Posted by on Nov 7, 2014

*By Gordon LaFortune – Managing Partner at Woods, LaFortune LLP

The Government of Canada is a major purchaser of goods and services. In 2012, the last year for which full year data is available, the Federal Government purchased approximately $15 billion worth of goods and services through 386,601 contracts. By any measure, the Government of Canada is potentially an important customer that can make a real difference to a seller’s bottom line.

Procurements by the Government of Canada differ from purchases by private sector corporations because the Government entities are subject to specific obligations that are intended to make the procurements competitive, fair and open to reduce purchasing costs and to support the growth of a strong economy. These rules are set out in law in the obligations concerning government procurement in Canada’s Free Trade Agreements and in Canada’s Agreement on Internal Trade.

Government of Canada procurements can be reviewed by the Courts under Canadian law or can be reviewed by the Canadian International Trade Tribunal (CITT) through its bid challenge procedure. The CITT reviews government procurement in light of the procurement obligations in the Free Trade Agreements and in the Agreement on Internal Trade (AIT).

As a result of the obligations imposed on government and the ability to enforce those obligations through the Courts or the CITT, potential suppliers have rights and remedies that they can rely on to ensure that they benefit from fair and open procurement. Although government is bound by these obligations, it is up to potential suppliers to make sure that government lives up to these obligations. Only by understanding these rights and how to effectively enforce them can potential suppliers gain the maximum benefit from their efforts to sell to the Government of Canada.

The purpose of this article is to provide a brief overview of the procurement obligations imposed on the Government of Canada and how CITT bid challenge review can be used by potential suppliers. This publication does not however address the separate question of how the Courts can be used to enforce procurement obligations.

Trade Agreements

Canada has negotiated a number of Free Trade Agreements, such as the NAFTA, with its trade partners. The purpose of these agreements is to liberalize the conditions of trade between the parties to the agreements so that they can mutually benefit from increased trade in goods, services and investments between the parties to the Agreement. The following free trade agreements negotiated by Canada include obligations that are intended to open government procurement at the federal level at least:

  • North American Free Trade Agreement (NAFTA)
  • Canada-Chile Free Trade Agreement (CCFTA)
  • Canada-Peru Free Trade Agreement
  • Canada-Columbia Free Trade Agreement
  • Canada-U.S. Agreement on Government Procurement
  • WTO Agreement on Government Procurement

The rights and obligations set out in these Agreements only apply to companies and individuals within the territory covered by the specific Agreement.

Canada continues to negotiate free trade agreements to include government procurement obligations in those agreements, so this list will increase over time. For example, Canada and the European Union have recently concluded the Canada-EU Comprehensive Economic and Trade Agreement (CETA). The CETA includes government procurement obligations which will come into force once the parties have ratified the Agreement.

The Federal, Provincial and Territorial Governments have also concluded the Agreement on Internal Trade which includes a comprehensive chapter on procurement obligations. Other trade agreements have been negotiated between Provincial Governments, but these do not impose any obligations on the Federal Government.

Procurement Obligations in Trade Agreements

In broad terms, the Free Trade Agreements and the AIT include the same basic obligations and, with some exceptions, all government procurements are bound by the obligations in the Trade Agreements. The exceptions include such things as:

  • Procurements that are below the minimum monetary threshold at which the obligations take effect in the particular Trade Agreement;
  • Procurements of goods and services and construction services that are specifically excluded from the procurement obligations in the specific Trade Agreement. The specific goods, services and construction services that are exclude are generally listed in Annexes to the specific Trade Agreement;
  • Procurements by specific government agencies, such as the House of Commons, that are not bound by the procurement obligations. These government entities are generally listed in Annexes to the specific Trade Agreement; and
  • Procurements that are excluded on the basis of national security.

Despite these exceptions, the majority of government procurements are subject to the trade obligations and must be open to all potential suppliers on an equal and fair basis. In most cases, the tender documents (i.e. the Request for Proposal) will indicate whether the procurement is subject to trade obligations and will identify the specific trade agreement at issue.

The Trade Agreements require that Government do the following in each procurement:

  1. Accord to all potential suppliers, and to the goods and services offered by those suppliers, the best treatment accorded to its own suppliers, goods and services. This is referred to as the National Treatment obligation in the Free Trade Agreements and as the Reciprocal Non-Discrimination obligation in the Agreement on Internal Trade.
  2. Give all potential suppliers equal access to information throughout the solicitation period.
  3. Allow potential bidders a reasonable period of time to submit a bid in response to the tender documents.
  4. Clearly set out the requirements of the procurement, the criteria that will be used by the evaluators in evaluation of the submitted bids and the method of weighting those criteria. These must be set out in the tender documents so that all potential suppliers can fully understand the requirements.
  5. Evaluate all bids fairly on the basis of the evaluation criteria set out in the tender documents and on the basis of the bid, as submitted.
  6. Award contracts to potential suppliers who submitted bids by the bid closing date that complied with the mandatory requirements of the procurement.

