Government Contracts,

Procurement and
Tender Law in Canada

A COMPLETE GUIDE
 Copyright © 2020 Fasken Martineau DuMoulin LLP.
All rights reserved.

All information and opinions contained in this publication are for general information purposes only and
do not constitute legal or any other type of professional advice. The content of this publication is not
intended to be a substitute for specific advice prepared on the basis of an understanding of specific
facts. Any reliance on this information is at your own risk.
Table of Contents
Part I Pre-Solicitation Period 5
Early Engagement Sessions or Industry Days 5
Draft Tender Documents 5
Criteria for Future Contract Award 6
Pre-qualification Processes 6
Grounds for Exclusion 7

Part II Bid Preparation and Managing the Solicitation Period 8

Understanding the Requirements 8
Attempting to ‘Save’ a Bid by Using Qualifying Statements 10
Privilege and Waiver Clauses: Don’t Rely on Them to Save
a Non-Compliant Bid 10
Canadian Common Law - The Duty of Fairness 11
Clarifying Requirements During the Solicitation Period 14

Part III Bid Evaluation 16

The Bid Evaluation Process 16
Preventing Bid Disqualification - Preliminary Bid Review Process 17

Part IV Contract Award, Debriefing and Disputes 18

Disputes 19

Part V Additional Information on Trade Agreements 20

Determining Coverage 20
The Essential Rules 21
Exceptions from the Trade Agreements 21
Determining Requirements 22
Evaluating Bids 22
Contract Award 23
Disputing a Procuring Entity Decision 24

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Overview
The rules governing public procurement in Canada stem from a number of legal sources,
including the common law, trade agreements and legislation. In Canada, the common law of
procurement has been established over several decades. The basic fundamental tenets of public
procurement - whether under the common law or trade law - are fairness (good faith), openness,
and transparency.

In Canada, competitive procurement is the primary method used by public entities to procure
goods, services, and construction.

Governments leverage procurements to achieve social, policy and economic benefits - which is
why they cannot be viewed through the same lens as commercial arrangements. For the public
buyer, procurements must:

• Be fiscally appropriate (in line with budgets; achieve good value for money or other financial
objectives)
• Be consistent with government priorities, taking in to account a “whole of government”
perspective
• Be conducted fairly and consistent with policies and trade obligations
• Achieve social, policy and economic objectives

Regardless of the amount of agility governments seek to bring to the procurement process, these
broader objectives will necessarily lead to additional cost and complexity considerations for any
procurement (for both government and suppliers). As government priorities change, so will the
social, policy and economic benefits required to be achieved by the procurement process.

For ease of reference, this guide is broken in to 4 parts that follow the procurement process:

PART I PART II PART III PART IV

PRE-SOLICITATION BID PREPARATION AND BID EVALUATION CONTRACT AWARD,
AND REQUALIFICATION THE SOLICITATION DEBRIEFINGS AND
PERIOD DISPUTES

Part 5 of the Guide provides more detailed information on procurements subject to trade
agreements.

We want to ensure our Guide provides information that is relevant to our readers.
Should you have any questions, comments or suggestions, please send them to:

Marcia Mills, Editor-in-Chief

[email protected]

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PART I

Pre-Solicitation Period
Early Engagement Sessions or Industry Days
As part of the procurement planning process, a procuring entity may conduct preliminary
investigations to assess the market’s interest in its requirements (e.g. what it is that it needs) or
its proposed procurement strategy. Research of open source information on the availability of
goods, services or suppliers may be done directly or through a third party.

A positive trend amongst public sector buyers to improve the success of their procurements is
the increasing use of early engagement sessions, even in advance of the drafting of the tender.
These sessions seek out industry feedback on the buyer’s requirements – to determine whether
industry has current capability to meet the requirements, or is willing to develop the necessary
capabilities if they don’t exist.

Engagement sessions give suppliers the “context” for the upcoming procurement, offering an
opportunity to gain advance understanding of requirements, to provide input into the process,
to ask questions, to seek clarification, to meet government officials involved in the process and to
see who potential competitors may be. For companies that might be interested in subcontracting
for part of the work, engagement sessions also provide an opportunity for them to meet potential
prime contractors who intend to submit a bid.

Draft Tender Documents

Procuring entities may release draft tender documents to obtain industry input into requirements,
particularly for complex or novel acquisitions where the procuring entity wishes to determine
if the marketplace can fulfill its needs (e.g. if the technology exists now and can be used as
intended; if there are alternative solutions etc.).

Access to draft tender documents provides an invaluable opportunity for a potential supplier
to gain an understanding of the requirements, to provide comments on the requirements to the
procuring entity, to identify requirements that are unclear and to determine if one should invest
time, energy and resources to submit a bid. Many of the “rules of the process” set out in the draft
tender will stay consistent through to the final tender, as will elements such as bidder instructions,
mandatory certifications, governing policies and “standard terms” for contracts.

Trade Agreements

Procuring entities are not required to engage in advance engagement sessions. However,
if they do so, they must respect the trade agreement principles generally applicable to
procurement.

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Criteria for Future Contract Award
Although it may seem premature, reviewing the criteria for contract award is essential as well. If
contract award criteria are vague or unclear, or if the criteria provide such a wide discretion to the
procuring entity that the essential requirements of good faith or transparency of the procurement
process are compromised or negated, this should be questioned at the outset of the procurement
process.

