Thank you, Madam Chair.
I would like to thank you for inviting us to appear before the committee. This will give us an opportunity to explain who we are, what we do and to answer your questions. As I understand it, they will focus mainly on calls for tender.
Let me start by introducing myself. My name is André Scott and I am the Chairman of the Canadian International Trade Tribunal. Today, I am accompanied by Randy Heggart, the Director of Procurement Review at the tribunal, and Hélène Nadeau, the Secretary of the Tribunal, and Éric Wildhaber, a senior counsel from the tribunal's legal services.
I would like to start by giving you a brief overview of the tribunal's mandate. The tribunal hears complaints about federal government procurements. This line of business represents $2.5 million of our annual budget of $9.4 million. The tribunal also hears cases on dumped and subsidized imports, appeals from customs and excise tax rulings and requests for relief from textile tariffs.
Just to refresh your memory, I will start by reminding you of a few things. The independent review of procurement complaints, bid challenges, began in Canada in January 1, 1989, with the coming into force of the Canada-US Free Trade Agreement. At that time, it was handled by the Procurement Review Board. With the coming into force of the North American Free Trade Agreement (NAFTA) in 1994, the tribunal took over the mandate to review procurement complaints in Canada.
The tribunal is an administrative tribunal operating within Canada's trade remedies system. It is an independent quasi-judicial body that carries out its statutory responsibilities in an autonomous and impartial manner and reports annually to Parliament through the Minister of Finance. We are a separate department with a separate budget. We have our own independent legal services branch. Our counsel are employed directly by the tribunal and are not Department of Justice lawyers. We issue our own press releases and publish our own decisions.
Members and staff give presentations about the tribunal's work to the business and legal communities, industry associations, procurement professionals and international organizations. This is how we publicize our role and explain the rights that flow from the legislation we administer.
With respect to procurement complaints, we consider ourselves a court of easy access. There are currently no fees required to file a complaint. There is also no requirement to be represented by legal counsel. Although we do receive complaints from multinational firms represented by large law firms, we also receive complaints from individuals and small businesses that were vying for federal contracts covered by one of the trade agreements. Although there is a legislated ten-working-day time limit for filing a complaint, we have on our website, in both official languages, user-friendly information and a complaint form. I've asked the staff to put in your briefing binders a copy of that complaint form so that you can see that it is very simple. I believe it's no more than six pages, and that form can also be used as a guide for interested complainants.
I want to emphasize that the tribunal's work is supplier-initiated and complaint-driven. In other words, we are only authorized by legislation to respond to complaints filed by suppliers. Those complaints must relate to a contract or procurement that is covered by one of the three trade agreements, which are NAFTA, the federal–provincial agreement on internal trade, and the World Trade Organization Agreement on Government Procurement. The bid challenge portions of these agreements came into force on January 1, 1994, for NAFTA; on July 1, 1995, for the internal trade agreement; and on January 1, 1996, for the agreement on government procurement under the WTO.
The government mandated the tribunal as its reviewing body for bid challenges under these three agreements. A supplier may file a complaint concerning any aspect of the procurement process, which begins with the establishment of the requirement and goes up to and includes the contract award. After the contract award, we do not have any authority. It is out of our hands. Thus, suppliers who believe they have been unfairly treated during the solicitation or evaluation of bids or in the awarding of contracts on a designated procurement may lodge a formal complaint with the tribunal. More specifically, suppliers may challenge federal government procurement decisions that they believe have not been made in accordance with the requirements of any one of the three agreements—NAFTA, the internal trade agreement, and the agreement on government procurement.
There is an important distinction between our work and that of the new procurement ombudsman. Unlike the ombudsman, our work includes all procurements that fall under the coverage of the three trade agreements mentioned. We do not examine complaints about contract administration, and we do not conduct general practice reviews.
It should also be noted that a potential supplier is encouraged to first attempt to resolve the issue with the government institution responsible for the procurement. If this process is not successful or a supplier wishes to deal directly with the tribunal, that supplier may ask the tribunal to consider the case by filing a complaint. The legislated timeframe in which the tribunal must render its decision is normally 90 days from the time the complaint is filed. So it's not lengthy; it's three months. In some circumstances, it may be extended, but it can never go beyond 135 days.
I have provided to the committee a briefing document on the provisions and coverage of the three trade agreements. I will now provide a quick summary of the key objectives and provisions of these agreements.
Generally stated, the objective of procurement review in Canada is to ensure that procurements covered by the trade agreements are conducted in an open, fair, and transparent manner, and, whenever possible, in a way that maximizes competition. As a party to NAFTA and the agreement on government procurement, Canada has agreed to provide suppliers from the other countries that are parties to this agreement with an equal opportunity to compete with Canadian suppliers for contracts involving specific classes of goods and services. These include construction services bought by certain government departments, agencies, and enterprises such as crown corporations. The signatory countries have reciprocated by opening up their government procurement opportunities to Canadian businesses.
These agreements guarantee national treatment and non-discrimination for goods and services originating in Canada as well as for the suppliers of such goods and services. Some notable exceptions to the coverage of these agreements include communications services. They are excluded. Transportation relocation services are also excluded. Shipbuilding, repair, and goods and services related to military operations, such as armaments and vehicles, are all excluded from these three agreements. The agreements also allow exemptions for reasons of national security and for small and minority businesses.