The Government may not:

  • Bias the technical specifications of the procurement in favour of a particular potential supplier or suppliers. A technical specification is a specification that sets out the characteristics of the goods or their related processes and production methods, or the characteristics of the services or their related operating methods, including administrative provisions. Technical specifications may also include, or deal exclusively with, terminology, symbols, packaging, marking or labelling requirements as they apply to a good, process, production or operating method.
  • Specify quantities or delivery schedules in a way that could be reasonably judged as deliberately designed to prevent potential suppliers from meeting the requirements of the procurement.
  • Impose conditions that are based on the location of a potential supplier.
  • Use price discounts or preferential margins to favour particular potential suppliers.
  • Divide or structure the procurement to avoid the obligations in the trade agreements. This is generally done by dividing the procurement into different solicitations each intended to procure goods or services in an amount below the threshold set out in specific Trade Agreements.Unjustifiably exclude a potential supplier from bidding.
  • Unjustifiably exclude a potential supplier from bidding.
  • Provide information to any potential supplier in a manner that would have the effect of precluding competition.
  • All potential supplier to amend the bids that they submitted in response to the tender documents. Government officials may ask questions to clarify submitted bids, but they may not invite or permit bid repair.

In addition, because government is required to treat all potential suppliers equally and fairly, procurements may not be tainted by bias or by action that raises a reasonable apprehension of bias.  The test for determining whether there is bias or a reasonable apprehension of bias, which was by the Supreme Court of Canada, follows:

“What would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude. Would he think that it is more likely than not that [the individual], whether consciously or unconsciously, would not decide fairly.”

While the test seems to be simple, it is often difficult to gather sufficient evidence to establish bias or a reasonable apprehension of bias.

The government may use limited tendering in some circumstances, either by purchasing from pre-qualified suppliers or through sole source procurement. If the government uses pre-qualified suppliers, it must give other suppliers an opportunity to become pre-qualified and be included in the suppliers list.

The government can sole source procurements in cases where the procurement must be completed quickly or if it is clear that only one supplier could satisfy the procurement criteria.  In these cases, the government will publish an Advance Contract Award Notice (ACAN) to advise potential suppliers of the decision to use sole source procurement.  If a potential supplier believes that it could satisfy the procurement requirements, it can request that the government put the procurement out to competitive tender.

The CITT Process

A CITT bid challenge is a faster and less expensive alternative to taking action in the domestic courts.  The CITT process takes 90 days from the date on which a potential supplier files its complaint with the Tribunal.  The CITT can extend that period to 135 days if the complaint raises more complex issues that will take more time to review.  The CITT is not permitted to go beyond the maximum 135 period and will issue a decision on that date.

A CITT bid challenge may also allow potential suppliers to base their claim on a broader range of trade obligations than those available to them in the courts.  However, the decision to challenge government action through the CITT bid challenge process may foreclose the possibility of filing suit in the domestic courts later, and vice versa.  Therefore, the decision on whether to proceed via the CITT or in a domestic court should not be taken lightly.

I – Starting the CITT Process

A potential supplier must take action within ten working days of the date on which it became aware of the basis for its complaint or when it should reasonably have become aware of the basis for its complaint.  Ten working days excludes weekends and statutory holidays so, in most cases, the complainant has two weeks to act.  The CITT is not permitted to hear a complaint that was filed outside the ten working day period.  The ten working day period was established so that potential suppliers would have an opportunity to challenge procurements without unduly limiting government’s ability to conclude solicitation processes.

Because potential suppliers have the right to file a complaint within ten working days of the date on which they became aware, or should reasonably have become aware, of the basis for the complaint, there is essentially no limit on when a complaint can be filed.  A potential supplier may become aware of the basis for the complaint when the tender documents are issued or after the contract has been awarded.  So long as action is taken within that ten working day period, the CITT will have jurisdiction to hear the complaint.


Potential suppliers can either file a complaint with the CITT within the ten working day period or they can file an objection with the Government of Canada entity that operated the procurement (ie., Public Works and Government Services Canada, Shared Services Canada, etc).  If a potential supplier files an objection, the ten working day period for filing a complaint is cancelled until the Government entity responds to the objection.  If the entity rejects the objection, the potential supplier has ten working days from that date to file a complaint with the CITT.  Filing an objection is a simple process that can give a potential supplier more time to prepare and file a complaint.  The potential supplier would write a letter to the Government entity outlining the issue, explaining the basis for the objection (ie., a failure to properly evaluate submitted bids, a failure to clearly identify evaluation criteria in the tender documents, etc) and setting out a clear request for corrective action to be taken.  The Government entity must respond to the objection, but is not required to respond within a particular period of time.  The CITT has held that if a potential supplier files an objection, it cannot file a complaint with the CITT until the Government entity has responded to the objection.