Draft tender documents should be reviewed with the same degree of attention as is provided to
any final tender documents, including engaging the subject matter experts who will be respon-
sible for overseeing and preparing the final bid submissions.

Pre-qualification Processes
Procuring entities may use a pre-qualification process to down-select bidders either in advance
of release of the formal tender or as the first phase of a solicitation process. Advance qualification
of bidders can be a useful method to improve the efficiency of the ultimate procurement process
as it ensures that only those suppliers who possess the essential requirements participate in the
actual tender process.

Pre-qualification can be used for individual contracts, to provide the procuring entity with a list
of qualified suppliers for a future procurement, or to create a list of suppliers for more general
supply arrangements of commercial goods or services that are required on a recurring basis or
that can be supplied “as is” (e.g. temporary staffing arrangements, office supplies, food, fuel or
basic computer equipment such as laptops).

Trade Agreements

The rules for pre-qualification processes under the trade agreements are more prescriptive,
and the pre-qualification process must meet the same requirements for fair, open and
transparent procurements as the final tender process. Pre-qualification processes cannot
be designed to be overly restrictive so as to unfairly limit competition in the future. The
process can be conducted for a specific procurement (e.g. a one-time qualification process)
or for future, yet-to-be determined procurements. In each case, the rules that apply to
qualifications are different. Depending upon the trade agreement, the pre-qualification
process may also be identified as “conditions for participation”.

For a procuring entity wishing to create a list of pre-approved or registered suppliers for
future but as yet unknown purchases, all trade agreements require that new suppliers
must be able to qualify for these ‘standing’ supplier lists. This qualification process is
usually required by trade agreements to be conducted annually, subject to certain limited
exceptions.

The procuring entity must limit the pre-qualification requirements to those conditions that
are essential for ensuring the supplier possesses the capacities and abilities necessary to
undertake the requirements of the procurement (e.g. the contract).

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 While each trade agreement will have its own specific requirements, common rules for pre-
qualification under all of the trade agreements require that any conditions for qualification:

– must be limited to those that are essential to ensure a supplier has the legal and financial
capacities and the commercial and technical abilities to undertake the procurement;

– cannot be unnecessarily restrictive, and not otherwise expressly excluded by an applicable

trade agreement;

– must be set out in advance in the tender notice and/or tender documentation;

– cannot require a bidder to have prior contracts awarded by that procuring entity; and

– must permit all qualified suppliers to participate in the procurement they have been pre-
qualified for, unless notice was provided in the original request for pre-qualification that
identified a limited roster of pre-qualified suppliers would be selected and the criteria that
would be used to do so.

Paying attention to a pre-qualification process is important. Suppliers who do not qualify at the
pre-qualification stage are thereafter excluded from participating in the eventual procurement
process and may have to wait for a prolonged period of time before the pre-qualification list is
re-opened to new suppliers.

Grounds for Exclusion

While a pre-qualification process sets certain requirements that must be met to participate in a
procurement, all public procurements will provide that, if certain conditions exist, the bidder must
or will likely be disqualified from competing in the solicitation process (even if they are otherwise
capable of meeting the pre-qualification requirements or their bid is compliant with the terms
of the tender). These types of exclusions will address issues of fundamental legislative or policy
importance that would prevent a public entity from entering in to a contract with that bidder.
For example, certain criminal convictions, fraud, bankruptcy, insolvency, repeated material
performance failures on prior contracts, conflict of interest or collusion.

Trade Agreements

The trade agreements provide a non-exhaustive list of factors that are grounds for bidder
elimination quite similar to the grounds noted above: bankruptcy, insolvency, false
declarations, contract performance issues, criminal offenses, misconduct or failure to pay
taxes. Procuring entities are not prohibited from adding additional grounds for exclusion,
provided that this process and the identified grounds for exclusion remain in compliance with
the trade agreements.

The grounds for exclusion in a tender will become material terms of any awarded contract, the
breach of which usually entitles the contracting authority to terminate the contract.

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PART II

Bid Preparation and Managing

the Solicitation Period
Throughout the Guide, we identify several reasons why bids fail. One of the most common causes
arises during the bid preparation process, when a bidder fails to closely read the requirements,
makes assumptions about vague or unclear requirements, or believes that the buyer can be
swayed to accept an alternative to what was asked for.

If a draft tender was not provided in advance, the essential first step is to review the tender
documents closely and in full, to ensure a clear understanding of the requirements, to identify
requirements that are unclear, and to determine if one should invest time, energy and resources to
submit a bid. Close review of the bidder instructions (including time limits and information and bid
submission deadlines), mandatory requirements, mandatory certifications, governing policies and
“standard terms” for contracts should be done well in advance of the bid submission deadline.

Whether the tender is subject to trade agreements or not - it is the bidder that bears the
responsibility to ensure they understand the requirements and to submit a responsive bid.

Once a tender is released:

• Achieving significant modification of the tender or its requirements is unlikely

• Communicating with government officials will be strictly controlled
• Public sector buyers are subject to strict rules– they cannot accept an alternative that does not
meet the requirements, unless the tender expressly permits this to occur (and even then, the
variations from the original requirement are not open-ended by any stretch of the imagination)

Bidders are always responsible for ensuring they understand the tender requirements and sub-
mitting a bid that responds to those requirements.

