Author: Erin Smith
This post was written prior to our January 2017 merger, under our previous firm name, MacPherson Leslie & Tyerman LLP.
Beginning July 1st, 2015, government entities that fail to comply with the procurement provisions in The New West Partnership Trade Agreement (the “NWPTA”) face awards against them of up to $100,000 in any one proceeding, under a new dispute resolution process called the Bid Protest Mechanism.
NWPTA seeks to liberalize and promote trade between Saskatchewan, Alberta and BC. Among other things, the NWPTA requires that procurement of goods, services and construction by a broad range of government entities be done in an open, transparent and non-discriminatory manner.
Prior to July 1 suppliers had no effective process to dispute award decisions made by public sector bodies (except the federal government and its agencies). The NWPTA’s new Bid Protest Mechanism is designed to address situations where a supplier believes a specific procurement was not conducted according to the NWPTA procurement rules. (Complaints related to systemic procurement practices should proceed through the NWPTA’s general dispute resolution mechanism.) Suppliers in Saskatchewan, Alberta and BC that provide or could provide goods and services for a procurement covered by the NWPTA are able to use the Bid Protest Mechanism.
The Bid Protest Mechanism involves two stages: consultation and arbitration. The first stage begins if and when a supplier launches a complaint. This must be done within 10 calendar days after the supplier knew, or reasonably should have known, that a procurement was potentially non-compliant with the NWPTA. This complaint begins a 20-day formal consultation period between the supplier and the government to try to resolve the dispute. Once the consultation period has begun, the government entity and supplier are to “make every effort to arrive at a mutually satisfactory resolution”. If the issue is not resolved by the end of the consultation period (which may be extended by mutual agreement), the process moves to the second stage: arbitration.
The supplier has 14 days following the conclusion of the consultation to request an appointment of an arbitrator, and must provide a financial deposit of $2,500 for costs along with any such request. An arbitrator may make findings of facts, make a determination as to whether the procurement was compliant with the NWPTA, and recommend how the procuring entity can bring itself in compliance with the NWPTA.
An arbitrator can make an award against the government entity of up to $50,000 to help the supplier recoup the costs of preparing a bid for the specific procurement in question (“recoupment award”). An arbitrator can also order costs against the government entity of up to $50,000 relating to the arbitration procedure itself. Thus, in total, a government entity can be liable for up to $100,000 under the Bid Protest Mechanism. Under this process, a supplier is potentially liable for a cost award of up to $50,000. An arbitrator cannot order a recoupment award against a supplier.
Government entities (including Crown corporations municipalities, school boards and health regions) involved in procurement processes should be aware of this change and consider accessing legal advice to help establish an effective consultation process that will minimize the risk of arbitration proceedings and arbitration awards against them. While there has always been an expectation that government entities will run a transparent and non-discriminatory procurement process, there are now financial repercussions under NWPTA for failing to do so.