LATEST NEWS Professional Services
September 4, 2013
No duty to disclose project budget
Bid Protest Bulletin | Paul Emanuelli
In its December 2009 decision in GDC Gatineau Development Corp. v. Canada (Minister of Public Works and Government Services), the Federal Court determined that the government was not required to disclose budget information regarding the tendered contract.
The case dealt with a tender call for the construction, lease and management of an office building in Gatineau, Quebec.
An unsuccessful bidder launched a judicial review and argued that the government was required to disclose its budget in the tender call.
The court disagreed:
GDC’s argument that Public Works had a duty to disclose the financial criteria by which its Offer would be considered has no merit. It is to be expected that Public Works will have a budget for any procurement and, particularly, for a project of this magnitude.
It would also be anticipated that in creating a budget for a specialized real estate project of this size, Public Works would seek the assistance of a professional, independent appraiser like the Altus Group.
Public Works is required by its policies to obtain an appraisal for a project of this type and to otherwise ensure that its tendering decisions are financially prudent.
GDC knew that its offer would be scrutinized to ensure that its pricing was competitive in the marketplace.
That was all GDC needed to know and was entitled to know when it submitted its offer.
The suggestion that Public Works had a duty at any time to disclose its budget or the Altus report analysis to GDC is also wrong in law.
Such a disclosure would have placed Public Works in a position of marked disadvantage in obtaining a competitive offer and later, even more profoundly, in the negotiation that GDC claims it was entitled to have in the search for “a mutually acceptable price.”
Knowing that, a developer would never be expected to propose a price that was any lower than the high end of the range acceptable to the tendering authority.
The acceptance of GDC’s position would foster an anti-competitive environment of the sort that was of concern to the Court in Martel Building Ltd., above, at paragraphs. 66 and 67:
(Paragraph 66) In many if not most commercial negotiations, an advantageous bargaining position is derived from the industrious generation of information not possessed by the opposite party as opposed to its market position as here. Helpful information is often a by-product of one party expending resources on due diligence, research or other information gathering activities. It is apparent that successful negotiating is the product of that kind of industry.
(Paragraph 67) It would defeat the essence of negotiation and hobble the marketplace to extend a duty of care to the conduct of negotiations, and to label a party’s failure to disclose its bottom line, its motives or its final position as negligent. Such a conclusion would of necessity force the disclosure of privately acquired information and the dissipation of any competitive advantage derived from it, all of which is incompatible with the activity of negotiating and bargaining.
As this case illustrates, while purchasers may elect to disclose their budgets in tendered contracts, they are typically under no duty to do so.
Purchasers should therefore carefully consider whether to disclose pricing information, particularly since such disclosures could adversely impact the ability to obtain the best possible pricing during the tendering process.
This article is extracted from Paul’s Government Procurement textbook published by LexisNexis Butterworths. Reach Paul at email@example.com.
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