As a party to the agreement on internal trade, the federal government has agreed to provide all Canadian suppliers with equal access to procurement opportunities involving most goods and services, including construction services, in government departments and agencies and crown corporations listed in the agreement on internal trade, which you have in your briefing material.
The agreement on internal trade prohibits the federal government from discriminating against goods or services of a particular province or region and the suppliers of such goods or services in any province or region. The agreement on internal trade imposes constraints on procurement procedures, which are aimed at promoting equal access to procurement for all Canadian suppliers.
Although most federal government procurements with a value of over $25,000 for goods and $100,000 for services, including construction, are covered by the agreement on internal trade, notable exceptions are advertising and public relations services, health services, and social services.
The agreement on internal trade contains exceptions for national security, for measures with respect to aboriginal people, and for measures that are part of a general framework of regional economic development. So there are those exceptions.
The agreement on internal trade also allows preferences for Canadian goods and suppliers and for Canadian value added, as long as these are consistent with Canada's obligations. So the provisions are there for these exceptions, but within limits.
I would now like to talk briefly about how the procurement review process is carried out at the tribunal. When the tribunal receives a complaint, it reviews the submission against certain criteria. If the tribunal decides to conduct an inquiry, the government institution is sent a formal notification and a copy of the complaint itself. An official notice of the complaint is also published in MERX, Canada's official electronic tendering service, and in the Canada Gazette.
If the contract in question has not been awarded, the tribunal may order the government institution to postpone awarding it pending the disposition of the complaint.
After receipt of its copy of the complaint, the government institution responsible for the procurement files a response within 25 days. So, to summarize, there are five days from the day on which the complaint is received to determine whether there is a prima facie basis for it. The party then has 10 days in which to file a complaint, and the government institution has 25 days to respond to it. So the timelines are quite short.
The complainant and any interveners are sent a copy of the response and then have the opportunity to submit comments within seven working days. And I stress seven “working” days. Deadlines of less than 10 days are working days. Any comments are forwarded to the government institution and other parties to the inquiry.
Once this phase of the inquiry is completed, the tribunal reviews the information on the record so far and decides if a public hearing is necessary or if the case can be decided on the basis of the information on the record. Generally, cases are decided without a public hearing.
The tribunal then determines whether the complaint is valid. If the complaint is found to be valid, the tribunal may make recommendations to the government institution such as re-tendering, re-evaluating or providing compensation. The government institution is notified of the tribunal's decision, as are all other parties and interested persons.
Recommendations made by the tribunal in its determination are, by statute, to be implemented to the greatest extent possible.
The tribunal will ordinarily award reasonable costs to the complainant or the government institution depending on which one succeeded in the case. Costs awarded are generally between $1,000 and $4,100.
I would like to take this opportunity to point out that access to the tribunal is not expensive, unlike traditional courts, where the losing side generally has to pay much higher costs.
In the last five years, the tribunal has received 351 procurement complaints. Consider that during the same time period there were more than $100,000 contracts for goods and services above $25,000, worth in excess of $80 billion, issued by the federal government. For comparison, in 2004, there were over 400,000 transactions at values less than $25,000, for a total value of $1.3 billion; whereas there were 20,854 transactions above a value of $25,000, worth a total of $17.7 billion. That gives you some idea of the number of the small transactions compared to the number of large transactions.
Although these complaints represent only a small percentage of the procurements performed by the federal government for which a complaint could be lodged (less than 1%), their small numbers belie a significant impact on the integrity of government procurement through the disciplinary and instructional effects of complaints found valid.
Of the 351 complaints received by the tribunal, 318, or more than 90%, were filed by Canadian suppliers. This is quite conclusive. Most of those were related to procurements covered by the Agreement on Internal Trade. That is why I sometimes say that the name of the tribunal maybe somewhat misleading. Canadians are filing complaints under the Agreement on Internal Trade. As you can see, the procurement review mechanism at the tribunal has primarily become a vehicle for Canadian business to address its concerns with the way some procurements have been conducted.
With 19 years of procurement review experience in Canada behind us, it is important to emphasize some key lessons.
Truly competitive procurement processes require open bidding, clear procedures and transparent criteria for selection. Such a process enhances the integrity of the procurement system in Canada, invigorates the delivery of government services and translates into savings for the taxpayers, because it is a competitive process.
One of the intended purposes of the Federal Accountability Act is to ensure that the biding process for government contracts remains fair, open, and transparent.
Along the same lines, the Canada-United States Free Trade Agreement and its successor, NAFTA, required that Canada adopt and maintain bid challenge procedures for procurement in order to promote fair, open and impartial procurement procedures. The formal process of procurement review at the tribunal allows Canada to meet these obligations as well as similar ones under the Agreement on Internal Trade and the Agreement on Government Procurement .
Before opening the floor for questions, it is important to set out the areas within which I am able to answer questions. I am speaking today in my capacity as the chairman of the tribunal. Our mandate is to ensure that federal government procurements respect the obligations set out in all domestic and international trade agreements. I am thus able to answer questions on the provisions of the trade agreements and on the tribunal's procurement review process.
As an adjudicator, I am not, however, at liberty to speak to individual cases whether real or hypothetical. Unfortunately, I must respect this requirement. I am sure you will understand.
Moreover, I must stress that the tribunal administers these provisions of the trade agreements but has no policy responsibility with respect to the trade agreements. That is not our responsibility. We implement the agreements we are given. I am thus unable to speak to government policy on NAFTA or international trade agreements. That is outside my jurisdiction.
I will now be pleased to answer any questions you may have.
