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September 23, 2013
Tender calls and the addendum process
Procurement Perspectives | Stephen Bauld
There is a very common process when tenders are issued and changes are required.
Given the potential liability for inaccurate specifications or test and survey results, it is not surprising to find that many purchasing authorities reserve the right to amend the guidelines, plans, specifications and other relevant rules and aspects of the bid any time up until the close of tenders.
A typical provision in the terms of the tender will read the city reserves the right at any time prior to the award of the contract:
— to withdraw or cancel the tender;
— to extend the time for the submission of bids;
— to modify these Instructions, the tender notice, the form of tender, the specifications, the special provisions, or the description of the project, work or supply; or
— to change the project or contract documents; by the publication of an addendum or other notice, and the city shall not be liable for any expense, cost, loss, incurred or suffered by any bidder (or any other person) as a result of its so doing.
Some municipalities also reserve the right to resubmit a proposed contract for tender, where an error is discovered after the opening of tenders but before a contract for the substantive work is concluded. Provided such reserved rights have been properly disclosed, there would seem to be no problem in a contracting authority relying upon them. However, even where such rights exist, they do not open the door to unfair practice.
Most municipalities and other public contracting authorities also include in their terms and conditions an expressed procedure under which prospective bidders are given an opportunity to submit queries with respect to a tender or RFP, which is sometimes described as a Request for Information or Bid Consultation.
After the opening of the bids, it is not permissible for a contracting authority to depart from the original tender requirements and negotiate substantial changes to the specifications with one bidder, without giving all bidders the chance to revise their bids, in order to take those changes into account.
Even where a privilege clause applies giving a right to decline all tenders, the contracting authority’s options are limited: it may reject all, or it may accept the lowest compliant tender, but it may not award some alternative contract to one of the bidders who replied in response to the request for the original work.
In Ben Bruinsma & Sons Ltd. V. City of Chatham the defendant city called for tenders in relation to certain soccer fields. Work was broken down into items in the tender form. The plaintiff’s tender was the lowest. After the tenders were opened, the city decided to decline certain items from the tender as a cost cutting measure.
As a result of this change, another bidder was $300 lower than the plaintiff’s and the city awarded the contract to that bidder. The plaintiff sued. In giving judgment for the plaintiff, the judge’s comments were related to the fairness of the process. He stated that: “without notifying tenderers and giving them the opportunity to revise their tender to take into account a substantial deletion from the specifications, then there would not appear to be any reason why the recipient could not go further and delete other items and this practice in my opinion could easily make a mockery of the customary tendering process.”
Most municipalities require addenda to be in writing and many also require all questions related to a tender to be directed to a “Designated Buyer” (generally specified in the request for tenders). There are clear advantages to both of these requirements. They allow for a proper record to be maintained of all communication. They also facilitate the process of ensuring that all bidders receive comparable information.
Stephen Bauld is Canada's leading expert on government procurement. He can be reached at firstname.lastname@example.org.
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