Public Contracts in Quebec: First Order of the Autorité des Marchés Publics Welcomed by Industry Stakeholders

On June 21, 2019, Quebec’s autorité des marchés publics (AMP) rendered its first decision, less than a month after the coming into force of its powers to examine and process complaints about public procurement processes and contract awards. In this decision, the AMP ordered the cancellation of a call for tenders issued by the CHU de Québec-Université Laval (CHU).

The AMP determined that a so-called “unfair” call for tenders (i.e., a call for tenders favouring a potential tenderer over its competitors by imposing requirements likely advantageous to that potential tenderer) did not comply with the applicable normative framework. In doing so, the AMP reaffirmed the principles of equal treatment of tenderers, access to public procurement processes and contracts by qualified suppliers, and sound management of public funds.

The AMP based its decision in part on the principles of the Act respecting contracting by public bodies (Act) and applied the rules of the Canadian Free Trade Agreement (CFTA) and the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) regarding technical specifications, including a prohibition on drafting such specifications to create unnecessary obstacles to trade.

BACKGROUND

The purpose of the CHU’s call for tenders was the acquisition of wireless network equipment in order to extend the existing network to the CHU’s new buildings. The CHU decided to limit its call for tenders to the acquisition of additional equipment from the same manufacturer as that of its existing wireless network. It specified the desired brand in the technical specifications and included the name and description of the equipment drawn from that manufacturer’s catalogue in the price schedule. According to the AMP’s analysis, the call for tenders’ documents did not allow for potential tenderers to offer equivalent equipment or equipment in substitution to that manufacturer’s equipment. There was no addendum or provisions in the call for tenders’ documentation to this effect.

Following the publication of the call for tenders, the AMP was informed that [translation] “the terms of the call for tenders do not promote healthy competition” and agreed to intervene after its preliminary analysis of the file. It should be noted that the AMP can receive information from the public and exercise its powers in this regard, even if such information is provided anonymously.

In the course of its examination, the AMP learned from the CHU that the latter’s decision to limit its call for tenders to the equipment of a specific manufacturer was based on monetary considerations and the familiarity of the CHU’s technical staff with that manufacturer’s equipment. However, the CHU confirmed that no steps or actions had been taken to verify, by way of an official study or otherwise, if there existed equipment from another manufacturer that could be [translation] “reasonably satisfactory or compatible with the existing systems and infrastructures”. According to the CHU, such measures were not justified as they would have required the allocation of resources and entailed excessive costs.

ANALYSIS

At issue was the question of whether the CHU had complied with the applicable framework in limiting its call for tenders to a single manufacturer by delineating the technical specifications of the equipment it wished to acquire.

The relevant provisions of the framework include the fundamental principles of the Act with which all public bodies and public procurement processes must comply, as well as certain free trade agreements, including CFTA and CETA provisions on technical specifications, the provisions of the latter being more clearly restrictive.

In its analysis, the AMP determined that according to the applicable framework, the rule that should have prevailed is the drafting of technical specifications in terms of performance and functional requirements based on recognized norms or standards (if any), rather than in terms of design or descriptive features, to facilitate tenderers’ access to public contracts and not create undue obstacles to trade. Therefore, any equipment or product that met these requirements would be acceptable. The use of descriptive characteristics, such as a trade name or a manufacturer, in drafting the technical specifications of a good, product or any other required element must remain an exception, even if the call for tenders allows for equivalent or substitute goods to be offered by tenderers. This exception is only justified if [translation] “there is no sufficiently precise or intelligible way to otherwise describe the requirements of the contract”.

In addition, the use of this exception by a public body must be thoroughly documented, through studies and other measures, even if such process implies resource allocation and costs, to demonstrate that its use is adequate in the circumstances. Finally, the expertise of the public body’s employees, or their familiarity with a given equipment, does not justify limiting a call for tenders to a specific product.

According to the AMP, the CHU had not adequately justified its approach and, by not carrying out thorough, documented studies, it had erred in its tendering process. Given the non-compliant elements and the repercussions (particularly on potential tenderers) of rectifying the documentation, the AMP ordered the cancellation of the call for tenders.

CONCLUSION

This eagerly awaited first decision of Quebec’s AMP confirms the importance of such new independent public procurement authority as well as the seriousness and rigour with which it exercises its role from the outset. In doing so, the AMP sends a strong signal to potential tenderers, indicating that it will monitor the information that it is provided with, and that it will exercise its powers when justified.

This decision also confirms that the AMP intends to exercise its role as a neutral and independent body overseeing and controlling public procurement in Quebec, and to ensure that public bodies comply with all standards applicable to public contracts, including trade agreements. It also indicates that the AMP will not hesitate to cancel a call for tenders, when it deems it necessary.

On the merits, this decision addresses the concerns of multiple suppliers interested in doing business with public bodies, particularly in the health field, as to how technical requirements should be drafted. Such concerns often preclude potential suppliers from participating in calls for tenders and offering innovative products or goods.

The AMP’s website provides more information on the AMP’s powers, as well as on how to file a complaint with, or communicate information to, the AMP.

For further information, please contact:

Clémentine Sallée         514-982-4077
Liviu Kaufman               514-982-5032

or any other member of our Procurement group.

Blakes and Blakes Business Class communications are intended for informational purposes only and do not constitute legal advice or an opinion on any issue.

We would be pleased to provide additional details or advice about specific situations if desired.

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