Date: 20030213
Docket: T-2164-02
Neutral citation: 2003 FCT 157
Ottawa, Ontario, February 13, 2003
Present: The Honourable Madam Justice Danièle Tremblay-Lamer
BETWEEN:
VERINT TECHNOLOGY INC.
Applicant
and
MINISTER OF PUBLIC WORKS AND
GOVERNMENT SERVICES
Respondent
REASONS FOR ORDER AND ORDER
[1] This is an application for an order for an interlocutory injunction, prohibiting the respondent, the Minister of Public Works and Government Services, ("PWGSC") and/or his delegates, from further implementing a contract awarded pursuant to the Request for Proposal ("RFP"), Solicitation No.# M9010-023466/A.
[2] On July 7, 2002, PWGSC sent a RFP for a new Central Communications Intercept System for the Royal Canadian Mounted Police. ("RCMP") This is a wiretap system that is used by the RCMP in connection with its law enforcement activities.
[3] Verint Technology Inc. ("the applicant") was one of the selected bidders for this RFP and submitted a bid of $11,968,234.
[4] On December 3, 2002, PWGSC advised the applicant by letter that it had not been successful in its bid. It indicated in the letter that the contract had been awarded to another bidder, who had bid $17,631,148.
[5] The applicant sent a letter by fax to PWGSC stating that it had been fully compliant in its bid and that its price was more favourable than that of the successful bidder. The applicant requested further information on the evaluation of its bid and asked for a meeting with PWGSC as soon as possible which was held on December 10, 2002. At the meeting, the applicant was advised that it had lost the contract because its bid was non-compliant to one of the mandatory requirements of the RFP.
[6] Section 6.2.3.7 of the RFP contained the following mandatory requirement:
The word processing capability will be the latest release of Corel WordPerfect. This word processing program will be provided and installed on each User Workstation by the Contractor.
[7] The applicant submitted the following statement in its proposal:
It is understood that the Government will supply the latest release of Corel WordPerfect for all required work stations.
[8] The technical evaluators considered this wording ambiguous and requested PWGSC to ask the applicant for a clarification of this statement. PWGSC did not ask the applicant for a clarification of this statement. It concluded that the applicant's bid was non-compliant.
[9] On December 18, 2002, the applicant filed a complaint with the Canadian International Trade Tribunal ("CITT") seeking to review the award of the contract.
[10] On December 23, 2002, the applicant commenced an application for judicial review of the decision of the Minister to award the contract to a bidder other than the applicant.
[11] On December 24, 2002, the applicant was advised that the CITT had decided not to conduct an inquiry into the complaint on the grounds that the RFP was the subject of a valid national security exemption. The CITT held that the procurement was excluded from coverage under the trade agreements and that it did not have jurisdiction to hear the complaint.
[12] On January 2, 2003, the applicant commenced an application in the Federal Court of Appeal seeking to review the decision of the CITT not to conduct an inquiry into the complaint.
[13] The applicant seeks an order for an interlocutory injunction prohibiting PWGSC from further implementing the contract, pending a final determination of its application for judicial review.
[14] The appropriate test to consider in granting the injunction has been established by the Supreme Court of Canada in R.J.R. MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311. Pursuant to this test, the applicant must show that there is a serious issue to be tried, that it will suffer irreparable harm if the injunction is not granted and that the balance of convenience favours the applicant. The test is conjunctive. The applicants are only entitled to the relief sought if they satisfy all three aspects of the test.
[15] With respect to the serious issue, the applicant argues that PWGSC deliberately applied a policy that resulted in a breach of the Government's obligations to promote fair, open and impartial procurement procedures. The action of PWGSC in failing to request clarification of one sentence dealing with an ambiguous mandatory requirement was arbitrary and breached PWGSC's obligation of good faith and fairness towards parties invited to bid on Government contracts and was contrary to the doctrine of natural justice.
[16] I am of the view that serious issues have been raised by the applicant. Firstly, whether the failure of PWGSC to request clarification of the sentence at issue prior to its determination of non-compliance, (in spite of the fact that it had during the evaluation process asked the applicant for clarification of two other mandatory requirements in the RFP) was arbitrary; secondly, whether the failure of PWGSC to advise the applicant of its disqualification prior to the awarding of the contract to another bidder thus foreclosing its opportunity to obtain a stay order prohibiting such an award from the CITT, was contrary to procedural fairness. These issues certainly meet the threshold of an arguable case.
