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Procurement Perspectives: Confusion that can arise concerning the bid process

Stephen Bauld
Procurement Perspectives: Confusion that can arise concerning the bid process

Over the years, I have seen many ways that confusion can arise during the bidding process.

It is generally true that the fairness requirement is, in the nature of an obligation, assumed by the contracting authority by reason of the publication of its request for tender.

The receipt of the bids in answer to that request can also work so as to allow the contracting authority to back away from an initial tender contest where confusion has arisen concerning the bid process.

For Instance, in EllisDon Construction Ltd v. Canada (Minister of Public Works), the minister called for bids to carry out work. Six building contractors were invited to bid for the project. Bids were to be submitted in accordance with bid documents prepared by the minister. These documents called for a lump sum bid.

After the minister issued the bid documents, the Province of Quebec adopted a new sales tax structure putting into place an arrangement similar to the federal government’s goods and service tax (GST). The bid documents stated the price for the work was to include all taxes except federal GST. A number of bidders wrote to the minister to get additional information as to how to deal with the Quebec tax.

However, it appeared after the bids were opened that there was no consistency in the way this matter was dealt with by the various bidders. The minister advised each bidding company of his intention to call for new bids. The plaintiff objected.

It argued that the minister must either accept a tender that was made or refuse to accept any of the offers that were made, subject to the caveat that all offers might be refused only if a valid reason existed for doing so.

The plaintiff further argued the confusion over the sales tax question was not a sufficient reason. The judge (Teitelbaum) rejected these arguments, relying on the discretion reserved to the minister under the terms and conditions of the tender to reject all bids.

The decision reads: “I am satisfied from the evidence of Ms. Ouimet that after the bids were opened they were each carefully examined. After consultation, Ms. Ouimet advised each of the bidding contractors that the minister could understand that confusion existed in the mind of the contractors regarding the T.V.Q. to come into effect on July 1, 1992 and as a result none of the bids would be accepted and a new call for tenders would be made.

“Is the fact that the defendant believed that there is confusion amongst most of the bidding parties with respect to a serious issue as a T.V.Q. tax enough for the defendant to refuse all bids and ask for new bids? I believe yes. The defendant is under an obligation to act fairly, this means that the defendant has the obligation to ensure that the information that it gives is understood by those parties who will be making a bid. Surely this would be reason enough to ask for new bids, that is, that the bidding parties did not understand how to take account of the Loi 170.”

Unfortunately, this passage leaves unclear whether the minister might have rejected all bids, had there been no discretion reserved to do so.

If, however, the basic goal of the law in this area is to maintain the integrity of the tendering process, it is submitted that such a direction would exist even in the absence of the reservation by the contracting authority of an express discretion to reject all bids.

For it can hardly be said to be advancing the fairness of the bidding process if the parties are obliged to continue once the bidding process has been sullied by ambiguity, imprecision or subsequent unexpected events.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.

Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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