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Agency shrugs off Supreme Court

by Michael Asner

This is a British Columbia story. If you are a supplier, it will confirm all your worst suspicions about public procurement. If you are a public sector procurement person, it will make you sad or mad that so many best practices have seemingly been abandoned. If you are a small company, you will re-learn an old lesson: it takes lots of money and energy to force agencies to comply with the law, even with the Supreme Court of Canada (SCC).

By way of background: in 1999, the SCC decision (MJB Enterprises v. Defense Construction) said that in a competitive situation, you cannot award the contract to a non-compliant bid. A non-compliant bid is simply one that didn't satisfy some of the mandatory conditions in your Request for Proposal (RFP). The SCC then went on to say that if you did make an award to an ineligible bidder, then the compliant bidder would be awarded damages based on "the amount of profits it would have realized had it been awarded (the contract). In this case, the court awarded damages to MJB in the amount of the profits it would have realized ($398, 121) had it won the contract.

This is not a terribly difficult ruling to understand. Paraphrasing Robert Worthington, a lawyer specializing in procurement matters, from his column Legal Notes (Summit, March 2001), when a public (or private organization) chooses some form of competitive procurement they become legally bound to reject any bid (no matter how attractive) that is non-compliant.

Paul Lalonde, another lawyer with expertise in this area, stated that, "The privilege clause does not override the obligations of Contract A, i.e., to accept only compliant bids. It is not a carte blanche to award Contract B to anyone." (Summit, December 1999)

Now here is the story. In February 2000, the Industrial Musculoskeletal Injury Reduction Program Society (IMIRP) issued an RFP, making the society subject to the rulings of the courts of Canada and the province of British Columbia. The IMIRP is a non-profit society which, apparently, receives all of its funding from the Workers Compensation Board (WCB), a BC Provincial Crown Corporation. This RFP, entitled Consulting Services for the Industrial Musculoskeletal Injury Reduction Program, was issued February 7, 2000, with proposals due March 7, 2000.

At least two companies submitted proposals: Advanced Ergonomics Inc., and ErgoRisk Management Group Inc. ErgoRisk Management Group was selected as the winner. Advanced Ergonomics protested the award on the basis that ErgoRisk's proposal was non-compliant.

Having read the RFP and both proposals, it appears to me that ErgoRisk did not comply with the RFP in several areas. For example:

  • Page 16 of the RFP states, "The tool kits must also be available on CD-ROM." Page 14 of ErgoRisk's proposal states, "Tool Kit CD-ROM not included."
  • Page 17-18 of the RFP states, "The following information must be provided in your response: Hourly rate for each proposed person and number of hours for each person for a total contract cost." I could not find the number of hours for each person stated anywhere in my copy of ErgoRisk's proposal.
  • Page 17-18 of the RFP states, "The following information must be provided in your response: Define the specific type and frequency of expenses proposed for reimbursement." Again, I could not find this information anywhere in ErgoRisk's proposal.

Advanced Ergonomics protested the award. It is that company's position that this process has harmed it, as it had invested more than $100,000 in developing its proposal. It is IMIRP's position, and that of WCB, that the RFP process was performed properly and that ErgoRisk's proposal was compliant.

Occasionally RFP processes and the related evaluations go awry. The evaluation doesn't work, or the committee doesn't do a credible job, or factors not included in the RFP become dominant. Occasionally, errors get made, or personal biases come into play. Both the WCB and IMIRP responded to the protest by doing a review of the process and then confirming the fairness of the process and its adherence to good public procurement practices. But, the story goes on.

On July 31, 2001, IMIRP issued an RFP for Training using wording that appears to abandon all the laws and public policy that might be applicable. I have not found these sorts of terms, conditions, regulations, or provisos in any other jurisdiction using open competition. But judge the following excerpts for yourself.

"Each Proponent agrees that IMIRP may, but is not obligated to, reject any Proposal based on incompleteness, irregularity or non-compliance with the requirements of the Request for Proposals. If a Proponent fails to complete its Proposal in compliance with the requirements of the Request for Proposals IMIRP may, in its sole and absolute discretion, nonetheless waive such non-compliance, seek clarification from and enter into negotiations with that Proponent and award the contract to that Proponent even if such failure in compliance would otherwise render the Proposal null and void at law.

"No Proponent shall be entitled to allege or assert that IMIRP is or was obligated to reject a Proposal or refuse to consider a Proposal or was not entitled to accept a Proposal because that Proposal was incomplete, irregular or allegedly non-compliant or invalid.

"Notwithstanding anything at law or stated expressly or by inference in the Request for Proposals to the contrary, the Proponents are not at any time entitled to disclosure of any information concerning the deliberations, review, basis of any assessment or recommendations of IMIRP or of the Evaluation Committee or any member thereof, any documents, minutes of meetings, records, notes, reports, any information provided by persons contacted for references or any other information or documentation relating to the Proposal review and evaluation or selection of a Proponent. The Evaluation Team are entitled to rely upon the fact that their deliberations, assessments, evaluations, recommendations are and will continue to be confidential and non-discloseable and non-compellable by any of the Proponents."

There are many other similar terms and conditions. I'm not a lawyer, but I believe that this agency's procurement process is clearly out of control.

On July 18, BC's Minister of Management Services, the person responsible for government tendering, stated, "During the first 90 days in office, government can address many significant barriers to open tendering." In the Speech From the Throne on July 24, 2001, BC's new government stated: " government will act this session to restore open tendering on government contracts to allow fair competition for businesses to provide better value for taxpayers."

It looks like IMIRP would be a great place to start. The BC Purchasing Commission should review the offending RFPs of this agency, introduce practices similar to those in other agencies and ministries, and objectively assess the grievances of Advanced Ergonomics.

Michael Asner ( asner@compuserve.com ), based in Vancouver, is internationally recognized as a procurement expert. He authors The RFP Report, published in Canada and the US; he contributes a regular column in Reseller magazine, a Sacramento-based publication; and he has authored several books on procurement, including The Request for Proposal Handbook and Selling To Government. He recently launched www.proposalsthatwin.com and www.proposalworks.com.



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