The statement of reasons will be issued at a later date.
C2.1 Sustainable Pricing
In Canada’s experience, when financial evaluation of offers is based on a basket of goods, Offerors will from time to time propose prices that do not allow them to recover their costs and/or make a profit on certain items. Canada has adopted an evaluation strategy for this commodity based on sustainable pricing. A sustainable price is defined as a price for an item that, without subsidy, can generate greater than zero profit for the Offeror.
For the purpose of this requirement, manufacturer incentive programs such as rebates based on sales volume or volume commitments and co-operative advertising programs will be considered as subsidies.
When evaluating the prices offered for certain items, Canada may, but will have no obligation to, require price support for those items whose prices have been deemed as abnormally low. An abnormally low price is defined as a price lower than the minimum price threshold for the item, as detailed further in paragraph B2.3 a). Examples of price support that Canada would consider satisfactory include:
(a) a current manufacturer’s published price list indicating the cost of the item to the Offeror; or
(b) documentation such as copies of recently paid manufacturer/distributor invoices excluding any volume rebates or discounts; or
(c) a signed contract or agreement between the Offeror and its supplier which includes pricing structures.
Once Canada requests price support for any item, it is the sole responsibility of the Offeror to submit the information (either the information described in the examples above or information that demonstrates that it will be able to recover its own costs based on the price it has proposed) that will allow Canada to determine, with confidence, that the price proposed is sustainable. Where Canada determines that the price support offered does not demonstrate that the price offered is sustainable, the item in question will be considered non-compliant.
. R.S.C., 1985, c. 47 (4th Supp.) [CITT Act].
. S.O.R./93-602 [Regulations].
. The complaint form completed by Grant and Toy identified two separate solicitation documents that were issued for this requirement: Solicitation No. EZ107-120002/E aimed at the general industry and Solicitation No. EZ107-120002/F under the Aboriginal Set Aside Program. However, the information provided by Grand and Toy indicates that its complaint relates solely to Solicitation No. EZ107-120002/E, for which it submitted a bid. Therefore, the Tribunal considered Solicitation No. EZ107-120002/E for the purposes of its analysis.
. On November 4, 2015, the Government of Canada gave notice that the name of the Department of Public Works and Government Services will be changed to Public Services and Procurement Canada.
. Subsection 6(1) of the Regulations.
. Paragraph 7(1)(a) of the Regulations.
. Paragraph 7(1)(b) of the Regulations.
. Paragraph 7(1)(c) of the Regulations.
. 2002 FCA 284 (CanLII) at paras. 18, 20.
. Sani Sport, (23 March 2014), PR-014-064 (CITT) at para. 30; Stonehaven Productions Inc. (16 March 2012), PR‑2011-060 (CITT) at para. 11; Weir Canada Inc. (6 September 2012), PR-2012-014 (CITT) at para. 12.
. Revised Agreement on Government Procurement, online: World Trade Organization <http://www.wto.org/english/docs_e/legal_e/rev-gpr-94_01_e.htm> (entered into force 6 April 2014) [Revised AGP].
. The solicitation at issue is clearly covered by the Revised AGP and the AIT. Under several of the other trade agreements, including NAFTA, Canada has excluded the coverage of certain procurements in respect of Federal Supply Classification 70 (“automatic data processing equipment, software supplies and support equipment”). The Tribunal considers there to be a possibility that some or all of the goods being procured may fall within that exclusion, but it would need more information in order to determine if that is indeed the case. However, the Tribunal is willing to accept that all the trade agreements cover the solicitation for the purposes of determining whether the complaint discloses a reasonable indication of a breach, given that the Revised AGP is applicable and contains similar provisions to Article 1014(4) of NAFTA, upon which Grand and Toy relied.
. Grand and Toy relied on Article X(1) of the former Agreement on Government Procurement, 15 April 1994, online: World Trade Organization <http://www.wto.org/english/docs_e/legal_e/final_e.htm>, which has been replaced by the Revised AGP. The Tribunal notes that the Revised AGP includes similar provisions under Articles IV(4) and IX(3).
. See also Articles 1008 and 1009 of NAFTA; Article 504 of the AIT.
. The extension of the bid validity period to February 29, 2016, meant that prices quoted in July 2015 (i.e. when the solicitation closed) would need to be maintained, for those bidders who received a standing offer, until February 28, 2017 (i.e. the end of the first one-year standing offer period).
. Complaint at 6; letter from Grand and Toy to the Tribunal, dated December 10, 2015, which contains a detailed statement of facts and arguments.
. Letter from Grand and Toy to the Tribunal, dated December 10, 2015, which contains a detailed statement of facts and arguments. The Tribunal notes that on December 16, 2015, Grand and Toy filed additional information with respect to increasing manufacturer costs.
. The Revised AGP contains similar provisions. See Articles X(11) and XII.
. Article 1014 of NAFTA provides the following: “1. An entity may conduct negotiations only: (a) in the context of procurement in which the entity has, in a notice published in accordance with Article 1010, indicated its intent to negotiate; or (b) where it appears to the entity from the evaluation of the tenders that no one tender is obviously the most advantageous in terms of the specific evaluation criteria set out in the notices or tender documentation. 2. An entity shall use negotiations primarily to identify the strengths and weaknesses in the tenders.”
. For example, as set out respectively in Articles IV(4) and IX(3) of the Revised AGP.
. See Agri-SX Inc. (27 March 2013), PR-2012-051 (CITT) at paras. 26-29; 723186 Alberta Ltd. (12 September 2011), PR-2011-028 (CITT) at paras. 19-21.
. RFSO, Part 7, clause 4.1.
. RFSO, Part 7, clause 12.
. RFSO, Part 7, clause 4.2.1.