Food mail ruling quashed on technicality

Last week was a tough one for Canadian North.

It ended with a big fire that destroyed their cargo warehouse in Iqaluit. But the worst news came earlier: a March 6 decision by a three-judge panel from the Federal Court of Appeal.

In it, the federal court quashed a Canadian International Trade Tribunal ruling that would have forced the federal government to re-bid a five-year, $175 million food mail contract awarded to First Air in 2005.

Canadian North, who made the complaint to the trade tribunal last fall, alleged that the Department of Indian Affairs and Northern Development, acting through Canada Post, judged Canadian North’s contract proposal using criteria that were not disclosed in its request for proposals.

And they went on to allege that Canada Post may have used this faulty evaluation process to favour First Air and prevent Canadian North from getting the contract.

One Canadian North official told the Qikiqtani Inuit Association in Iqaluit last fall that the contract award may have been “rigged” in favour of its competitor.

The trade tribunal, in a ruling issued Feb. 5, upheld Canadian North’s complaint.

They found that Canada Post, as agent for DIAND, judged Canadian North’s proposal using criteria that Canadian North did not know about when they bid on the contract.

The trade tribunal even said that if the two competing proposals had been evaluated correctly, there is a better than 50 per cent chance that Canadian North, not First Air, would have won the contract.

To fix the mess, they recommended that the contract be re-bid, and that Canadian North be paid compensation equal to 60 per cent of the profit they would have earned had they won the contract.

First Air, Canada Post and DIAND then went to the Federal Court of Appeal to appeal the ruling. Their lawyers argued the trade tribunal does not have jurisdiction, or the legal right, to rule on the issue.

They also argued that it is Canada Post, not DIAND, who is the real contractor. Canada Post is exempt from many of the procurement rules that apply to ordinary federal government departments.

The federal court agreed with First Air, Canada Post and DIAND. On March 6, Chief Justice John D. Richard and two other federal appeal court judges issued a ruling that orders the trade tribunal to dismiss Canadian North’s original complaint “for want of jurisdiction.”

But the federal court ruled only on the technical issue of jurisdiction. They did not deal with the substance of the trade tribunal’s findings on the food mail contract award.

In its Feb. 6 decision, the tribunal said Canada Post used at least six evaluation criteria that Canadian North could not have known about when they bid on the contract.

Canada Post then used those undisclosed criteria to give Canadian North’s contract proposal a lower score than First Air’s proposal.

The trade tribunal said Canada Post’s “misuse of the evaluation criteria were so pervasive, that, in the Tribunal’s view, they amounted to a general disregard for the criteria in the RFP.”

The tribunal also said that this “prejudices the integrity and efficiency of the competitive procurement system.”