Understanding the Requirements

The drafting of requirements and the development of a bid in response to these requirements
is a complicated process. Inadvertent errors that skew requirements or scoring methodologies
can occur through no fault of the drafter. Inherent assumptions about requirements can lead to
inherent assumptions in bid preparation - either of which can negatively impact the bid evaluation
and/or score. Failing to closely read the requirements to ensure a full understanding of what is
required; or making assumptions about what a requirement means when it is unclear, are two of
the most common - and fatal - bidding errors.

The subject matter experts on the bid preparation team should be able to determine, at a
minimum, the basic elements for each requirement:

• what is the requirement;

• why is this a requirement;
• when does the requirement have to be met;
• how does the bidder demonstrate the requirement is or will be met; and
• is the requirement mandatory or not.

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In addition to understanding the requirement, the team must also be able to clearly identify for
each requirement:

• what is being evaluated;

• how it is being evaluated;
• what scoring methodology is being applied; and
• how is the score is being determined.

Unclear or vague tender requirements do not shift the bidder’s responsibility to understand the
requirements - the bidder’s obligation remains solidly in place.

Mandatory versus non-mandatory requirements - critical differences

A mandatory requirement is a requirement that must be met in order for a bid to remain in the
competition. Mandatory requirements are usually identified as requirements that a bid/bidder
“must”, “shall” or “will” meet.

Compliance with all of the mandatory requirements of a tender is one of the cornerstones
for maintaining the integrity of the procurement process, and will be thoroughly and strictly
evaluated. If not met, the bid will be disqualified, deemed non-responsive or rejected.

While the tender may permit a bidder to provide an explanation as to how they meet a mandatory
requirement, at its most basic level a mandatory requirement is a “yes” or “no” proposition - the
requirement is met or it is not. Typically, a mandatory requirement requires a response confirming
that the requirement is met, without exception.

Non-mandatory requirements will be identified in the tender documents using words such as
“may” or “should” or described as “optional” or “value-added” offerings. Bidders are usually
required to provide detail describing how they meet such a requirement. Non-mandatory
requirements may be scored - the better the requirement is met, the greater the number of points
awarded.

However, in any scenario where points are awarded, it is important to take note of requirements
where a minimum number of points must be achieved (e.g. “minimum points to pass”). In these
cases, the minimum points threshold operates as a mandatory requirement - failing to meet the
point threshold can mean elimination of the bid from the competition.

As a general rule, mandatory requirements must be met, without qualification.

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Attempting to ‘Save’ a Bid by Using Qualifying Statements
Mere irregularities in bids (for example, forgetting to execute a certificate) should not result in the
disqualification of a bid that otherwise complies with all material conditions of a tender. However,
bid qualifications, or modifications to the stated requirements of the tender made in a bid
submission, are not “mere irregularities”. Bids that differ in quantity and quality from the tender
requirements or that attempt to qualify or modify the terms of the tender are typically considered
to be counter-offers and are incapable of acceptance.

Even if the qualifying statements may not result in a bid being converted into a counter-offer,
qualifications can create two significant problems:

Qualifying statements in bids can render a bid non-compliant and

For bidders
incapable of acceptance.
Accepting bids which modify or qualify tender requirements
For procuring entities
breaches the implied duty of fairness.

Public sector buyers are subject to strict rules in procurement – if the requirements are for a
particular technical outcome or solution, then that is what the bid must be evaluated against.
Accepting an alternative that does not meet the requirements, unless the tender expressly
permits this to occur (and even then, there are limits to how much deviation a procuring entity
can permit), amounts to acceptance of a non-compliant bid.

The underlying rational for rejecting qualifications of requirements in bids is fairly straightforward
- the bidder who was permitted to submit a bid containing qualifications gains an unfair
advantage over other bidders who, given the same opportunity, may have wished to also modify
or qualify their bids or submit counter-offers.

Before qualifying any requirement or offering a modification to a stated requirement in a bid

submission, confirm that the requirement is not a mandatory requirement and that the rules of
the tender permit bidders to do so.

Privilege and Waiver Clauses:

Don’t Rely on Them to Save a Non-Compliant Bid
Procuring entities may seek to balance the risk of the loss of an otherwise great bid by including
a clause - usually referred to as a “privilege clause” - in the tender documents. Privilege clauses
enable procuring entities to reserve a right to accept bids that may not respond one hundred
percent to the tender requirements.

While this might seem to be a workaround, the Canadian courts have been clear for over 30 years
that privilege clauses do not create a carte blanche for procuring entities or bidders. If a tender
contains a privilege clause that permits a procuring entity to accept a non-compliant bid, it may
not save the day, particularly if the bid’s non-compliance results in a failure of the bid to address
an important or essential requirement and there is a “substantial likelihood” that the bid defect
would have been significant in the procuring entity’s decision-making process.

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Even in the face of a broad privilege clause, a court is unlikely to excuse the failure to comply with
mandatory requirements on the basis that such an approach is arguably harmful to the public
solicitation system, creates commercial uncertainty, and undermines the credibility and integrity
of the solicitation process.

Procuring entities may also use “waiver of informality” clauses, allowing them to waive minor
omissions or defects.

For example, in Double N Earthmovers v. Edmonton (City),1 the call for tenders required that
serial and license numbers be provided for all equipment to be used by the bidder. The successful
bidder failed to provide this information for certain pieces of equipment, but was awarded the
contract when the City exercised its rights under the waiver of informality clause in the tender
documents. An unsuccessful bidder sued the City of Edmonton and the matter made its way
through the courts, eventually landing at the SCC.

