February 6, 2013

Bid Protest Bulletin | Paul Emanuelli

Court reviews decision evaluation

In its August 2009 decision in Bot Construction v. Ontario (Ministry of Transportation), the Ontario Divisional Court ordered the government to revisit an award made to a non-compliant bidder.

The Divisional Court determined that the Minister was conducting its highway construction procurement under the general statutory powers of the Public Transportation and Highway Improvement Act and that it was a matter of public interest that the exercise of those powers comply with the government’s internal procurement directives.

Since the government breached its internal procurement rules by awarding to a non-compliant bidder, it was ordered to revisit its award decision.

The government argued that the decision in question was purely commercial in nature and was therefore not subject to judicial review.

While the Divisional Court acknowledged that government decisions which are discretionary public policy decisions or are purely commercial in nature may not be subject to judicial review, it also noted that judicial review may apply where the decisions impact the public interest.

The Divisional Court noted that the judicial review of government procurement decisions will be available where the public interest is impacted and, in particular, where procurement decisions are subject to statutes, rules or regulations,

Turning its attention in more detail to the facts of the particular dispute, the Divisional Court noted that the government was making its procurement decision under a statutory power and was expending significant public funds in the process.

The Divisional Court also noted that the tendering rules waived liability for damages and contained provisions allowing the government to bar contractors from bidding opportunities if they engaged in litigation against the government. These factors contributed to making the specific procurement decision in question subject to judicial review.

The Divisional Court also clarified that while the government’s procurement directive did not, in itself, create a free standing enforceable set of legal obligations, it did inform the manner in which the government should make its procurement decision under the relevant statutory framework.

The government was therefore required to comply with its internal procurement policies and risked a finding of unreasonableness in its exercise of its statutory powers if it failed to do so.

The Divisional Court then turned its attention to the appropriate standard of review, noting that there are two potential standards of review available when judicially reviewing a government decision: (i) the more deferential “reasonableness” standard, which asks whether the government decision in question fell within the spectrum of reasonable decisions available in the circumstances; and (ii) the less deferential “correctness” standard, where the court substitutes its own view for that of the decision-maker in order to determine whether the decision in question was, in the opinion of the court, “correct”. The Divisional Court concluded that the appropriate standard of review in the circumstances was the more deferential “reasonableness” standard.

The Divisional Court ultimately concluded that the government’s decision was unreasonable, ran contrary to the government’s procurement directive and compromised the duty of fairness that was owed to the all bidders in the particular tendering process. The Divisional Court therefore quashed the decision and ordered the government to re-evaluate the tenders in accordance with the terms set out in the tendering documents. In December 2009 the Ontario Court of Appeal overturned this judgment, finding that the government’s assessment of bid compliance was not unreasonable. However, the Court of Appeal did not rule out the possibility of granting a judicial review in future situations where the government acts unreasonably.

This article is extracted from his Government Procurement textbook published by LexisNexis Butterworths. Reach Paul at paul.emanuelli@procurementoffice.ca.

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