Bidding and Tendering

Question 1

Tendering process

Answer 1

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.

Question 2

Why is the tendering process good?

Answer 2

Competition rather than negotiation is the best method to ensure the owner gets the best price for the project

Question 3

Tendering rules to ensure competition gets best value

Answer 3

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

Question 4

R v Ron Engineering (background)

Answer 4

• Before this tender bids were wild (made/retracted at any moment)
• Facts: deposit/ made a mistake

Question 5

R v Ron Engineering Ratio

Answer 5

• 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)

Question 6

MJB Enterprises

Answer 6

• 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

Question 7

Privilege Clause

Answer 7

• 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

Question 8

Martel Building v Canada

Answer 8

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

Question 9

Double N Earth Movers

Answer 9

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

Question 10

Bid shopping

Answer 10

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

Question 11

Tercon

Answer 11

• 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)

Question 12

Exclusion of liability clauses

Answer 12

A clause that excludes liability against the tender authority for damages resulting in the tendering process

Question 13

Dissent in Tercon (5/4 split)

Answer 13

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?

Question 14

Strict vs Substantial compliance

Answer 14

• 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.

Question 15

Pre-qualification

Answer 15

• 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

Question 16

Contract A and Contract B with subcontractors

Answer 16

• 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

Question 17

When is contract A created?

Answer 17

• When party submits a compliant bid

- Need intention to enter into competitive process that creates contractual obligations

Question 18

When is contract B created?

Answer 18

• When bid is accepted and awarded to a party

- All obligations of contract A discharged

Question 19

Terms and Conditions of Contract A are..

Answer 19

The tender documents

Question 20

Express terms and conditions of contract A

Answer 20

• Privilege clause

- Exclusion clause

Question 21

Privilege clause (review)

Answer 21

If clear and unambiguous allows you to evaluate bids not just on a cost basis

Question 22

Exclusion clause (review)

Answer 22

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

Question 23

SCC implied obligations read into contract A

Answer 23

• Duty to treat all bidders equally and fairly (Martel)

- Duty to consider only compliant bids (MJB)

Question 24

Tendering remedies

Answer 24

• Remedies in tort
• Remedies in contract
• Judicial review in government procurement process

Question 25

Remedies in tort

Answer 25

- Negligent misrepresentation - Oral misrepresentation - Negligent misrepresentation from party other than owner

Question 26

Negligent misrepresentation

Answer 26

If in the tender document and bidders rely upon those in preparation for their bids the owner can be liable

Question 27

What must bidder establish for negligent misrepresentation?

Answer 27

1. Duty of care based on relationship between owner and bidder 2. Representation made by the owner and materially untrue, inaccurate or misleading 3. Owner was negligent in making misrepresentation 4. Bidder reasonable relied on negligent misrepresentation 5. Bidder suffered some detriment caused by the reliance and that the detriment can be responded to by awarding damages

Question 28

Oral Misrepresentation

Answer 28

Circumstances where oral representations made inconsistent with tender docs AND owner accepts bid knowing the bidder relied on oral representation, owner may be liable

Question 29

Knowledge requirement for oral misrepresentation

Answer 29

Must show owner was aware of reliance on oral representations

Question 30

Misrepresentation cannot

Answer 30

- Transform non-compliant bid into a compliance one | - Owners liability limited to compliant bidders

Question 31

Negligent Misrepresentation from party other than owner

Answer 31

- 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

Question 32

Tender docs constitute designers...

Answer 32

Implied representation to compliant bidders that project is constructible as designed

Question 33

Designer Services Limited v Canada

Answer 33

Subcontractors cannot recover in tort for damages against the owner

Question 34

Remedies in contract

Answer 34

- 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)

Question 35

Owners remedies in contract

Answer 35

- 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

Question 36

Remedies in Judicial Review in Government Procurement Process

Answer 36

- Addresses public interest concerns - Employed particularly where PP authorized by statute/reg - Freedom of contract does not apply to public entity

Question 37

BOT Construction v Ontario

Answer 37

Authority for JR for PP awards in Ontario, court said public law interests are sufficient to require JR to be available

Question 38

Shell Canada Products Limited v Vancouver

Answer 38

JR available when municipal government exceeds authority given under enabling statute

Question 39

Federal procurement

Answer 39

has their own process for review