This article is an extract from the 5th edition of Government Procurement.
In its September 2022 decision in Prime Terra Group Inc. v. Thunder Bay (City), the Ontario Superior Court of Justice upheld a debarment decision made pursuant to a municipal by-law even though the debarment provisions in the by-law were not expressly incorporated into the specific tender call rules. The dispute dealt with the rejection of a bidder who submitted a bid in response to a tender call for sidewalk repair work. The bid was rejected since the company was previously disqualified under the provisions of the by-law due to ongoing litigation with the municipality. While the bidder challenged this disqualification, the court ruled that the debarment rules in the municipal by-law could be read in as forming implied terms of the specific tendering process:
In this case, Prime Terra’s sealed bid was physically accepted by a clerk who was unaware that Prime Terra was a disqualified bidder pursuant to the City’s reprisal policy. Prime Terra’s sealed bid was returned to Prime Terra the same day that it was received when the City’s Supply Management staff realized that the bid had been submitted by a disqualified bidder, as determined by reference to the City’s reprisal policy.
It is not in dispute that the By-Law, the existence of a disqualified bidder list and the reprisal policy were not specifically referenced in the tender document. I reject the submission of the City that the reprisal policy was an express term of Contract A pursuant to the Supplementary Conditions referenced in the tender documents. As noted by Prime Terra, the express terms of the tender documents include Article 1.4, “Disqualification of Tenders”, which section omits any reference to the reprisal policy as a ground for the disqualification of a bidder.
I agree with Prime Terra that the ambiguity between these two contractual provisions, drafted by the City, must be resolved in favour of Prime Terra and against the City, pursuant to the doctrine of contra proferentum.
However, the jurisprudence has clearly recognized the uniqueness of the tendering process, a process in which fairness and integrity are of paramount importance and in which the courts have consistently recognized an implied duty on the part of the owner to treat all bidders fairly and equally and to accept only compliant bids, all necessary to bring business efficacy to the tendering process.
As noted in Derby Holdings, the terms of Contract A are case-specific. In my view, the consideration of whether to recognize any implied terms within the tender documents must take into account both of the above concepts.
Having done so, I am persuaded that the reprisal policy was an implied term of Contract A based on the presumed intention of the parties.
As this case illustrates, the specific rules that govern a tendering process may be broader than the express terms contained in the solicitation document and may incorporate a broader body of statutory frameworks and procedures, including debarment procedures, that apply more generally to an institution’s bidding process.