[17] The applicant filed the affidavit of Mr. R. Bennett, President of Verint Systems Canada Inc., in support of its motion for an interlocutory injunction. With respect to irreparable harm, the applicant foresees to lose its reputation as a provider of RCMP services with other law enforcement entities and it believes that its loss of the RCMP contract is prejudicial to its right to participate in future proposals by law enforcement entities.
[18] Although I accept that the applicant's concerns are legitimate, its allegations regrettably do not meet the high threshold imposed by the jurisprudence, i.e. the applicant must present clear evidence that it would suffer damage or that the damage would be irreparable. (Syntex Inc. v. Novopharm Ltd. (1991), 36 C.P.R. (3d) 129; Centre Ice Ltd. v. National Hockey League, [1994] F.C.J. No. 68 (Q.L.)). In cross-examination, Mr. Bennett admitted that it is only the applicant's belief that a stigma will be attached to it as a result of the loss of the contract. He also admitted that he was not aware of any contract which the applicant has not been invited to bid on as a result of the loss of the contract. Thus, the applicant has advanced no clear evidence which demonstrates that it will suffer irreparable harm not compensable by an award of damages if the injunction is not granted.
[19] With respect to the balance of convenience, on the one hand, the applicant alleges that the loss of the RCMP contract will severely prejudice its reputation with other law enforcement entities and its ability to participate in future proposals. On the other hand, the respondent submits that any postponement of the contract already awarded would have serious adverse effects. The contract between PWGSC and the successful bidder has been implemented. In fact, substantial equipment has already been delivered to the RCMP and more is scheduled to be delivered shortly. Staying the contract awarded would only put the matter in limbo.
[20] I disagree with the applicant that the granting of the interlocutory injunction would remedy the irreparable harm that it has allegedly suffered. The interlocutory injunction would only stay the continuance of the contract already awarded but would not result in the contract being granted to the applicant. It would do little in my opinion to remove the alleged stigma nor improve the ability of the applicant to bid on future contracts. This type of harm would only be resolved when a final determination is made on the issue.
[21] The only foreseeable benefit at this time for the applicant of an interim relief would be the preservation of the value of the contract. However, if it is determined at a future date that the contract should have been awarded to the applicant, such harm is purely financial in nature and would be adequately remedied by an award of damages.
[22] In weighing the factors to consider at the third stage, the Court must take into account any harm to the public interest established by the respondent. It is undisputed that the new equipment will allow the RCMP to effectively perform its duties and ensure public safety. Based on the confidential evidence filed by the respondent, I accept that any postponement of the contract would delay the delivery of such equipment. Thus, I believe that any delay in the installation of the new system will have a detrimental effect on the ability of the RCMP to carry out essential enforcement activities. It is therefore in the public interest to allow the contract to continue. I am satisfied that the balance of convenience and public interest favour the maintenance of the status quo.
[23] Consequently, I have to conclude that no interlocutory injunction should be granted.
ORDER
THIS COURT ORDERS that the motion for an interlocutory injunction is denied.
"Danièle Tremblay-Lamer"
J.F.C.C.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2164-02
STYLE OF CAUSE: VERINT TECHNOLOGY INC. v. MINISTER OF PUBLIC WORKS AND GOVERNMENT SERVICES
PLACE OF HEARING: OTTAWA, ONTARIO
DATE OF HEARING: FEBRUARY 10th, 2003
REASONS FOR ORDER : THE HONOURABLE MADAM JUSTICE
AND ORDER TREMBLAY-LAMER
DATED: FEBRUARY 13th, 2003
APPEARANCES:
MR. THOMAS A. McDOUGALL
AND MRS. BARBARA J. NICHOLLS FOR APPLICANT
MRS. ELIZABETH RICHARDS FOR RESPONDENT
SOLICITORS OF RECORD:
PERLEY-ROBERTSON
HILL & McDOUGALL LLP FOR APPLICANT
OTTAWA, ONTARIO
MORRIS ROSENBERG
DEPUTY ATTORNEY GENERAL
OTTAWA, ONTARIO FOR RESPONDENT