Looking for Tenders

Article

Failed approvals justify tender cancellation

0 37 Home

by Paul Emanuelli last update:Aug 29, 2014

BID PROTEST BULLETIN - In its September 2008 decision in Aloia Bros Concrete v. Peel (Regional Municipality), the Ontario Superior Court of Justice dismissed a claim launched by an unsuccessful low bidder.
Paul Emaneulli
Paul Emaneulli

In its September 2008 decision in Aloia Bros Concrete v. Peel (Regional Municipality), the Ontario Superior Court of Justice dismissed a claim launched by an unsuccessful low bidder.

The case involved a tender call for road stabilization work near the Credit River in the Town of Caledon.

The tendering process was cancelled after the municipality failed to obtain the necessary environmental approvals in time to complete the work within the construction season.

The low bidder sued, alleging that the municipality had misled bidders by providing pre-bid assurances that the necessary approvals had been or would be obtained.

The court dismissed the claim, finding that the municipality had not acted unfairly or in bad faith when it cancelled the tendering process.

Notwithstanding the low bidder’s allegations, the court found that the municipality did not misrepresent the state of the environmental approval process when the issue was raised during a pre-bid meeting:

Bidders were put on notice about the requirement that permits and approvals be in place before the work could commence.

The question was raised by one contractor at the site meeting and those present were told that the NEC approval had yet to be received.

The focus of the site meeting was to discuss construction issues, which may explain, in part, the inability of the defendant’s witnesses, Randy Sanko and Murray Nelson, to recall any discussion about permits.

To the extent that those present at the site meeting were left with the impression that permits and approvals would not be an impediment, the evidence supports the view that there was no intention on the part of the Peel representatives to either withhold information or to mislead.

It was not mere wishful thinking for Peel to believe that the work could commence on schedule.

The court also held that the municipality was under no duty to negotiate with the low bidder and that it was within its rights to use its privilege clause and cancel the process when the prerequisite environmental approvals failed to materialize.

I agree with the defendant’s submission that there is no duty to negotiate over the terms of the tender.

There is no reference to such a duty in the tender documents.

Nor, in my view, does the wording of clause 9 quoted at paragraph 26 above imply a duty to negotiate.

Clause 9 reserves to Peel the right to exercise any one of three options: cancel the call for bids, award the contract in whole or in part subject to the right of Peel to cancel at any time thereafter, or delay consideration of the award of the contract until such time as the required approvals have been obtained.

Peel chose to exercise the first of the three options. The preamble to the three options which provides that, in the event “and to the extent” that the requisite approvals are not in hand, does not qualify the absolute discretion reserved to Peel.

In this situation, the pre-conditions that were expressly attached to a contract award gave the municipality the right to bypass the low bidder and cancel the tendering process.

While the claim was ultimately dismissed, the case serves as a useful reminder of the need to ensure accuracy in the representations made during the pre-bid phase of the tendering process since those representations can be used against purchasers in subsequent legal challenges.

This article is extracted from his Government Procurement textbook published by LexisNexis Butterworths. Reach Paul at paul.emanuelli@procurementoffice.ca.

last update:Aug 29, 2014

Leave a comment

Or register to be able to comment.