II – The CITT Process

CITT bid challenge reviews generally proceed on the basis of written submissions.  The usual process is for the potential supplier to file a complaint.  The CITT will then take approximately one week to review the complaint to determine whether or not it is properly documented.

If the CITT concludes that the complaint is properly documented, the Complaint will be sent to the Government entity with a direction that it file its defence (the Government Institution Report) within a schedule set by the CITT.  Once the Government Institution Report has been filed, the potential supplier will be given an opportunity to review the Report and to respond to the evidence and arguments set out in the Report.  The CITT will then consider the submissions filed by the parties and issue its decision.  The CITT also has the right to hold public hearings to gather evidence, but these are relatively rare and are usually intended to focus on specific issues raised in the review.

If the CITT decides that the complaint is not properly documented it will not initiate a review.  In virtually all cases, the CITT will make this decision within one week of the date the complaint was filed, which means that the decision will be made outside the ten working day period.  Consequently, if the complaint is not properly documented, the potential supplier will likely not be able to correct any deficiencies identified by the CITT and re-file its complaint because it will be outside the ten working day period.  Therefore, it is very important to make sure that the complaint is accurate, complete and as fully supported as possible when it is filed.

 III – The Complaint

A complaint filed with the CITT must do the following:

  • Establish that the CITT has the jurisdiction to hear the complaint;
  • Clearly identify the issue being complained against (i.e., the obligation in the trade agreement that was violated by the government entity);
  • Set out the arguments establishing that there has been a breach of the obligations in the trade agreements;
  • Set out the facts, supported by documentary evidence, that support the arguments that there was a breach of the obligations; and
  • Request a remedy from the CITT.

(a) Jurisdiction

Jurisdiction refers to the CITT’s right to conduct a review into the complaint filed by the potential supplier.  The CITT’s jurisdiction to conduct a review is established by the terms of the Trade Agreements.  Therefore, each complaint must do the following:

  • Demonstrate that the complainant is a company incorporated within the territory covered by the trade agreement at issue (i.e., if the complaint is taken under the NAFTA, then the potential supplier must be incorporated within a NAFTA country). The same basic rule applies to individuals.
  • Demonstrate that the complainant is a potential supplier by stating that the potential supplier is fully capable of supplying the goods or services that are being acquired through the procurement.
  • State that the Federal Government entity at issue in the procurement is subject to the procurement obligations of the specific trade agreement.
  • State that the procurement is for goods or services that are subject to the procurement obligations of the specific trade agreement.
  • State that the total value of the contract that would result from the solicitation would exceed the threshold values for goods, services or construction services set out in the specific trade agreement.
  • State the date on which the potential supplier became aware of the basis of the complaint and the action taken by the potential supplier to either object to the government entity or to file the complaint. The purpose of this element is to demonstrate that the potential supplier acted within the ten working day period.
  • Note that the grounds for the complaint and the evidence filed in support of the complaint are set out in the body of the complaint and establish a reasonable indication of a breach of the trade agreements.

Because of the importance of jurisdiction in the process, it should be addressed in a separate section of the complaint so that the CITT can easily check every box and find that it has jurisdiction to hear the complaint.

(b) The Issue

The issue refers to the specific action taken by the Government entity that led the potential supplier to file the complaint.  The issue could refer to virtually any that would amount to a breach of the procurement obligations in the relative trade agreement or bias on the part of the procuring entity.

Each violation of a trade agreement should be described as a separate issue for review by the CITT and should specifically refer to the procurement obligation that has been violated.

(c) The Facts

The factual basis supporting the complaint is very important and must be as detailed as possible and supported by all of the documentary evidence available to the potential supplier including:

  • The tender documents (i.e., the RFP, the RFSO, etc.)
  • The bid filed by the potential supplier in response to the tender document;
  • Any correspondence between the potential supplier and the government entity pertaining to the procurement;
  • Any other materials available to the potential supplier that supports the complaint, including an affidavit to attest to other evidence if necessary.

The CITT must determine whether the complaint has provided sufficient evidence to establish a reasonable indication that there has been a breach of one of the trade agreements.  There is no specific test for determining when this threshold has been met.  Therefore, it is always best to file as much evidence as possible to meet this threshold.

The Treatment of Confidential Information

The evidence filed by potential suppliers generally includes commercially sensitive information that would not be released publicly.  The CITT recognizes this and allows parties to its inquiries to protect confidential information from public release by filing confidential and non-confidential versions of submissions.  If a submission contains confidential information, the party making the submission can have that information protected from public release by the CITT by identifying the submission as being confidential and by filing a non-confidential version of that submission which redacts the confidential information.