In a split decision, the SCC, applying the material non-compliance test, held that the failure
to include serial numbers was not something that could materially affect the price or the
performance of the procurement. The court found that the City was not aware of the successful
bidder’s deceit until after it had accepted the bid and it had not colluded with the successful
bidder during the bidding process to treat other bidders unfairly. Once the City accepted the bid,
it was permitted under Contract A to waive this informality and award the bid to the successful
bidder. The court identified that a procuring entity has no duty to investigate whether a bidder
will comply with tender requirements, and can rely on the terms of the tender because each
bidder is legally obliged to comply in the event that a bid is accepted.

For procurements subject to trade agreements, the rules applicable to compliant and non-
compliant bids are more stringent.

Privilege clauses or waiver clauses are not the solution to a poorly structured tender or bid.

Even if a tender document contains a privilege clause, the exercise of the rights provided to a
procuring entity in a privilege or waiver clause are optional – the procuring entity is not required
to exercise this right even if all bidders are non-compliant.

Canadian Common Law - The Duty of Fairness

The origins of the legal framework applied to the tender process in Canada can be traced back to
the 1981 Supreme Court of Canada (SCC) decision in Ron Engineering. 2 This case concerned a
tender for a construction contract for the Government of Ontario’s Water Resources Commission
in the City of North Bay. The tender documents required a bid deposit at the time of bid filing.
While the tender permitted for the return of the bid deposit, if a bid was withdrawn within sixty
days of the opening of the bids, the deposit could be retained.

1. 2007 SCC 3.
2. The Queen in Right of Ontario v. Ron Engineering, [1981] 1 SCR 111 (Ron Engineering).

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After the opening of bids, one of the bidders, Ron Engineering, identified a pricing error in
its submitted bid, rendering its bid price considerably lower than the rest of the bidders.
Ron Engineering sent a notice of its error and asked to withdraw its bid without penalty. The
Commission refused, accepted the bid and submitted the contract for Ron Engineering’s signature.
Ron Engineering refused to sign, maintaining that since it had notified the Commission of its error
prior to acceptance of the bid, the offer was not capable of being accepted. The Commission,
relying on the bid deposit terms, retained Ron Engineering’s bid deposit and accepted another bid.

The arguments made by Ron Engineering were fairly complex but in essence, Ron Engineering
argued that because it had identified its error prior to acceptance, it had not withdrawn its bid
and thus the right to retain the deposit was not triggered.

Ultimately, the SCC determined that the Commission was entitled to keep the bid deposit
because that is what the tender documents said. The Court held that when a mistake was proven
by the production of reasonable evidence after the bids were opened, the person receiving the
bid was not prevented from accepting the bid or seeking to forfeit the bid because the test is
applied at the time the bid is submitted and the rights of the parties have crystallized.

While the outcome may not be surprising, the paramount importance of Ron Engineering was
the Court’s determination that the tender process itself creates a contract between the procuring
entity and each bidder who submits a compliant bid in response to an invitation to tender. This
contract is known in Canadian tender law as “Contract ‘A’.”3 The SCC gave full weight to the terms
of the tender document (e.g. the rules for the tender process). The bid deposit, which was designed
to ensure the performance of the obligations of the bidder under Contract ‘A’, was exposed to the
risk of forfeiture upon Ron Engineering’s breach of obligations by withdrawing its bid.

Cases at the SCC have further evolved the Canadian tendering framework since 1981, but the
essential elements of Ron Engineering have not changed.

Essential Guiding Principles*

• Parties must always follow the rules set out in the tender.
• The tendering process can create contractual obligations (“Contract ‘A’”) and trigger a duty of
fairness on the part of the procuring entity towards all compliant bidders.
• The key implied terms of Contract ‘A’ are:
– to accept only a compliant bid; and
– to be fair and consistent in assessment of bids.

• There is a difference between a bid which contains an informality and a bid which is materially
non-compliant.
• If a bid is non-compliant or so qualified that it constitutes a counter-offer, no Contract ‘A’ exists
and no duty of fairness is owed to that bidder.
• A broad privilege clause will not excuse the failure to comply with mandatory requirements.
• Over-application of the rights found in a privilege clause may run up against the duty of fairness
which is owed when Contract ‘A’ is formed.

*non-trade agreement procurements

3. The final written contract between the successful bidder and procuring entity is referred to as “Contract ‘B’”.

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Trade Agreements

While each trade agreement may have additional requirements, and procuring entities are
permitted to waive minor omissions or defects under trade agreements, there are essential
requirements that are applicable to all trade agreements requiring that a procuring entity:

– must implement processes that guarantee the fairness and impartiality of the procurement
process and the confidentiality of bids;

– must ensure procurement processes are open and transparent;

– must provide a “level playing field” on which bidders compete; and

– absent conditions satisfying a specific trade agreement exception, must provide a non-
discriminatory process; meaning it must prohibit discrimination against goods, services,
and suppliers of other Parties to the trade agreements, or from discriminating against
domestic suppliers based on the degree of foreign affiliation or ownership.

The general duties of fairness/good faith, openness and transparency exist “as of right” in trade
agreement-covered procurements and apply to the entire procurement process. No “Contract
‘A’” is required to exist.

