This article is an excerpt from Government Procurement, which is available for purchase.
In its October 2011 decision in Civil Construction Co. v. Advanced Steel Structures Inc., the British Columbia Supreme Court found a subcontractor liable to the prime bidder for failing to honour its sub-tender. The case dealt with a tender call issued by the City of Richmond for the construction of a drainage pump station upgrade. The subcontractor, Advanced Steel, put in a bid to the prime bidder, Civil Construction, for the structural steel component of the project, stating that its sub-tender was valid for 30 days. That sub-tender was incorporated into Civil Construction’s main tender. Civil Construction was awarded the contract but Advanced Steel refused to honour its sub-tender. The court found Advanced Steel liable for the difference between its original quote and the price paid by Civil Construction in securing another subcontractor for the structural steel portion of the project:
Civil could not force Advanced to sign a construction contract that included a scope of work beyond Advanced’s bid unless Advanced agreed to that.
At the same time Advanced had a duty to enter into a construction contract B that reflected the scope of the work that it offered to do in its bid for the price it stipulated, and Civil had a duty to enter into that construction contract as well if that was all Advanced would agree to.
Instead Advanced took the position that Civil had not accepted its bid on the terms contained therein and its bid was no longer valid.
In my view this is not a correct conclusion. Civil had accepted Advanced’s bid on the terms contained therein and had included it in Civil’s own bid to the City of Richmond, thereby creating contract A.
What was left to be entered into was the construction contract, contract B, and if that contract required a revision of the construction contract proposed by Civil to coincide with Advanced’s bid then that is what was required. At the very least, however, Advanced was bound to do the work it bid on for the price it stated. When it did not do that and said its bid was no longer valid it fell into breach of contract A.
When Civil had to have the same work done by another subcontractor at a greater price, because Advanced declared its bid to be no longer valid, it became entitled to the claim that is made against Advanced for the difference.
I find Civil entitled to judgment against Advanced for the claimed amount of $32,955.30 plus court order interest from December 31, 2009 to the date of judgment. (paras. 53-39)
As this case illustrates, when subcontractors enter into binding quotes with prime contractors, they can be liable if they later fail to honour those quotes when the prime bidder tender is selected for contract award.
