The process of withdrawing your bid prior to the closing time is a common practice. One of the goals of the tender system — at least in most cases — is to secure binding bids from suppliers, under which they undertake a legally enforceable obligation to supply goods or services at a specified cost.
Almost invariably for their part, suppliers are wary of committing to such an undertaking, because it exposes them to the risk that input costs may increase before the contract is secured (after the contract is secured), the supplier may protect itself by entering into a formal contract, either with its own suppliers or in the general market for the inputs concerned).
In order to allow the tender system to operate, it is therefore necessary to allow suppliers to withdraw bids (in the event of an adverse fluctuation in the price for inputs) before the tender closes and the contract is awarded. The possibility of bid withdrawal is dealt with in section (19) of Schedule “C” to the Oakville Purchasing By-law No. 2006-86. It provides as follows:
— A bidder may withdraw his tender prior to the closing time. Withdrawal requests shall be directed to the Agent by letter, facsimile, or in person. A withdrawal request made by telephone shall not be considered. All withdrawal requests made in person shall require a written withdrawal request.
— Tender withdrawal requests on behalf of a corporation must be made by an officer of that corporation.
— Tender withdrawal prior to closing shall be returned unopened to the Bidder.
— The withdrawal of a tender does not disqualify a Bidder from submitting another tender on the same tender call prior to the closing time.
— Withdrawal requests received after the closing time shall not be considered.
— Tender fees will not be reimbursed in the case of withdrawals under section 19 and 21 of the schedule.
Although provisions of this kind are very common, the practical benefit that they afford is a matter of considerable debate. Forcing an unwilling supplier to take up an unprofitable contract can result in a supply relationship that is hostile and damaged from the start.
Bid bonds or other security are merely methods of coercing such a take-up. Since most municipalities realize that forcing a contract is a long-term no-win situation, they very often do not enforce them. Thus, the municipality places itself in the unenviable position of paying whatever cost results from required bid security, while it is constrained by the realities of contracting from enforcing it. Furthermore, the requirement for such security is often enough in itself to discourage the top tier of suppliers from bidding for municipal work.
Generally, at least in theory, bids cannot be withdrawn after the closing of the tender, although many municipalities will permit the withdrawal of a bid at any time before it is opened. In a true tender, the contract is awarded to the lowest qualifying bid. If the supplier refuses to go ahead with the contract, the supplier or contractor is potentially liable in damages for breach of contract. If any bid deposit, bond, or other security has been posted by the supplier to secure the bid, then it will be forfeited.
It is common practice that bids shall not be opened until after the date and time specified for the closing of the tender, and so far as practicable, all bids shall be opened at one time. One of the other points of note is the fact that unless otherwise provided in special provisions, a bid shall be irrevocable (i.e. open for acceptance by the city) for a period of 90 days following the closing date for the tender.
Contractors involved in bidding for government work should always know all the rules set out in the documents.
Stephen Bauld, Canada’s leading expert on government procurement, is a member of the Daily Commercial News editorial advisory board. He can be reached at stephenbauld@bell.blackberry.net.
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