A company that lost a $428-million federal contract in 2007 is calling on Canada’s top court to weigh in on the long-running case, arguing the fairness and integrity of the country’s public-procurement process is at stake.
The Supreme Court of Canada should decide among other things whether a winning bidder should be disqualified if it cannot deliver what it promised, and what the remedy should be if a judge finds the procurement process to have been unfair, TPG Technology says in its application for leave to appeal.
“No bidder ought to be permitted to make false, misleading or ambiguous bids, and win without recourse by bidders who complied with the procurement rules,” TPG’s application states. “That damages confidence in the procurement system in Canada, is manifestly unjust (and) undermines the principle of fair competition.”
The federal government argues against reopening the case, saying TPG is trying to get the Supreme Court to weigh in on factual matters particular to a specific case that have already been decided and which have no wider bearing. In addition, the government maintains relevant procurement law is already well settled.
“There are simply no novel issues of law or public importance raised in this application,” the government says.
The case arose when TPG Technology was shut out in 2007 from running the main computer networks at the federal Public Works department, something the Ottawa-based company had done since the late 1990s. Instead, the seven-year contract, which called for delivery of a team of more than 100 qualified IT professionals, went to Montreal-based CGI Group.
CGI presented an “audacious” bid that effectively relied on it being able to recruit TPG’s contractors, which it was unable to do, TPG argues in its application.
“The winning bidder could not deliver the very subject matter which was required in the procurement,” TPG asserts. “Yet, the winning bidder in this case was not disqualified. It was permitted, even assisted by the government, to try to become compliant.”
After several attempts at a remedy before the Canadian International Trade Tribunal, TPG president Don Powell sued Public Works for $250 million.
In 2014, Federal Court Judge Russel Zinn threw out the lawsuit despite finding that the government had failed to evaluate parts of TPG’s bid fairly. Among other things, Zinn ruled the CGI bid had indeed been compliant, and that TPG had failed to prove it suffered damages.
“Although it has been found on the balance of probabilities that TPG was not treated fairly and equally in the evaluation of its proposal, TPG cannot succeed in this action unless it can prove that it has suffered damages as a consequence of that breach,” Zinn wrote. “I find that it has failed in that respect.”
Zinn ordered TPG to pay the government more than $600,000 in legal costs. The findings were upheld by the Federal Court of Appeal.
TGP now asserts that the current state of the law allows a bidder to win a public contract by making promises it knows it can’t keep and then hiding behind an amended agreement, with the government’s help.
Allan Cutler, an Ottawa-based consultant and procurement expert, said he knows of a case in which a limousine company lost a contract, but then discovered the winning bidder did not have the needed licences. However, the government helped the competitor repair its bid and keep the contract, he said.
These cases expose a “loophole” in current law the Supreme Court should close, Cutler said.
“In brief, a firm does not have to bid honestly for the public sector,” Cutler said. “Once the firm wins a contract, the subsequent contract can be amended to correct the dishonesty.”