Canadian Lawyer InHouse

By Michael R. Swartz, Partner, WeirFoulds LLP The committee runs a competitive procurement and asks interested contractors to provide a firm price, schedule, and bid security. Once responses are received, the committee intends to sit down with the best three responses and negotiate with each to arrive at the best deal. Can they take this approach? a) Not a problem b) Could be a problem c) Definitely a problem 1 Side-stepping procurement traps Since the 1981 decision of the Supreme Court of Canada in R. (Ont.) v. Ron Engineering, the law of tendering has developed into a complicated legal matrix. The public sector is subject to lay- ers of laws, regulations, trade agreements, bylaws, and policies affecting procurement, such as the Agreement on Internal Trade and Ontario's Broader Public Sector Procurement Directive. In this quiz, imagine that a municipality has decided to build a new commu- nity centre. The municipality's bid selection committee will admin- ister the tendering process and recommend that council award the construction contract to the stron- gest bid. How would you decide the following questions if you were tasked to be a member of the selection committee? 2 BuildBig Contracting, one of the bidders, overlooked a portion of the scope of work and, as a result, its price is mistakenly lower than it would have otherwise been. The bid committee cannot tell from the face of the tender that there is an error. What can BuildBig do? a) Can't do anything. BuildBig is stuck with its mistaken price. b) Write to the municipality describing the error and withdraw its bid before the municipality accepts it. c) When presented with the contract for signature, BuildBig can refuse to sign it. d) Try to find a flaw in its bid submission and point it out to the committee so that the municipality has no choice but to disqualify its bid. In an effort to prevent BuildBig and other bidders from getting off the hook through flaws or potential problems with their respective bids, and in an effort to allow the committee to accept any bid submitted, the committee adds a "discretion clause" to the bid documents that allows it to waive any and all errors and omissions in any bid it receives. Can the bid committee use this clause to accept a non-compliant bid? a) Yes b) No 3 The municipality asks bidders to provide bid prices in both words and numbers. One bidder submits a bid but the bid price in words does not match the bid price written in numbers. Both prices are lower than any of the other bid prices received. What should the bid committee do? a) Pick the lower of the two prices and award the contract. b) Pick the higher of the two prices and award the contract. c) Reject the bid. d) Write to the bidder and ask it to clarify which is the intended price. 4 5 To protect the municipality from lawsuits arising from tenders, the bid committee adds an "exclusion of liability" clause to the instructions to bidders. It states that the municipality is free of any liability associated with the tender process. The municipality gets sued by Second2None Contracting, the second-lowest bidder, for having chosen another contractor's non-compliant bid. Can the municipality successfully defend the claim? a) No, the courts will not enforce exclusion clauses. b) Yes, the courts always enforce exclusion clauses. c) Who knows? INHOUSE JUNE/JULY 2012 • 15

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