This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its February 2014 decision in Newfoundland and Labrador v. Marine Contractors Ltd., the Newfoundland and Labrador Supreme Court determined that a disputed low bid was compliant and capable of acceptance after the government brought an application to court to determine whether it could award a contract to the low bidder. The dispute involved a tendering process for a sewer system upgrade project. The tender call set out different measurements for the removal of existing culverts, however, in numbering the items, the original bid form used a comma, rather than a period, which created potential confusion to the reader who could mistake “1, 600 mm dia.” to mean ‘one thousand six hundred’ rather than ‘six hundred’ and “2, 900 dia.” to mean ‘two thousand nine hundred’ rather than ‘nine hundred’. The bid form was amended to remove that numbering so that only the measurements remained:
Subsequent to the distribution of the Tender Specifications, there were five addenda to the Contract Documents. The first, Addendum No. 1, is relevant for the purposes of this application. It was issued on September 6, 2013. It appears to have arisen from concerns of Mr. Baird about possible confusion from the sequential numbering of some of the items contained in lists. The original appears to have listed several units as follows:
Removal of Culverts
1, 600 mm dia. [quantity]
2, 900 mm dia. [quantity]
3, 1050 mm dia. [quantity]
Mr. Baird gave evidence by affidavit and viva voce testimony that he decided to re-issue this document after concerns were expressed about the numbering of some of the items contained therein. The sequential numbering of each listed item, with a comma following, was thought to be potentially confusing for a bidder. It was decided to reissue the form, deleting the numbering on the each of the lists. Apart from the deletion of the numbering, the new document set out identical specifications and quantities as the original. Addendum No. 1 was re-issued on September 6, 2013 and showed the same specifications for culverts as the original. There were several lists of culverts which were changed in this manner, but in each, the list remained the same. In the case noted, the new form contained the same listing of 600, 900 and 1050 millimetres. It was set out without the numbering. That example was changed so it would read:
Removal of Culverts
600 mm dia. [quantity]
900 mm dia. [quantity]
1050 mm dia. [quantity]
There were several other lists in the Schedule of Quantities and Prices (SQP) where the Addendum contained the same specifications, but removed the numbers from the listing in a manner similar to the example shown. There was no evidence that anyone was misled or confused by either the form in the original documents, or the form in the Addendum.
The facts are that Cougar submitted the form set out in the Addendum No. 1. Marine, on the other hand, used the form set out in the original Tender Documents. Marine had acknowledged receipt of the Addendum. Mr. Wayne Walsh of Marine testified that the wrong form was used by inadvertence — he made a mistake. He said they received the forms in electronic format, and transferred the numbers to a spreadsheet program for the purpose of calculating the bid. The results were then written on a printout of the form and submitted.
The documents forming the record submitted indicate that Marine’s bid is lower — $4,520,242.78 vs. $4,847,702.26.
The issue appears to be whether the submission of Marine, being presented on a form which had been revised, was compliant with the terms of the tender.
However, the low bidder, whose $4.5 million (CAD) bid was $325,000 (CAD) lower than the next-best bid, used the old form rather than the new form. The government was unsure whether it could waive this irregularity or whether that would constitute the acceptance of a non-compliant bid. Since, under the Contract A process rules, accepting the low bid would expose the government to a lost-profit claim by the next-best bidder, while rejecting the low bid would expose the government to a lost profit claim by the low bidder, the government decided to proactively go to court for a ruling. The Court ultimately decided that the use of the older form was not a material omission, since the only difference between the old and new form was the removal of the ambiguous numbering contained in the old form. The bid was therefore deemed capable of acceptance. As this case illustrates, posting an addendum to address errors in an original solicitation documents can create new downstream issues in the bidding process. Drafting teams would be well-advised to carefully review and edit their documents before they are publicly posted to reduce the risks inherent in the use of subsequent amending documents.