Simon's Megalomaniacal Legal Resources

Cabinet (Ont) - Government Bidding

. Thales DIS Canada Inc. v. Ontario (Transportation)

In Thales DIS Canada Inc. v. Ontario (Transportation) (Ont CA, 2023) the Court of Appeal considered the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), here in the course of a successful Crown appeal of a JR finding that the bidding requirements were in violation of CETA. In these quotes the court considered the JR 'justiciability' of the case, which was particularly influenced by the availability of an administrative internal review process:

E. THE REVIEWABILITY OF THE REQUESTS FOR BIDS

[119] Ontario argues that the Divisional Court erred in holding that the request for bids was unreasonable. In making this argument, Ontario submits that the issuance of a request for bids is not generally subject to judicial review.

[120] I agree with Ontario that the Divisional Court erred in this case in finding that the request for bids was subject to judicial review on its own apart from the Decision. However, I arrive at this conclusion through a different route than proposed by Ontario.

[121] I deal first with Ontario’s argument, followed by a discussion of how I would address the issue of the reviewability of the request for bids in this case.

(1) There is no general authority that a request for bids should not be subject to judicial review

[122] Ontario relies on the decision in Wauzhushk Onigum Nation v. Minister of Finance (Ontario), 2019 ONSC 3491 (Div. Ct.), to argue that the terms of the request for bids is not subject to judicial review. However, Wauzhushk does not stand for that proposition. In Wauzhushk, the applicant sought to challenge a Cabinet decision directing the Ontario Minister of Finance to seek to increase revenues from land-based gaming. As part of this decision, Cabinet directed the Minister of Finance to shift operations of its gaming sites to private operators through a competitive procurement process. The Divisional Court held that the directive was not justiciable because it was a policy decision of Cabinet. The Divisional Court further held that the manner in which the Ontario Lottery and Gaming Corporation, a Crown corporation, chose to seek bids was not subject to judicial review because it was a commercial matter and not a matter of public law. It was in that context that the Divisional Court stated that “[t]o date, a public tender process has not been subject to public law remedies in Ontario”: at para. 108.

[123] In making this statement, the Divisional Court relied on this court’s decision in Bot Construction Limited v. Ontario (Minister of Transportation), 2009 ONCA 879, 85 C.L.R. (3d) 25. There, the court considered an appeal from a decision of the Divisional Court that had found the rejection of a bid as non-compliant to be unreasonable. This court reversed that conclusion, finding that MTO’s decision in that context was reasonable. However, in the course of the reasons, the court specified that it came to that conclusion “without expressing any view as to the availability of judicial review as a remedy with respect to the tendering process for government procurement contracts”: at para. 19. In other words, there is no definitive authority from this court on the issue of whether a tendering process can or cannot be subject to judicial review.

[124] However, as discussed below, this is not an appropriate case in which to decide the general issue of whether a request for bids can be subject to judicial review. The issue in this case should be decided based on its specific circumstances.

(2) The request for bids is not subject to judicial review because it first went through the Ontario Government’s bid dispute process

[125] In this case, the issue of whether the request for bids is subject to judicial review must be considered in the context of Ontario’s obligations to establish a dispute resolution process under the CETA. Given that the CETA foresees that the participant countries and their sub-governments must establish a review process, the ability to judicially review the request for bids must be considered in the context of that process.

[126] The majority of the Divisional Court reasoned that the request for bids was subject to judicial review because it raised matters of public law. In arriving at this conclusion, the court relied on the decision in Air Canada v. Toronto Port Authority, 2011 FCA 347, [2013] 3 F.C.R. 605. The court based its decision on the various factors to which Air Canada referred at para. 60 to conclude that the request for bids had a sufficiently public character to warrant subjecting it to judicial review.

[127] However, in approaching the issue from this perspective, the majority failed to consider the impact of the review process on the issue of whether the Divisional Court should exercise its discretion to review the request for bids on its own, and separate from the review of the Decision.

[128] In this respect, I agree with the concurring judge who stated that, if Ontario established a CETA compliant process for addressing complaints about a request for bids, the request for bids itself should not separately be subject to judicial review:

I disagree with my colleague’s approach because of what it could signal for future cases. If Ontario establishes a CETA-compliant dispute resolution process – as it is obliged to do under CETA – then this court should, in future [cases], respect the process established by Ontario. This would ordinarily foreclose this court from taking original jurisdiction to review an RFB, and instead, this court would leave it to the decisionmaker assigned this task by Ontario in a CETA-compliant process. Or, in other words, faced with an unreasonable decision from a lawful decisionmaker, we would send the issue back.

[129] Indeed, as a general principle, if an administrative process is set up for dealing with an issue, what is typically referred to as an adequate alternative remedy, the parties should first participate in that process before seeking judicial review: Canada (Border Services Agency) v. C.B. Powell Limited, 2010 FCA 61, [2011] 2 F.C.R. 332, at paras. 31-32; Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541, 111 O.R. (3d) 561, at paras. 68-69. The reviewing court then has the benefit of the administrative decision makers’ reasons and expertise. If the parties have participated in the administrative process, there is no basis for ignoring the administrative decision and separately reviewing the request for bids afresh. That is not the role of the court on an application for judicial review.

[130] Of course, if the original decision maker did not have jurisdiction to review the request for bids, this may be a different issue. However, in this case, with respect, I disagree with the concurring judge’s conclusion that Ontario failed to establish a CETA compliant review process.

. Thales DIS Canada Inc. v. Ontario (Transportation)

In Thales DIS Canada Inc. v. Ontario (Transportation) (Ont CA, 2023) the Court of Appeal considered the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), here in the course of a successful Crown appeal of a JR finding that the bidding requirements were in violation of CETA.

