In a New Brunswick court case, Tantramar Sanitation & Trucking Ltd. made a legal challenge against the Town of Sackville alleging that a waste removal contract was awarded to a non-compliant bidder who did not have an in-town transfer station. Owners should ensure that they clearly delineate between tender compliance requirements that compel the rejection of non-compliant tenders and contract performance standards that must be met at a future point in time after contract award.
Owners should carefully distinguish tender compliance requirements from contract performance requirements in their tender call. The failure to do so can attract bid protest challenges.
For example, in its decision in Tantramar Sanitation & Trucking Ltd. v. Sackville (Town), the New Brunswick Court of Queen’s Bench considered the issue of tender compliance. The case dealt with a municipal tender call for waste-removal services. The tender call included the requirement of an in-town garbage transfer station. The winning bidder did not have an in-town transfer station but was awarded the contract. The plaintiff, a competing bidder, challenged the process, alleging that the contract was awarded to a non-compliant bidder. The town claimed that the selected tender was compliant.
At issue was whether the tender call requirement for an in-town transfer station was a tender compliance requirement or whether it was a contract performance requirement that needed to be met after contract award. The court ultimately found that the transfer station was a contract performance requirement rather than a tender compliance requirement:
It is important to note that Tantramar was the only party which already had a transfer station in the Town and that therefore, according to them it appears that nobody else in the world could have submitted a compliant bid. Their argument leaves no room for other bidders and does not allow the required period to obtain a permit and open a transfer station.
As mentioned earlier Tantramar’s bid was, for the five year period, $480,000.00 higher than PBS’s bid. For the year 2004 alone Tantramar’s bid was $82,350.56 higher than PBS’s bid. The Town had not budgeted for such an increase.
The tax rate to realize such an additional amount would see an increase of between 1.5 and 2 cents per mill.
The main issue in this case is whether PBS’s bid was materially non-compliant. The British Columbia Court of Appeal said at paragraph 34 of its decision in Graham Industrial Services Ltd. v. Greater Vancouver Water District, [2004] B.C.J. No. 5:
“According to these definitions, in the context of the present case, material non-compliance will result where there is failure to address an important or essential requirement of the tender documents, and where there is a substantial likelihood that the omission would have been significant in the deliberations of the owner in deciding which bid to select.”
In the case at bar, PBS was compliant on the face of its bid.
There was no requirement to have been pre-approved for the permit. The Town knew that only Tantramar had a transfer station and that another bidder would have to obtain a permit and proceed to put one in place. The delay in obtaining the permit was beyond the control of the parties.
A transfer station is only a convenience and not a requirement that goes to the essence of this contract for garbage collection and disposal. In the first nine months of the contract, PBS collected and disposed of the garbage quite successfully and without interruption.
While the competing bidder’s claim was ultimately dismissed, this case underscores the importance of drafting clear tender compliance requirements in order to increase the defensibility of a tendering process.
To bolster their evaluations, owners should ensure that they clearly delineate between tender compliance requirements that compel the rejection of non-compliant tenders and contract performance standards that must be met at a future point in time after contract award.
Paul Emanuelli’s procurement law practice focuses on all aspects of the tendering cycle including bid dispute resolution. This article is extracted from his Government Procurement textbook published by LexisNexis Butterworths. Paul can be reached at paul.emanuelli@procurementoffice.ca.
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