This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its May 1991 ruling in Power Agencies Co. v. Newfoundland Hospital and Nursing Home Assn., the Newfoundland Supreme Court found that the government could validly cancel its tendering process since none of the bids complied with the tender call requirements. The case dealt with a bidding process run by a government-funded statutory body for the supply of hospital equipment. None of the bidders met the specifications and the purchasing institution cancelled. One of the bidders sued, claiming that the Newfoundland Public Tender Act, 1984 and the Provincial Preference Act prevented the government from not entering into the contract, and that “the defendant’s rejection of the first plaintiff’s tender is acting ultra vires these two statutes”. However, the Court ruled that the privilege clause in the tender call gave the defendant the right to cancel the tendering process:
I am persuaded that the clearly expressed term “The lowest or any tender will not necessarily be accepted” means there is no obligation on the defendant under the law of contract to award a contract, even if the first plaintiff meets all the requirements set out in the tender call.
While the Court found that the statutory rules required the purchasing institution to follow fair tendering procedures, it concluded that “it is a big jump which I am not prepared to make from these steps to ensure procedural fairness to limiting the right of a government funded body not to enter into a contract”. The complainant’s action was dismissed since the Court was not prepared to override the cancellation decision in the circumstances and force the award of a contract.
