This article is an excerpt from Government Procurement, which is available for purchase.
In its June 2015 decision in True Construction Ltd. v. Kamloops (City), the British Columbia Supreme Court granted a summary dismissal to the defendant purchasing institution after finding that the plaintiff bidder was properly disqualified for non-compliance. The case dealt with a tender call for the construction of a new fire hall. The low bidder was rejected for failing to submit all of the required forms by the bid submission deadline. It sued for lost profits. The City brought an application for summary dismissal, arguing that the plaintiff’s bid was non-compliant and incapable of acceptance and that there was no need for the matter to proceed to trial. The court agreed.
The tender call required bidders to physically submit a number of forms and also allowed bidders who had submitted the required forms in a sealed envelope to then use a faxed bid amendment form to make pre-deadline amendments to the bid prices. However, the low bidder attempted to use the faxed amendment process to provide information relating to forms that were not completed within its sealed envelope. The City determined that this was not permitted and rejected the bid. The low bidder took issue with the City’s interpretation of the rules:
51 The City, in considering True’s bid, had to consider whether it could have accepted the non-compliant bid, or whether the non-compliant component was material to the bid.
52 The City argues, in order for True’s bid to be compliant, the bid form and all appendices had to be completed, placed in a sealed envelope, and delivered to the City as required in the bidding instructions. Any revisions could be faxed or delivered to the City by decreasing or increasing the overall bid amount in accordance with Appendix F. Appendix F could not be used to complete Appendix A or to deliver Appendix B.
53 True argues that the bid instructions did not require that the appendices be completed and placed in a sealed envelope and delivered to the City. True states that the instructions are silent on this requirement. True argues that the instructions to bidders are ambiguous and ought to be construed contra proferentem, resolving the ambiguity in favour of True.
However, the court disagreed with the low bidder, finding that there was no ambiguity in the requirements and that the bidder had failed to provide information that was required within its sealed envelope:
73 True is correct that the instructions in clause 5 do not specifically state to enclose the appendices. However, having found that the appendices form part of the bid, this did not cause True any confusion. Mr. Koeck partially completed Appendix A. His reason for not completing Appendix A and not including Appendix B was he was not ready to complete his bid when he sent it out in the sealed envelope and delivered it to the City. Mr. Koeck was still waiting to receive bids from subcontractors and suppliers. He stated that some of the sub-trades he had chosen had not responded to him and those that were to appear in Appendix B had not responded when he delivered his sealed bid. Mr. Koeck was aware that his bid was incomplete. In order to complete its bid, after having delivered its sealed bid to the City, True used Appendix F to complete Appendices A and B by faxing in Appendix F and attaching to it the additional two pages of Appendix A and Appendix B. The City identifies this as being non-compliant on the part of True.
The court also confirmed that the faxed amendment form only permitted pre-deadline price adjustments and did not permit bidders to provide other information that was missing in the forms contained within their sealed envelopes:
77 Having delivered the envelope, the bidder is entitled to add or subtract an amount of money from its bid. This is in Appendix F. It can be delivered to the City or faxed. Instead, True used Appendix F in two ways: firstly, to complete its bid that should have been in the sealed envelope and, secondly, used it to add or subtract from an amount of its overall bid. That, I conclude, was not in accordance with the bid instructions. I find that True’s bid was non-compliant. Appendix F was not to be used in this manner; its use was limited as I described earlier.
The court then turned to consider whether the non-compliance in question was material and therefore fatal to the validity of the low bidder’s tender. It concluded that the irregularities in question were in fact material and that the low bid was therefore legally incapable of acceptance:
102 The City argues that material non-compliance in the bid made True’s bid incapable of acceptance. The moment True’s sealed bid was delivered to the City, it had to be capable of acceptance. When True submitted its sealed bid, it could not be accepted as it lacked an essential component of the bid; that is completed Appendices A and B.
The court ultimately upheld the City’s decision to reject the low bidder and granted the City’s application to summarily dismiss the non-compliant low bidder’s legal claim. As this case illustrates, non-compliance can be fatal to both the validity of a bid and to the ability of a bidder to bring a legal challenge to trial after its bid is validly rejected. Clearly defining tender compliance requirements can therefore serve as a useful shield against legal claims by non-compliant bidders.