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Clarifying Requirements During the Solicitation Period
Procurement law in Canada is very clear on this point - bidders are responsible for understanding
the procurement requirements. If a question and answer period is provided, this the last
opportunity for bidders to understand the procurement requirements and to improve their bids
before final submission.

Once final bids have been submitted, there are no further opportunities for bidders to fix errors
or ambiguities in their bid, or to submit additional information (this is called “bid repair” and is
generally prohibited). Although a “cure period” may be provided for, the bid corrections that are
permitted are usually limited in scope.

Bidders who take a ‘wait and see’ approach in the face of vague or unclear requirements, or who
decide to submit vague responses to requirements - either because they do not understand the
requirement or are trying to disguise the fact that they do not meet the requirements - instead
of seeking clarification, commit one of the most common and most fatal bidding errors that
can also result in bid disqualification. Failing to take advantage of the opportunity to obtain
clarification during the solicitation process can also impact of the success of any bid protest by an
unsuccessful bidder.

During the solicitation period, the communication process in most public procurements is strictly
controlled and often limited to written communications. This limit is invoked in order to preserve
the integrity of the procurement process, which is of concern whether or not the procurement is
subject to trade agreements. Communicating with government officials other than as permitted
is frequently identified in the tender as grounds for bid disqualification (and in some Canadian
jurisdictions, can amount to lobbying).

In general, there is no limit on the number of clarification questions that can be submitted.
Procuring entities expect questions. Questions should be submitted as early as possible. If the
answer received doesn’t provide enough clarity (or leads to additional questions), this will leave
time for follow-on questions, and ensures that adjustments to the final bid aren’t being rushed
through at the last minute.

If a response from a procuring entity is unclear, it is entirely appropriate (and absolutely

necessary) to submit further clarification questions. Even if a final solicitation is underway,
procuring entities can still amend the tender to provide clarifications or correct errors in the
documentation. If a tender is modified, bidders must be provided sufficient time to respond to
any changes to criteria before the solicitation period ends.

Substantive questions and answers will usually be shared with all bidders without revealing the
source of the question, in keeping with the requirement to ensure all bidders have equal access
to all information concerning the procurement and that no bidder receives information that other
bidders do not receive. Most procuring entities will require that the questions be submitted on a
non-confidential basis, to enable the question and response to be shared.

The question submission period will typically end several days prior to the date upon which final
bids must be submitted to provide bidders with a “quiet period” within which to prepare their final
bids for submission. Questions submitted after any final question submission date may not be
answered.

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Trade Agreements

The trade agreements add greater specificity to the above describe process, to ensure that
the bidding process remains open, fair and transparent and to prevent a bidder from gaining
an unfair advantage from receiving information relevant to the solicitation process that other
bidders have not received.

The opportunity to submit questions during the solicitation period is provided specifically to en-
able bidders to meet their obligations to understand the requirements and submit a responsive
bid.

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PART III

Bid Evaluation
At the heart of the procurement process is the following rule: the procuring entity writes the rules
of the solicitation process and the procuring entity and the bidder follow the rules - to a ‘T’.

This rule is particularly important during the bid evaluation process - bidders have prepared
and submitted bids based upon the stated requirements and in light of the identified evaluation
criteria. Whether subject to trade agreements or not, procuring entities cannot change the rules
once bids are in and the solicitation period has closed.

As had been noted elsewhere in this Guide, review of the evaluation criteria should be done as
early as possible, even when tender documents are provided in draft form. Questions should be
submitted to seek clarification if requirements are vague, unclear or appear geared to favour a
particular supplier.

The Bid Evaluation Process

Procuring entities will usually reserve a right to seek clarification from bidders with respect to their
bids following final bid submission. However, it is important to keep in mind several critical points:

• the exercise of this right is discretionary;

• the “clarification process” is a limited-scope event, intended to address issues such as
determining where information is located in a bid if it cannot be readily accessed; and
• procuring entities are not required to seek clarification of a bidder’s bid and even if they do seek
clarification, bidders do not usually get to modify their bid or provide new information.

Minor irregularities such as administrative or non-material errors can be fixed following the close
of the solicitation period. However, permitting bidders to submit entirely new information to
correct errors or omissions following the close of the solicitation period is considered “bid repair”,
and is generally limited and may, in certain cases, be entirely prohibited.

Trade Agreements

For trade agreement covered procurements, the evaluation of bids (as with most things) is
more prescriptive.

The tender documentation must include:

– all information necessary for a supplier to submit a responsive bid, including technical
specifications and plans;

– all evaluation criteria; and

– how the evaluation will be conducted, including weighting and rating (unless price is the
only criterion).

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Once the solicitation period closes, the procuring entity must evaluate bids against the criteria set
out in the tender. The trade agreements do not remove an evaluator’s discretion in performing an
evaluation; however that discretion must be exercised within the rule set of the tender itself and
within the trade agreement parameters. Evaluation criteria cannot be changed following the close
of the solicitation period. Use of any criteria that is not set out in the tender is considered to be
use of undisclosed evaluation criteria, and is a breach of the trade agreements.

In both trade agreement covered and non-covered procurements, procuring entities may require
that the financial information for a bid is submitted separately from the rest of the bid, to ensure
that the evaluation of the technical aspects of the submitted bids is not influenced by the cost of
the bid (e.g. to maintain the integrity of the bid process).