In these quotes the court illustrates aspects of the functioning of Ontario’s Ministry of Transportation's (MTO) 'Fraud Prevention and Business Integrity Office', apparently an internal security branch:

[45] MTO took the position that the Canadian production requirement did not breach the CETA, because it was permitted by the “public morals, order or safety” exception in Article 19.3. MTO submitted that this requirement was meant to reduce the risk of identity theft and fraud. In support of this position, MTO relied on a note (the “Fraud Note”) prepared by its Fraud Prevention and Business Integrity Office (“the Fraud Office”).

[46] The Fraud Note was attached to MTO’s response. The Fraud Note stated that the Fraud Office “works closely with … enforcement agencies in Ontario, Canada and throughout the world, as well as stakeholders including other provincial and national governments to ensure the integrity” of driver’s licences and other identification cards. The Fraud Note also stated that “incidents of theft and fraud are often deliberately under-reported or not reported for security reasons.” The Fraud Note explained that card stock is printed to “contain overt, covert and forensic level security features”, and that, once printed, the card is cut into individual blank cards with a unique stock number printed on each card. The Fraud Note then explained that “[b]ecause the manufacture of card stock is a complex, technical process and personalization is comparatively easier to forge, card stock has a high value to criminals and fraudsters.”

[47] The Fraud Note went on to describe two areas of risk if card stock were to be produced offshore outside of Canada. First, if card stock is produced outside of Canada, MTO would not have the same level of control it would have in supervising the security of the manufacturing process in Canada. Second, the transportation of card stock from offshore to Canada would increase the number of handovers and the opportunities for theft. The Fraud Note elaborated on each area of risk.

[48] The Fraud Note also mentioned that the American Association of Motor Vehicle Administrators (“AAMVA”) recommended in its “‘DL/ID Card Design Standard’ to centralize production and personalization wherever possible” (emphasis added).

[49] In its response, besides relying on the Fraud Note, MTO identified a two-step material necessity analysis which it said should be applied to determine whether the domestic production measure fell within the scope of the public morals, order or safety exception. First, the policy rationale must be materially connected to the protection of public morals, order or safety. Second, the domestic production requirement must be necessary in order to protect public morals, order or safety.

[50] MTO went on to apply this two-step analysis to the domestic production requirement for card stock. Relying on the Fraud Note, MTO stated that the measure is “clearly connected to protecting ‘public morals, order or safety’ of Ontario residents, as the measure is intended to, and will, mitigate the risk of danger or injury related to loss, theft or compromise from offshoring card stock production”. MTO next addressed the issue of necessity. In doing so, MTO relied on the WTO decision in Brazil – Measures Affecting Imports of Retreaded Tyres (2007), WTO Doc. WT/DS332/AB/R (Appellate Body Report), at para. 210, to argue that any alternative measure would have to preserve the Ontario government’s desired level of protection with respect to its objective of protecting against fraud and identity theft. MTO submitted that no alternatives would provide the level of protection it sought.

. Thales DIS Canada Inc. v. Ontario (Transportation)

In Thales DIS Canada Inc. v. Ontario (Transportation) (Ont CA, 2023) the Court of Appeal considered the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), here in the course of a successful Crown appeal of a JR finding that the bidding requirements violated CETA - in that an Ontario bidding process prohibited products (government ID cards) made outside of Canada.

These quotes illustrate an administrative bidding 'dispute resolution process':

(3) Ontario’s procurement dispute resolution process

[31] Before addressing Thales’s challenge, it is helpful to describe the dispute resolution process followed in this case.

[32] The Government of Ontario has an internal dispute resolution process to address bid disputes. A description of the process is set out in a document titled “Detailed Description of the Government of Ontario’s Bid Dispute Process” (“Detailed Description”).

[33] The Director of the Procurement Policy Branch, Supply Chain Ontario, Ontario Shared Services, of the Ministry of Government Services (the “Director”) is responsible for centrally reviewing all complaints.

[34] The complaint process is in writing. Vendors who have a complaint are to submit a complaint form with a detailed description of their complaint. The Director can then solicit further information, including seeking submissions from the affected Ministry.

[35] Once the Director has reviewed the complaint, the Director prepares an analysis that is presented to the Assistant Deputy Minister of Supply Chain Ontario, who in turn makes a recommendation to the affected Ministry. The Deputy Minister of the affected ministry is then responsible for assessing the implications of the recommendation. The complaint process is completed as follows:

The Ministry will have an opportunity to consider the operational impacts of this recommendation, its obligations under Ontario’s trade commitments and this bid dispute process, and will make a final decision that will be communicated to the [Assistant Deputy Minister, Supply Chain Ontario and the Director]. This decision will be adopted as the Government of Ontario’s position and the [Assistant Deputy Minister, Supply Chain Ontario] will communicate it back to the vendor.

[36] The complaint process provides that vendors who have complaints may be eligible for certain remedies, including measures to preserve their ability to participate in the process and monetary compensation limited to the costs of preparing the bid and making a complaint. In addition, where a complaint is made regarding a contract that has not yet been awarded, the dispute resolution process proceeds on expedited timelines and the government has the option of applying interim measures to preserve the vendor’s opportunity to participate in the bidding process. Notably, both the remedies and interim measures provisions mirror the requirements of Article 19.17 of the CETA.

[37] The complaint process further provides that vendors who are not satisfied with the outcome can proceed to court or, in the case of a non-competitive bid process, to arbitration.

(4) Thales’s complaint and MTO’s response

[38] On December 10, 2021, Thales submitted a complaint form to the Director.