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Prepare to be challenged
With a little inside help you CAN be prepared for a CITT challenge
by Micheal Tipman
So, you’ve just been appointed Project Manager for a major government
project. You are now faced with the real life problem of not only
procuring a solution that is within budget, on time and fulfills the needs
of the operations people, you must also be ready for any challenge that
comes along. “What challenge?” you may ask. “And why would anyone
challenge my solution?” Well, a supplier’s rule of thumb regarding the
cost of a bid for a project can be anywhere from one to three percent of
the total value of the bid; for a $10 million project; that is from
$100,000 to $300,000 that the bidders will spend just to bid on your
project. If the bid is for a project in the $100 million range, that works
out to one to three million dollars in costs just to bid. For this kind of
investment, a company will do everything possible to win. And if there is
even a hint of impropriety a challenge is inevitable.
In the end, only one company can win – all the others will lose.
Companies generally have a bid/no-bid process. Whatever the process –
whether it’s a recognized standard such as the Hy Silver method or a
proprietary bid process – once the intelligence is gathered, the SWOT
(Strength/Weakness/Opportunity/Threat) analysis is complete and the
decision is made to bid, the pressure is on to win.
Companies expect to win 35 to 85 percent of bids depending on the
industry. If the bid doesn’t win, then someone has to answer for the loss.
Every aspect of the procurement will be searched for a reason and if there
is any hint of an anomaly in the procurement process, a challenge is often
the result. If all was done according to the rules and the bid still lost,
then the company will normally accept the result and attempt to do better
next time. However, since we live in a more and more litigious society, a
loss often leads to a challenge. What’s a couple of thousand dollars for a
challenge, particularly if you can recoup at least part of the cost of the
bid? That is where the Canadian International Trade Tribunal (CITT) comes
into play.
Since Fiscal Year 1989/90 the CITT (has heard a total of 491
challenges– from a low of seven in 1989/90 to a high of 78 in 2000/01. As
of December 2001 there had been 42 challenges in 2001/02. Figure 1
illustrates that, with the exception of 1994, the number of challenges to
CITT has risen steadily over the years. The increase in number is due in
part to the increased awareness of the CITT by industry. Although it was
set up to deal with foreign vendors that had been wronged by the
government procurement process, Canadian companies mount the vast majority
of challenges. The tribunal provides suppliers a quick and relatively
inexpensive way to have their complaints reviewed and resolved. So prepare
to be challenged.
Dealing with a challenge can be time consuming and costly to your
department. Knowing the procurement rules and following them will ensure
that you have done everything necessary to withstand a challenge. But to
prevent a challenge – or minimize the risk of being challenged – there are
a number of positive things that can be done while preparing for your
procurement.
Getting the vendor community involved early is a good start. Publish a
Request for Information (RFI) and follow up with those vendors that
respond, meeting with them one-on-one to discuss their concerns. If their
comments make sense and are fair, take them into consideration when
writing the Request for Proposal (RFP).
Early on, hire a Fairness Monitor – an external third party who ensures
that there is no built-in bias for any vendor or product. He will be worth
every penny you pay him. He provides guidance on how to word the RFP, he
monitors the bid evaluation process and helps to ensure that any rulings
regarding issues with bids, evaluation criteria or rejection of a bid, are
done fairly and consistently. He also helps at the bidder debriefing which
follows the contract award. Although using a Fairness Monitor alone does
not guarantee that there will be no challenges, he does provide a level of
assurance that all was done according to the rules set up for the
procurement.
Keep the vendors involved throughout. Put out a draft of the RFP and
take into account the comments of the vendor community when developing the
final RFP. When writing the RFP, keep to simple wording and phrasing as
much as possible. Now is not the time to impress the vendor community with
your Master’s Degree in English Literature. If the bidders feel that
nothing has been hidden, chances are they will be less likely to challenge
the result. However, no matter how careful you are you will discover that
the RFP can and will be interpreted in a number of ways. This also goes
for the evaluation criteria and the point allocation for each rated item.
It helps to emphasize principle-based decision making rather than the
blind application of rules. If the criteria turn out to make no sense,
change them under control while being consistent.
Establish an Issues Resolution Team that includes as a minimum the
Fairness Monitor and the Procurement Officer. Whatever the issue, rule
fairly and consistently and, where there is some leeway in the ruling, try
to give the bidder the benefit of the doubt. Record and save all issues
along with their rulings – this provides proof that fairness and
consistency prevailed throughout the evaluation process. In fact, good
record keeping can be critical in the event of a challenge before the CITT.
Make sure to document all the activity throughout the entire procurement
process – don’t shred project and bid evaluation material. Challenges have
been won because the Crown could not prove that the procurement process
was flawless.
Once the contract has been awarded, the Crown’s last formal task is to
debrief the bidders. They have a right to know where they went wrong and
where they were strong in their bid. It is critical that they know how the
process was done, that they were always given the benefit of the doubt and
that they clearly understand the reason(s) they failed. If the RFI/RFP
process and the evaluation process are sound and the lines of
communication have remained open between the Crown and the bidder, there
is less chance that there will be a challenge.
However, even though you have been meticulous throughout the
procurement – from RFP development to the awarding of the contract – there
could still be a challenge. Plan for it from the beginning and you have
nothing to fear.
Micheal Tipman, a Professional Engineer and a
Certified Project Management Professional with more than 25 years
experience in project management, procurement planning and evaluation, is
a Principal at AMS Management Systems Canada, Inc.
SIDEBAR
The Canadian International Trade Tribunal
www.citt.gc.ca
The Canadian International Trade Tribunal (CITT) is an
independent, quasi-judicial body that carries out its statutory
responsibilities in an autonomous and impartial manner and reports
to Parliament through the Minister of Finance. With the powers of a
Federal Court, the tribunal conducts inquiries into complaints by
potential suppliers concerning procurements by the federal
government under the North American Free Trade Agreement, the
Agreement on Internal Trade and the World Trade Organization
Agreement on Government Procurement.
The CITT evolved from the Procurement Review Board, created in
1989 at the time of the Free Trade Agreement. A recourse mechanism
for unsuccessful suppliers competing under the international trade
agreements was needed and it was expected that most of the Board’s
work would revolve around US suppliers challenging Canadian
procurement decisions. However, because the Board’s oversight
covered all government procurement above the thresholds established
by the trade agreements, Canadian bidders not awarded contracts
gained a mechanism to challenge procurements awarded to other
Canadian bidders.
The timeline to challenge a procurement and for the tribunal to
issue its decision is very quick. Bidders wishing to file a
complaint with the CITT must do “so not later than 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.” [See
subsections 30.11(1) and (2) of the CITT Act, section 6 of the
Regulations, Rule 96(1)]. Within five working days of the complaint
being filed, the tribunal must decide whether an inquiry is
warranted. The government department or organization responsible for
the procurement must report its response to the challenge in 25
days. The tribunal usually renders its decision within 90 days of
receiving the complaint. |
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