Trade Agreements

Trade agreements permit correction of minor irregularities such as administrative or non-

material errors following the close of the solicitation period. However, the rules surrounding
submission of new information to correct errors or omissions following the close of the
solicitation period are even more strict. New information that is submitted following the close
of the solicitation period may be considered “bid repair” and, if so, is prohibited.

Once the solicitation period closes, the opportunity to improve the bid is over.

Procuring entities are not required to seek clarification of errors, omissions or ambiguities in a bid
during a bid evaluation, even if they have reserved a right to do so.

Preventing Bid Disqualification - Preliminary Bid Review Process

Procuring entities may provide for a preliminary bid review process, in advance of final bid
submission. This process permits bidders to submit their bids for a preliminary review against
specific mandatory requirements in advance of the solicitation period close. This can be a useful
approach in more complex procurements where the bidder pool may be limited and a procuring
entity wants to ensure that a bid is not disqualified as a result of a bidder inadvertently missing
an administrative requirement that can be readily corrected (such as, for example, failing to sign
required certifications). This does not eliminate the bidder’s obligation to submit a responsive bid
or procuring entity’s obligations to fully evaluate the final bid submission (the draft bid cannot be
relied upon if there is a discrepancy between the draft and final bids), but may assist, as noted,
with avoiding the need to eliminate an otherwise acceptable bid as a result of an inadvertent error.

17
PART IV

Contract Award, Debriefing

and Disputes
Contract Award
Once the winning bid has been selected, procuring entities will usually advise all bidders of the
outcome. Even if a bid is disqualified during the initial mandatory requirement review, procuring
entities may choose to wait until the final winning bid is selected before notifying bidders that
they were not successful.

Consequently, if a prolonged period of time has passed since the close of the solicitation period,
or if the estimated contract award date has come and gone, it is worthwhile to contact the
procuring entity to determine the status of the evaluation process.

For procurements not subject to trade agreements, it is essential to review and understand the
contract award criteria to ensure a clear understanding of how contract award will be determined
as the parameters can be quite different from those under trade agreements.

Trade Agreements

For procurements subject to trade agreements, the procuring entity is required to award
the contract to the supplier that the procuring entity has determined is capable of fulfilling
the terms of the contract and that, based solely on the evaluation criteria specified in the
tender notices and tender documentation, has complied with the essential requirements
(as disclosed in the tender documentation and tender notice) and submitted the most
advantageous bid; or, if price is the sole criterion, the lowest price.

The time to understand the contract award criteria is well in advance of the closing date for the
solicitation period.

Debriefs
Once contract award has occurred, it is important to seek a debrief from the procuring entity. A
debrief matters - even if the bid was successful. Learning what did and did not work in a bid is
important for future competitions, particularly with respect to lost points. Information provided
in a bid that was scored low may not have determined the final outcome in one situation, but it
could very well mean the difference between a win or a loss the next time around.

If a bid fails, it is crucial to know whether this was as a result of something that was misinterpreted,
misunderstood or missed entirely (and thus can be prevented in future bids), or the result of an
evaluation error or use of an undisclosed evaluation criteria on the part of the procuring entity.

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The debrief should explain why a bid was not successful. A debrief is also important when
deciding whether or not to challenge the award.

If the bid was improperly evaluated, a decision whether to protest the award has to be made
quickly, particularly for procurements subject to trade agreements or formal bid protest
mechanisms, as the timeline for bid protests under those options is usually short (10 days).

Whether a debriefing is provided by a procuring entity not subject to trade agreements is entirely
at the discretion of the procuring entity.

Trade Agreements

All procuring entities subject to the trade agreements are required to provide a debrief (in
writing or verbally, at their option) and will usually identify the time period within which a
debriefing must be requested in the tender documents.

Debriefings are important - whether or not the bid was successful.

Disputes
The court system in Canada is generally available to bidders, subject to those constraints that
may be provided for in the tender. The timelines for bringing a complaint will be determined by
the rules of the court to which the complaint is brought.

In Canada, there is no general statutory prohibition preventing aggrieved bidders from seeking a
judicial remedy with respect to a public procurement, whether or not subject to trade agreement
coverage although certain public entities may not be subject to certain types of legal claims and
there may be shorter limitation periods.

If a trade agreement does not apply to a public procurement, the procuring entity may provide an
internal dispute process or access to a procurement ombudsman.

The timelines applied by government entities to raise disputes are typically short, even if not
subject to trade agreements. The time period can start to run as early as the day unsuccessful
bidders are notified a contract has been awarded.

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PART V

Additional Information on Trade Agreements

Government procurement in Canada has been subject to trade agreements for decades, and
Canada’s promotion of plurilateral and bilateral trade agreements remains very active. More-
recent trade agreements, such as the Canada – European Union Comprehensive Economic and
Trade Agreement (CETA)4, the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP), and the Canadian Free Trade Agreement (CFTA), which replaced the
Agreement on Internal Trade (AIT), have expanded the application of various trade agreements to
territorial, provincial, municipal, academic, school, and hospital sectors.

One of the ways the parties to trade agreements seek to accomplish the trade barrier
reduction objective is to commit to promote open trade opportunities when it comes to their
own purchasing activities. These commitments and obligations are typically covered in the
“government procurement” chapter of the trade agreement. Each trade agreement will define
who is considered a covered entity, what goods or services (including construction services) are
covered and when they are covered.

