Construction of a New Building in Quebec City for the Canada Revenue Agency

Fairness Monitor Final Report (Report #3)

April 24, 2012

Submitted to: Director General, Operational Integrity Sector, Departmental Oversight Branch

Submitted by:

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1. Background
2. Attestation of Assurance
3. Fairness Monitor Role
4. Fairness Monitor Activities and Observations
5. Documents Relied Upon

1. Background

In its role as central agency for construction and leasing, Public Works and Government Services Canada (“PWGSC”) is requesting offers for the construction of a new building in Quebec City, Quebec. We understand that the new building will allow for a consolidation of office space for the Canada Revenue Agency in the Quebec City region.

The Selection of Invitees to Tender (“SOIT”) for the construction of a new building in Quebec City, Quebec, issued on March 9, 2011, established the process and schedule requirements for interested Proponents to submit Proposals to PWGSC for evaluation and selection of a Proponent for issuance of a contract. The SOIT is a two-step process consisting of a Request for Qualification (“RFQ”) and a Request for Proposal (“RFP”).

2. Attestation of Assurance

In accordance with its mandate, the Fairness Monitor observed the conduct of the SOIT process up to the closing of the RFP, and renders the opinion that:

It is our professional opinion that the procurement process we observed was carried out in compliance with the relevant solicitation documentation, and the process was conducted in a fair, open and transparent manner.

Original report signed
___________________________________
Gary Timm, CA IFA, CFE
Fairness Monitor company's representative
Partner, Deloitte & Touche LLP

Original report signed
___________________________________
Karl Payeur, CA IFA, CFE
Fairness Monitor team leader
Partner, Deloitte Finance SAS

Original report signed
___________________________________
Guillaume Vadeboncoeur, CA IFA
Fairness Monitor specialist
Senior Manager, Deloitte & Touche LLP

3. Fairness Monitor Role

Deloitte & Touche LLP (“Deloitte”) was retained as Fairness Monitor for the PWGSC SOIT for the construction of a new building in Quebec City as a result of solicitation EP737-102536/B. Deloitte is an independent third party with respect to the construction of a new building in Quebec City, Quebec.

In performing the Fairness Monitor role, a fairness framework was established for the SOIT which provided a reference for assessing the PWGSC “fairness” objectives and execution of the SOIT for a fair, open and transparent procurement transaction.

For the purpose of this report (“Report #3”), the Fairness Monitor was actively involved in monitoring the conduct of the SOIT for a period prior to the release of the SOIT on March 9, 2011 through to the closing of the first RFQ on April 29, 2011, the closing of the second RFQ on July 14, 2011 and the closing of the RFP on April 2, 2012. The key activities of the Fairness Monitor were:

Review of the SOIT document prior to its issuance.
Review of amendments to the SOIT document prior to their issuance.
Review of the SOIT document and amendments as issued to the public by PWGSC.
Attendance to the Proponents' Conference held on March 22, 2011.
Review of RFQ questions submitted by the proponents and related responses from PWGSC.
Participation in the RFQ evaluation kick-off meeting.
Attendance to the RFQ evaluation consensus meetings held on September 26 to 28, 2011.
Review of RFP questions submitted by the proponents and related responses from PWGSC.

4. Fairness Monitor Activities and Observations

4.1 Activities and Observations Related to Period Prior to Posting of the SOIT

Prior to the issuance of the SOIT on March 9, 2011, Deloitte participated in a meeting with the Technical Authority and other subject-matter experts to understand the SOIT development process and to explain the role and objectives of the Fairness Monitor.

Deloitte reviewed drafts of the SOIT, and provided fairness related comments verbally and in writing to the Technical Authority. Any identified potential fairness-related considerations appear to have been adequately addressed by PWGSC.

4.2 Activities and Observations Related to the SOIT and Amendments as Posted on MERX, the Proponents' Conference and the RFQ Process

The SOIT was issued on March 9, 2011. The first phase of the SOIT, the RFQ, closed on April 29, 2011.

