This article is an excerpt from Government Procurement, which is available for purchase.
In its December 2015 decision in Dynamic Painting v. Ball Construction, the Ontario Superior Court of Justice rejected a lost profit claim brought by a losing bidder for a municipal painting contract. The case dealt with a tender call issued by Ball Construction, a City of Brantford contractor, for a painting contract at the Wayne Gretzky Sports Centre. After the initial bids were submitted, Ball Construction sought post-bid price revisions from the bidders and then awarded a contract for the work. Dynamic Painting, one of the two bidders, sued for lost profits, alleging that Ball had engaged in bid shopping.
However, the court rejected the claim, finding that the time-sensitive project was run under the “fast-track construction management model” which involved tenders for sub-trades being completed during various stages of the project. Dynamic was one of the two bidders on the painting portion of the project, but, after post-bid price refinements were made to clarify pricing for the anti-graffiti spraying component of the work, the contract was awarded to the other bidder. After a detailed consideration of the pricing and follow-up pricing submitted by the competing bidders, the court ultimately rejected Dynamic’s bid shopping allegations. In coming to its decision, the court also concluded that Dynamic’s bid contained a number of errors that rendered its bid substantially non-compliant.
With respect to the bid shopping allegations, the court found that Ball’s post-bid conduct did not breach its duty to treat Dynamic fairly and equally:
[141] Both bidders were treated equally and fairly. Neither one knew the individual line numbers for the different items making up the total tender price for the other’s bid; they only knew the total number as read out at the opening of tenders.The court noted that Dynamic did not object to the request for follow-up bids until after the contract was awarded to the competing bidder. It also noted that Dynamic’s bid was actually higher than its competitor’s once the scope of work that was initially missing from its bid was included in its subsequent bid.
The court also found that the testimony from Dynamic’s expert witness did not assist Dynamic with its unfairness claim:
[152] The testimony of Mr. Bauld did not assist Dynamic with its submission that Ball Construction engaged in unfair treatment of Dynamic. Firstly, the manner in which the tendering process is carried out in a fast track model, means there will, on occasion, be post tender addenda requests, by an owner. The components of the project are a bit of a “moving target”, as far as the scope of work for the particular sub-trades is concerned. As long as all bidders are treated equally and fairly, there is no breach of duty towards the bidders by the owner/construction manager. [153] Further, Mr. Bauld did not say what the owner is supposed to do when new work, which is part of a particular aspect of the tender, in this case painting, needs to be added to the original scope before the sub-trade starts its work on the project.The court determined that the situation was different from past bid shopping cases where significant scope changes were made after the submission of the original bids. In this case the court found that the minor post-bid additions to the original scope were appropriate, that both bidders were given equal opportunity to submit revised bids, and that there was no bid manipulation in how Ball sought post-bid price clarifications from the two bidders.
While the court ultimately rejected the losing bidder’s lost profit claim, this case serves as a reminder that purchasing institutions should strive to achieve certainty in their tender call scoping prior to seeking bids, since retendering, particularly after conducting a public opening and announcing competing prices, significantly increases the risk of bid shopping claims. The court ultimately rejected the bid shopping allegations in this case. However, successfully defending a lawsuit is no substitute for avoiding that lawsuit in the first place.