Although a signatory to the Canada-United States-Mexico Agreement (CUSMA), Canada is not

a party to the government procurement chapter. As such, no procurements by any Canadian
government entity are subject to its rules. US-based suppliers who are eligible to do so may seek
remedies under the World Trade Organization - Agreement on Government Procurement (WTO-
AGP) and Mexican suppliers, under the CPTPP.

Determining Coverage
Determining trade agreement coverage for a procurement is a 3-step process:

1. Who is covered?
The trade agreements do not always identify the covered government entities by name (e.g. the
Department of National Defence, the Canada Space Agency). Often, the sub-central level (e.g.
not federal) covered entities are included by reference to their official status (e.g. “departments”,
“ministries”, “agencies” etc.) or on the basis of government ownership or control.

Note that if a government entity is acquiring goods or services through a designated

procurement authority, it is the government entity who will be using the goods or services that
is assessed to determine whether the trade agreements (and which trade agreements) apply.

2. What is covered?
Trade agreements do not all follow the same approach - some trade agreements are
inclusive (listing only what is covered) and others are exclusive (everything is covered unless
specifically excluded).

Note that for inclusions and exclusions, there are always further exceptions. For example,
purchases that might typically be covered may be excluded if they are being purchased for
specific activities.

3. When is it covered?
If a purchase is below a trade agreement threshold, the purchase is not subject to the trade
agreement - even if the entity and the good or service are otherwise covered.

4. On July 1st, 2017, the AIT was replaced by the Canadian Free Trade Agreement (CFTA) and on September 21st, 2017 the Cana-
20
da-European Union Comprehensive Economic and Trade Agreement (CETA) came in to effect.
The Essential Rules
One of the significant commitments made under trade agreements is to level the playing field
for potential government suppliers. Each agreement provides rules intended to ensure open,
fair, transparent and non-discriminatory procurement opportunities for potential suppliers.
While each trade agreement may have additional rules, the ‘essential rules’ found in all trade
agreements require procuring entities to:

a) implement processes that guarantee the fairness and impartiality of the procurement process
and the confidentiality of bids;
b) ensure procurement processes are open and transparent;
c) provide a “level playing field” on which bidders compete; and
d) Absent conditions satisfying a specific trade agreement exception, must provide a non-
discriminatory process; meaning it must prohibit discrimination against goods, services, and
suppliers of other parties to the trade agreements, or from discriminating against domestic
suppliers based on the degree of foreign affiliation or ownership.

All trade agreements seek to ensure open, fair, transparent and non-discriminatory procurement
opportunities.

Exceptions from the Trade Agreements

As noted earlier, trade agreements will provide specific exceptions of entities, goods or services
that are excluded from coverage - either generally or in specific circumstances. These exceptions
are set out in Schedules or Annexes to the trade agreement and permit the government entity to
conduct procurements in a way that would, under the usual rules, be considered a breach of the
trade agreement. Parties will negotiate these exceptions when negotiating the trade agreement
and may thereafter modify these exceptions only in accordance with the process outlined in the
trade agreement.

For example, Alberta and Manitoba, starting in 2019, began to cede their original exceptions to
the CFTA with respect to procurement rules (and also in other trade-related areas covered by
the CFTA). The removal of the CFTA exceptions also impacts the New West Partnership Trade
Agreement (NWPTA) - a trade enhancement agreement between British Columbia, Alberta,
Saskatchewan, and Manitoba.

Exceptions to the trade rules must be provided for within the trade agreement. Absent an ex-
press exception, procurements must follow the trade agreement rules.

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Determining Requirements
Procuring entities are entitled to determine their requirements, subject to the specific rules of
the trade agreements. Procuring entities are not required to lower their legitimate operational
requirements to increase opportunities for bidders who otherwise would not have been able
to succeed in a competition. As noted by the Canadian International Trade Tribunal (CITT),
procuring entities are entitled to “express any real and reasonable needs”, including future needs
(e.g. a legitimate operational requirement).

All trade agreements set parameters for what requirements can or cannot be included. For
example, procuring entities must state fully and clearly their requirements in the procurement
documentation (e.g. no hidden requirements); must base their requirements on international or
national standards (if available), and must set out their requirements in terms of performance or
functional requirements (e.g., quality, safety, dimensions, process/methods of production) rather
than design or descriptive characteristics5.

Each trade agreement will also provide for a list of expressly prohibited requirements. Some of
the prohibited requirements that are common to all of the trade agreements are:

• Favouring the goods or services of a particular supplier or suppliers specific to the procuring
entity’s jurisdiction
• Using pre-qualification requirements, setting bidding time lines or goods and services delivery
requirements or applying technical requirements so as to eliminate bidders from the competition
• Evaluating bids using undisclosed evaluation criteria

Procuring entities may set their requirements, but these requirements must be legitimate and
comply with the trade agreement rules.

Evaluating Bids
Once the requirements have been finalized, how bidders will be evaluated against the
requirements is also subject to trade agreements rules - all of which are focused on ensuring that
the procurement is open and transparent. For example:

• Tender documentation must fully disclose all of the evaluation criteria prior to the close of the bid
solicitation period, including:

9 all information necessary for a bidder to submit a responsive bid, including technical
specifications and plans;

9 all evaluation criteria; and

9 all details of the evaluation, including weighting and rating (unless price is the only criterion).

5. Although a product-specific branding requirement is generally not considered a legitimate operational requirement, this is
subject to exceptions where the procuring entity can demonstrably justify the use of the branded specification in the particular
circumstances.