A total of fourteen (14) questions were submitted by potential proponents. Responses to the questions submitted to PWGSC by potential proponents were addressed in amendments #1 and #3 to #6 to the SOIT. In addition, amendments #2 to #5 to the SOIT included a number of clarifications.

Deloitte reviewed all questions and answers as well as proposed clarifications provided during the bidding period in draft form prior to their posting on MERX. Any identified potential fairness-related considerations appeared to have been adequately addressed by PWGSC.

A Proponents' Conference was held on March 22, 2011 and was attended by representatives from twenty-three (23) different companies. Questions submitted during the Proponents' Conference, related answers and other clarifications were posted on MERX as part of amendment #2 to the SOIT.

Questions arising during the RFQ period were dealt with in accordance with the terms of the SOIT. The responses were fair and transparent and communicated to the potential offerors in a timely fashion. During the Deloitte review, nothing came to our attention that would indicate that the process was not fair, open and transparent.

Six (6) responses from two (2) proponents were received during this RFQ process. None of the responses received were deemed by PWGSC to have met the mandatory requirements. As a result, PWGSC invoked section 12e of the SOIT, namely that “Canada reserves the right to: if no responsive Response to the RFQ is received and the requirement is not substantially modified, reissue the SOIT by inviting only the Proponents who bid to resubmit a Response to the RFQ within a period designated by Canada”, and reissued a new SOIT which re-initiated the RFQ process. The second SOIT was issued on June 2, 2011. The new RFQ process closed on July 14, 2011.

No questions were submitted by the potential proponents during the second RFQ period. No Proponents' Conference was held during the second RFQ period as the requirement was not substantially modified.

During the Deloitte review, nothing came to our attention that would indicate that the second RFQ process was not fair, open and transparent.

4.3 Activities and Observations Related to the Second RFQ Evaluation Process

Kick-off meeting

Deloitte participated in the evaluation kick-off meeting. During this meeting, the PWGSC Project Authority explained and clarified the evaluation process to be adopted by the teams of subject-matter experts (the evaluators), and explained and clarified the role of the Fairness Monitor. Deloitte provided fairness related comments verbally. Any identified potential fairness-related considerations were adequately addressed by PWGSC.

Clarification of responses

A total of six (6) responses from two (2) proponents were received by PWGSC. Following the closing of the second RFQ, clarification questions were provided to Deloitte for our review and were sent by PWGSC to both of the proponents. Deloitte was also provided with a copy of the responses received by PWGSC. During the Deloitte review, nothing came to our attention that would indicate that the bid clarification process was not fair, open and transparent.

Consensus meetings

Deloitte attended the evaluation consensus meetings held on September 26 to 28, 2011. The meetings were attended by the group of PWGSC subject-matter experts responsible for the evaluation of the responses received. In total, three groups of subject-matter experts were formed to evaluate 1) experience and financial capability, 2) proponent's property management experience and expertise, and 3) management, design, commissioning and construction experie nce and qualifications. Deloitte provided fairness-related comments verbally throughout the meetings. During the Deloitte review, nothing came to our attention that would indicate that the consensus meetings were not fair, open and transparent.

Final technical scoring

Deloitte monitored the score roll-ups, completed at the end of the consensus meetings. Deloitte observed that the technical scoring was performed in accordance with the evaluation structure. No fairness-related issues were identified during this process.

Conclusion of evaluation process

Following the evaluation of the six (6) offers from two (2) proponents, the evaluation team determined that all offers received met the requirements of the second RFQ.

4.4 Activities and Observations Related to the RFP Process

The second phase of the SOIT, the RFP, closed on April 2, 2012.

A total of forty-three (43) questions were submitted by the two qualified proponents. Responses to the questions submitted to PWGSC by potential proponents, plus a number of clarifications, were addressed in thirteen (13) separate amendments.

Deloitte reviewed all questions and answers as well as proposed clarifications provided during the bidding period in draft form prior to being provided to the proponents. Any identified potential fairness-related considerations appeared to have been adequately addressed by PWGSC.

