that may also apply to various aspects of an evaluation process, including the scoring of bids.

Flawed evaluation
Similarly, in its October 2020 determination in Falcon Environmental Inc. v. Canada, the Canadian International Trade Tribunal ordered the cancellation of a contract and ordered that the contract be awarded to the complainant after concluding that the original award was based on a flawed evaluation process. The dispute dealt with a request for proposals for aerodrome wildlife control services at Canadian Forces Base Trenton and Canadian Forces Detachment Mountain View. While the Tribunal accepted the government’s use of a post-bid rectification process to allow bidders to rectify and cure non-compliance issues in their initial bids, it found that the tender call rules did not permit the government to use information collected through the rectification process to also score the bids.

The Tribunal therefore ruled that the original contract award was invalid and that the contract should be awarded to the complainant. As this case illustrates, evaluators should draw a clear distinction between post-bid cure procedures that permit bidders to rectify areas of non-compliance in their initial bid submissions, and other post-bid procedures that may allow bidders to refine their original scores through multi-stage bidding procedures. Unless the solicitation rules specifically allow for the post-bid collection of information for scoring purposes, evaluators should not use information collected for compliance rectification purposes for the subsequent scoring of compliant proposals.

Finally, in its February 2021 determination in Marine Recycling Corporation and Canadian Maritime Engineering Ltd. v. Canada, the Tribunal recognized the government’s phased approach to bid compliance. The case dealt with a request for proposal (RFP) for vessel disposal services. The RFP included
a phased bid compliance process where bids were first reviewed for pricing irregularities to determine whether any information required to be included in the financial bid was missing so that bidders could remedy any identified deficiencies. Once pricing issues were addressed, the phased rectification process moved to a second technical review phase to identify any instances where the bid failed to meet any other mandatory criteria. As the Tribunal explained, after the technical compliance review, bidders were issued a compliance assessment report identifying any mandatory criteria that the bid failed to meet. After receiving those reports, bidders were then provided a period in which they could provide additional information to achieve compliance with the identified criteria.

The Tribunal found no issue with the phased compliance process used by the government. In fact, it overruled the government’s decision to cancel the RFP over other issues relating to the subsequent scoring of those compliant proposals. The Tribunal determined that the cancellation decision was unnecessary and ordered the government to proceed with re-evaluating the proposals that had passed the phased compliance screening process.

As these cases illustrate, recent decisions are increasingly recognizing the validity of transparent rectification processes that allow bidders to cure compliance irregularities so that a larger number of submissions remain eligible for scoring in the subsequent stages of the evaluation process. While rectifications can help resolve bid compliance issues and avoid unnecessary litigation, these procedures must be properly administered to be defensible against legal challenge.