22
• Bids must be evaluated only against the criteria set out in the tender documentation.

The trade agreements do not remove an evaluator’s discretion in performing an evaluation;

however that discretion must be exercised within the rule set of the tender documentation itself
and within the trade agreement parameters for evaluations.

• Use of any criteria that is not set out in the tender documentation is considered to be use of
undisclosed evaluation criteria, and is not permitted.

This should be distinguished from activities used by a procuring entity for bid verification
purposes (for example, confirming references).

• Changes to any evaluation criteria after an tender documentation has been issued must be done
in advance of the closing of the solicitation period. This should be done through a written tender
documentation amendment to ensure certainty.
• Bidders must have sufficient time to respond to any changes to criteria before the solicitation
period ends. The more complex the new criteria or the more material and/or significant the
change to the criteria, the longer a bidder should have to revise and submit its bid.

Evaluations must be conducted only against evaluation criteria that has been disclosed to bid-
ders in advance of the closing of the solicitation period.

Contract Award
Procuring entities are required to provide public notice of contract award and offer a debrief to
any bidder who requests one.

Public notice of the award does not mean the contract itself has to be posted. For a debrief, the
procuring entity is permitted to set a time limit within which a debrief must be requested, and
may determine how it will provide the debrief (orally, in person, by letter etc.).

Always seek a debrief, and pay attention to deadlines - debriefs must usually be requested within
a specified period of time from disqualification or contract award.

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Disputing a Procuring Entity Decision
All trade agreements require signatories (i.e. governments) to have in place an administrative or
judicial review procedure for bidders to assert a breach of the government procurement chapter
or a failure of a party to comply with a government’s implementation of the obligations under the
government procurement chapter.

The dispute processes of the different trade agreements are similar, if not identical, to each other:

• in structure, to allow bidders access to an administrative review process or judicial review

• setting minimum time periods within which a complaint or challenge must be lodged by a bidder;
and
• permitting governments to determine and limit costs that can be awarded.

Formal bid dispute mechanisms have been implemented by the federal government, and a
limited sub-set of the provincial/territorial governments.

There is no significant body of jurisprudence (courts or trade dispute panels) in Canada regarding
the various trade agreement government procurement chapters other than as provided by the
Canadian International Trade Tribunal (CITT) for federal procurements.

Federal government procurements that are covered by trade agreements provide unsuccessful
bidders with access to the CITT. The CITT provides all parties with an expedited review process.
The total period of time for the procurement review (from the filing of a complaint to the release
of the CITT’s decision) is 90 days. Parties can ask for an expedited hearing (45 days), or the CITT
may extend the total procurement review process by up to 135 days. Of significant importance is
that the complaint must be made within a 10-day period from when the aggrieved bidder knew or
reasonably ought to have known the basis for a complaint.

Under Canada’s internal trade agreement – the Canadian Free Trade Agreement (CFTA) – each
provincial and territorial government is required to provide an administrative or judicial review
procedure through which a complaint may be filed. The provinces of British Columbia, Alberta,
Manitoba and Saskatchewan, and Ontario currently provide a non-binding procurement dispute
process.

In Ontario, bidders can submit a complaint to the Program and Policy Enablement Branch
of the Ministry of Government and Consumer Services. In 2019, the provinces of British
Columbia, Alberta, Saskatchewan and Manitoba implemented a Bid Protest Mechanism for
specific procurements. None of these processes provide for final decisions that are enforceable
equivalent to a court order.

24
 The current Canadian International Trade Tribunal (CITT) has been
in place for decades, and is empowered to investigate all complaints
by potential suppliers that the federal government’s procurement
practices violated free trade agreement rules. It is Canada’s only trade
review tribunal in Canada.

In 2019, the federal government implemented a regulatory change

Federal
to the reviewing authority of the CITT, seeking to remove the CITT’s
Government
reviewing authority for procurements subject to the “national security
exception” under all trade agreements. Whether this regulatory change
exceeded the authority of the Governor-in-Council to make regulatory
changes remains open to debate.

https://www.fasken.com/en/knowledge/2019/07/van-removing-the-
citt-from-the-review-of-canadas-national-security-exception

As of 2020, only British Columbia, Alberta, Manitoba and

Sub-central
Saskatchewan (via an agreed-to Bid Protest Mechanism) and Ontario
Governments
provide a non-binding procurement dispute process.

Other than the decisions available at the federal level from the Canadian
Canadian International Trade Tribunal (CITT), there is no significant body of
Courts Canadian jurisprudence regarding the government procurement
chapters of the trade agreements.

For non-judicial disputes, the minimum time period provided to bidders

within which to make a complaint under all trade agreements is ten
(10) days from the date the bidder knew or reasonably should have
known the basis for its complaint. The Bid Protest Mechanism and the
Procurement Regulations that govern the CITT all impose this 10-day
time limit and, at least at the CITT, this time limit is strictly enforced.
Timing
https://www.fasken.com/en/knowledge/2019/10/beat-the-clock-10-
critical-days-for-procurement-disputes-under-the-trade-agreements

In the litigation or administrative (judicial) review context, the time

period within which to raise a complaint will be determined by the rules
applicable to the court selected by the bidder.

Time limits for seeking a review of a procurement decision are extremely short and strictly en-
forced.

25
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491653 PR Procurement Guide EN