By: Anna Krol
In its May 2018 decision in Coady Construction and Excavating Limited v. Conception Bay South, the Newfoundland Supreme Court awarded lost profit damages due to the acceptance of a non-compliant bid. The case dealt with the procurement for the installation of a sewage pipe for the Town of Conception Bay South (the “Town”).
The complainant, who was the next-lowest bidder, alleged that the lowest bidder was non-compliant due to the omission of a unit price within its bid. The Town argued that the omission was a mere irregularity and did not render the bid non-compliant on the basis that it would not have changed the ranking of the bids. Further, the Town believed that the line item would not be used in the work completed under the contract and did not need to be taken into account when calculating the total bid price for determining the lowest bidder.
The court disagreed with the Town on both counts and noted that the omission of a price for the line item went beyond just a mere irregularity since it could have implications for the work performed if the item noted was subsequently required to complete the contract. The court further noted that the Town did not treat all bidders fairly as the bid prices of the other bidders were based on the included line item.
The court awarded lost profits damages to the complainant and cautioned that by not rejecting the lowest bidder for omission of the line item in its bid, the Town was exposed to future cost and budget overruns as the price for the item was missing and would have to be negotiated post contract award.