The confidential version of the submissions will only be made available to members of the CITT and CITT staff involved in the review and to counsel for other parties who filed non-confidentiality undertakings with the CITT.  If any party believes that use of a confidential designation is unwarranted, it can raise the question of whether the information should be treated as public with the CITT.  If the CITT agrees, it will give the party that filed the confidential information the option of making the information public or of withdrawing it from the CITT’s record.  The CITT will not publicly release any information has been declared confidential on its own.  The CITT’s protection of confidential information has worked very well over the years and potential suppliers should feel confident that any confidential information that they file will be protected.

(d) The Argument

The complaint must set out arguments explaining why the Government entity violated the specific obligations set out in the trade agreements.  The argument advanced in the complaint will depend on the specific violation at issue and the evidence available to the potential supplier.  The argument should be clear, concise and should deal with one issue at a time.

(e) The Remedy

At the conclusion of its review, the CITT will issue a recommendation to the parties.  The CITT has the authority to take virtually any action, ranging from a recommendation that the procurement be amended to recommended that a contract awarded to one bidder be terminated and awarded to another bidder.  Recommendations are generally not binding, but in these cases the Government is required to implement the recommendation to the greatest extent possible.  In the vast majority of cases, the requirement to implement makes the recommendation binding.


The CITT has the authority to award costs at the conclusion of its review.  When the CITT first began hearing bid challenges it would only award costs against a government entity.  Following an appeal of this practice by the Federal Court of Appeal, the CITT adopted the practice of awarding costs against the losing party but took steps to limit those costs on the basis of the complexity of the case.  The CITT generally awards $1,000 in costs for simple cases, $2,400 in costs for more difficult cases and $4,200 in costs for complex cases.  These amounts are far below the cost awards that the CITT had previously awarded against losing government entities and were likely adopted to avoid imposing significant costs against losing potential suppliers.  The CITT retains the authority to award higher amounts if it considers that higher cost awards are appropriate in the circumstances of the particular case.

How to know if you have an Issue – Red Flag Question

Potential suppliers have the right to take action if government entities have failed to meet any of the procurement obligations set out in the Trade Agreements or if they have tainted the procurement with bias or have raised a reasonable apprehension of bias.  Consequently, before a potential supplier can take any action, it must know whether there has been a violation or whether it has been treated unfairly and must come to that conclusion within ten working days.

In many cases, this determination will be obvious and little more than an application of the “I don’t know what discrimination is, but I know it when I see it” approach.  In other cases, it may not be as obvious.  In other cases, the violation may not be as obvious or as easy to characterize.

To help potential suppliers determine whether they have been fairly treated, they should ask the following question:

  • Who is/are my competitors?
  • Is there an incumbent supplier (i.e., someone already in place providing the same goods and services to the government)?
  • Are the technical specifications for the procurement fair or do they deliberately favour some other supplier?
  • Is there a list of pre-qualified suppliers? If my company is not on that list, is there a way to become pre-qualified?
  • Have I been given a reasonable period of time to submit a bid?
  • Is the delivery schedule appropriate or has it been developed to deliberately benefit a competitor?
  • Have I been given enough information to fully understand the procurement and its requirements? Have officials responded to any questions that I have submitted?
  • Are the evaluation criteria and the methods of weighting the criteria clearly set out in the tender documents and in a manner that allow me to fully understand the procurement requirements?
  • Does the evaluation grid reflect the value of the components of the procurement fairly and accurately?
  • Are the evaluators independent from other bidders?
  • Have the evaluators fairly evaluated my bid in light of the evaluation criteria?
  • Have the evaluators asked questions or taken steps which indicate that they may have invited other suppliers to repair their bids or which indicate that they have accepted bids late?
  • Has the contract been awarded to a potential supplier that is not capable of supplying the required goods and services?
  • Have I been excluded from the procurement?
  • Does this procurement benefit any particular supplier?

While the answers to these questions may not definitively establish that there has been a violation of the procurement obligations, they can point to discriminatory treatment and a potential violation that is worthy of further consideration.


This paper is not intended to provide an exhaustive review of the procurement obligations or the steps that potential suppliers can take to protect their rights, but is intended to give potential suppliers sufficient information to determine whether there is a problem, to describe CITT bid challenge as an option available to them and to explain the short time period available to potential suppliers to take action.

The CITT’s bid challenge review system, like the courts, polices government on the basis of complaints filed by potential suppliers; you have to know your rights to be able to protect your right.  Consequently, if there is any question as to whether government has violated its obligations to your detriment, you owe it to yourself to determine whether your rights have been violated so that you can make an informed decision on whether or not to take further action in the limited time available to you.