Questions arising during the RFP period were dealt with in accordance with the terms of the SOIT. The responses were fair and transparent and communicated to the potential offerors in a timely fashion. During the Deloitte review, nothing came to our attention that would indicate that the process was not fair, open and transparent.

5. Documents Relied Upon

The following documents were issued by PWGSC, through MERX for documents #1 to 8, in relation to the procurement process being monitored:

Selection of Invitees to Tender, Project No. 525016, dated March, 2011 and published on March 9, 2011.
Amendment #1 to SOIT, dated March 10, 2011.
Amendment #2 to SOIT, dated March 16, 2011.
Amendment #3 to SOIT, dated March 29, 2011.
Amendment #4 to SOIT, dated April 18, 2011.
Amendment #5 to SOIT, dated April 20, 2011.
Amendment #6 to SOIT, dated April 27, 2011.
Selection of Invitees to Tender, Project No. 525016, dated May 2011 and sent out on June 2, 2011.
Amendment #1 to RFP, dated November 25, 2011.
Amendment #2 to RFP, dated December 9, 2011.
Amendment #3 to RFP, dated December 22, 2011.
Amendment #4 to RFP, dated February 2, 2012.
Amendment #5 to RFP, dated February 24, 2012.
Amendment #6 to RFP, dated February 29, 2012.
Amendment #7 to RFP, dated March 2, 2012.
Amendment #8 to RFP, dated March 9, 2012.
Amendment #9 to RFP, dated March 12, 2012.
Amendment #10 to RFP, dated March 15, 2012.
Amendment #11 to RFP, dated March 19, 2012.
Amendment #12 to RFP, dated March 21, 2012.
Amendment #13 to RFP, dated March 26, 2012.

Addendum to the Fairness Monitor Final Report dated October 11, 2012 concerning the Construction of a New Building in Quebec City for the Canada Revenue Agency

This addendum to our Fairness Monitor Final Report dated October 11, 2012 covers the period following the conclusion of the evaluation phase.

Fairness Monitor Activities Related to Debriefings

Two (2) proposals were submitted in response to the Request for Proposal (“RFP”). Following the evaluation of the offers, it was determined that one of the proposals received met the requirements of the RFP and the other did not. As such, one contract was issued to the proponent meeting the requirements.

PWGSC sent a written debriefing dated October 30, 2012 to the unsuccessful proponent providing a breakdown of the evaluated elements and identifying where the proponent had not met the requirements of the RFP. Deloitte reviewed the written debriefing prior to its distribution to the unsuccessful proponent. Any identified potential fairness-related considerations were adequately addressed by PWGSC.

Following the issuance of the October 30, 2012 written debriefing, the unsuccessful proponent sent an email to PWGSC on October 30, 2012 contesting the result of the RFP and requesting additional information. PWGSC sent a letter dated November 21, 2012 to the unsuccessful proponent providing additional information related to the “major deficiencies” identified in the proposal submitted by the unsuccessful proponent. Deloitte did not review this letter prior to its distribution to the proponent. No fairness-related issues were identified regarding the November 21, 2012 letter.

Following the issuance of the November 21, 2012 letter, the unsuccessful proponent sent an email to PWGSC on December 18, 2012 asking PWGSC to review the concerns listed in the email, and to re-evaluate the concept proposed by the unsuccessful proponent. PWGSC sent a letter dated February 13, 2013 to the unsuccessful proponent providing additional information regarding the concerns included in the December 18, 2012 email from the unsuccessful proponent, and indicating that PWGSC will not re-evaluate the proponent's proposed concept, and will not cancel the award of the contract. Deloitte did not review this letter prior to its distribution to the proponent. No fairness-related issues were identified regarding the February 13, 2013 letter.

As of the date of this addendum, PWGSC has indicated that the matter is closed.

Fairness Monitor Attestation of Assurance

It is our professional opinion that the debriefing process we observed was carried out in compliance with the relevant solicitation documentation, and the process was conducted in a fair, open and transparent manner.

Original report signed
___________________________________
Gary Timm, CA IFA, CFE
Fairness Monitor company's representative
Partner, Deloitte LLP