Bidding and Tendering Flashcards
Tendering process
Tender calling authority (owner) issues a set of tender documents containing details of the project, invites parties to submit a bid and chooses successful bidder.
Why is the tendering process good?
Competition rather than negotiation is the best method to ensure the owner gets the best price for the project
Tendering rules to ensure competition gets best value
1) Integrity of tendering system must be protected and maintained
2) The owner has a general obligation to treat all tenders fairly and equally
3) No tender is to gain an unfair advantage over another tender
R v Ron Engineering (background)
- Before this tender bids were wild (made/retracted at any moment)
- Facts: deposit/ made a mistake
R v Ron Engineering Ratio
- Created contract A/ contract B scheme
- Contract A (when bid submitted)
- Contract B (when a bidder is selected and agrees)
- Could be invalid if it was an obvious mistake on its face (prevents owner from entering contract A)
MJB Enterprises
- Facts: person they picked did not comply with requirements, MJB was second lowest bid but privilege clause
- RATIO: only compliant tenders are capable of being accepted (invalid if not compliant)
- Privilege clause meant MJB wouldn’t necessarily get it anyway, can evaluate on other things
Privilege Clause
- A clause saying that the owner does not necessarily have to accept the lowest bid and can look at other factors
- Must be clear and unambiguous
- Does not override obligation to only award contract B based on disclosed criteria, only accept compliant bids, or to treat everyone fairly
Martel Building v Canada
Facts: government facility. Chose bidder on undisclosed specifications.
Ratios:
1) Duty of care does not extend to conduct in contract negotiations
2) Different in tendering process (in contract A) implied duty to treat all bidders fairly and equally
3) Obligation to only award contract B based on disclosed criteria
Double N Earth Movers
Facts: certain equipment to be used, S submitted improper info saying they had it
Ratios
1) No duty to investigate
2) What is relevant is intention at time of acceptance
3) Obligations under contract A do not survive the creation of contract B (rights and obligations of contract A fully performed and discharged)
*so fact dependent not smoking gun
Bid shopping
When tender calling authority solicits a bid not with the intention of dealing in the tendering process but to drive prices down with other bidders
Tercon
- Exclusion of liability clauses
- Facts: tender with 6 OG parties, secret joint venture. Had a clause excluding all claims for damages from tendering process.
RATIO:
- no exclusion clause that allows you to breach your own requirements
- Need clear language to exclude liability that allows you to breach one of the most fundamental obligations (ex: fairness)
Exclusion of liability clauses
A clause that excludes liability against the tender authority for damages resulting in the tendering process
Dissent in Tercon (5/4 split)
Tercon Test:
1) Does exclusion clause apply to what we are talking about?
2) If yes, was clause unconscionable at the time contract was made?
3) If valid and applicable, should refuse to enforce because of public policy argument outweighing enforcement?
Strict vs Substantial compliance
- When determining if bid is compliant no longer need strict compliance.
- Only those with deviation concerning material elements of the tender call are not compliant.
Pre-qualification
- Ability to engage in preliminary pre-qualification by limiting the pool of people who can apply based on qualifications (experience, ability, and capability)
- *if you do this decision based solely on price
Contract A and Contract B with subcontractors
- Terms and conditions of tender documents expressly imported into subcontractor bid requirements
- If general contractor includes as part of the bid subcontractor requirements and then owner needs to offer contract B to subcontractor too
- Contractor can only get out of awarding contract B to subcontractor if contractor can show reasonable objection to the subcontractor
When is contract A created?
- When party submits a compliant bid
- Need intention to enter into competitive process that creates contractual obligations
When is contract B created?
- When bid is accepted and awarded to a party
- All obligations of contract A discharged
Terms and Conditions of Contract A are..
The tender documents
Express terms and conditions of contract A
- Privilege clause
- Exclusion clause
Privilege clause (review)
If clear and unambiguous allows you to evaluate bids not just on a cost basis
Exclusion clause (review)
Limits liability of the owner (bar to claims)
- Needs to be clear and unambiguous
- Cannot really operate to bar from having implied obligations
- Cases extremely fact specific
SCC implied obligations read into contract A
- Duty to treat all bidders equally and fairly (Martel)
- Duty to consider only compliant bids (MJB)
Tendering remedies
- Remedies in tort
- Remedies in contract
- Judicial review in government procurement process
Remedies in tort
- Negligent misrepresentation
- Oral misrepresentation
- Negligent misrepresentation from party other than owner
Negligent misrepresentation
If in the tender document and bidders rely upon those in preparation for their bids the owner can be liable
What must bidder establish for negligent misrepresentation?
- Duty of care based on relationship between owner and bidder
- Representation made by the owner and materially untrue, inaccurate or misleading
- Owner was negligent in making misrepresentation
- Bidder reasonable relied on negligent misrepresentation
- Bidder suffered some detriment caused by the reliance and that the detriment can be responded to by awarding damages
Oral Misrepresentation
Circumstances where oral representations made inconsistent with tender docs AND owner accepts bid knowing the bidder relied on oral representation, owner may be liable
Knowledge requirement for oral misrepresentation
Must show owner was aware of reliance on oral representations
Misrepresentation cannot
- Transform non-compliant bid into a compliance one
- Owners liability limited to compliant bidders
Negligent Misrepresentation from party other than owner
- Consultant
- If bidder suffers damages based on reliance on errors bidder will have cause of action against eng, arch, or design pros
- Still need to meet the 5 elements
- If tender package silent on important issue and specifically places onus of site investigation on bidder, bidder has no claim
Tender docs constitute designers…
Implied representation to compliant bidders that project is constructible as designed
Designer Services Limited v Canada
Subcontractors cannot recover in tort for damages against the owner
Remedies in contract
- If breach of contract A, bidder ought to end up in same position they would have been in had owner not breached financial obligations
- Normal measure= actual contract price minus cost to complete work (loss of profit)
Owners remedies in contract
- If suffered breach of contract A. Bidder bids amount they cannot reasonably do
- Measure of losses is difference between bid of defendant bidder and next lowest bidder
Remedies in Judicial Review in Government Procurement Process
- Addresses public interest concerns
- Employed particularly where PP authorized by statute/reg
- Freedom of contract does not apply to public entity
BOT Construction v Ontario
Authority for JR for PP awards in Ontario, court said public law interests are sufficient to require JR to be available
Shell Canada Products Limited v Vancouver
JR available when municipal government exceeds authority given under enabling statute
Federal procurement
has their own process for review
