This article is an excerpt from Government Procurement, which is available for purchase.
In its March 2012 decision in Moorefield Excavating Ltd. v. Arran-Elderslie (Municipality), the Ontario Superior Court of Justice dismissed a summary defence motion brought by a consultant whose alleged drafting error resulted in a lawsuit. The case dealt with a tender call issued by the Municipality of Arran-Elderslie for the replacement of a water main. A bidder brought a claim against the municipality for alleged breaches of the bid submission protocols. The municipality had retained an external consultant to prepare the tender documents and administer the tendering process. After being sued by the unsuccessful bidder, the municipality brought a third-party claim against the consultant. The consultant brought a motion for summary judgment, seeking to dismiss the bidder’s claim.
By way of background, the dispute was caused by a discrepancy in the tender call documents, which contained contradictory information regarding whether the bid deadline was 1:00 p.m. or 2:00 p.m. on the relevant date. As the court explained, a number of bids were opened after the 1:00 p.m. deadline, which was then extended by the municipality after the discrepancy was discovered through the arrival of more bids:
It was not until shortly after the initial four bids were opened and when two additional bidders arrived, taking the position that the closing time was 2:00 p.m., that the representatives of Genivar and the Municipality reviewed the tender documents and determined that the correct closing time was 2:00 p.m. and not 1:00 p.m. On that basis, the additional two bids were accepted and opened immediately, without waiting until 2:00 p.m., and the contract was awarded to one of the two new bidders, Harold Sutherland Construction, whose bid was some $56,000.00 lower than that of Moorefield. Genivar and the Municipality decided to open the additional two bids immediately, rather than waiting until 2:00 p.m., being the correct closing time on their interpretation, in the interest of promoting fairness among all of the bidders, and on the basis that bids had then been received from all parties invited to submit tenders. (para. 10)
The bidding day interpretive dispute escalated into legal proceedings, with the municipality and consultant maintaining that the 2:00 p.m. deadline in a document attached to an addendum superseded the 1:00 p.m. deadline stated in the original tender call. However, the court took issue with this interpretation. While the document that contained the 2:00 p.m. deadline was attached to the relevant addendum, it was never formally incorporated to form part of that addendum:
Genivar takes the position that the new revised Form of Tender which was “enclosed” with the Addendum (to use the wording of paragraph 12) formed part of Addendum 2. It argues that since the Revised Form of Tender stated that the tender closing date was “July 31, 2009 at 2:00 p.m.” it took priority over the Instructions to Tenderers (which stated the closing time to be 1:00 p.m.) by virtue of the Order of Precedence, which, as stated above, ranked “Addenda” higher than “Instructions to Tenderers” for the resolution of conflicts.
Despite Ms. Bawolska’s very capable argument, for the following reasons, I do not accept that the revised Form of Tender formed part of Addendum No. 2, in such a way as to have the effect of resolving the conflict between the closing time in the Information for Tenderers and the Form of Tender in favour of a closing time of 2:00 p.m.I find that there is nothing in paragraph 12 of Addendum No. 2 which explicitly states that the Revised Form of Tender forms part of the Addendum. Indeed, it states that it is “enclosed” thereby connoting an independent existence and status. It does not say, for instance, that the revised Form of Notice is “attached hereto and forms a part hereof”. The four page Addendum is concluded with the logos, names and addresses of the Municipality and Genivar respectively, which would connote that the operative part of the Addendum ended with the last of the numbered paragraphs.
Moreover, paragraphs 12 and 13 provide explicit statements of certain reasons for the replacement of the Form of Tender. For instance, at paragraph 12 it is stated: “note that some of the tender quantities have been revised to include change in the scope of work outlined in this Addendum,” and at Paragraph 13 the deletion of Item 10 on the Form of Tender is specifically noted. No mention is made of a change or clarification to the time of tender closing in the text of the Addendum. A contractor receiving Addenda 2 would be entitled to reasonably conclude that the reasons for the replacement Form of Tender were as explicitly stated.
The lack of any intention that a change to, or clarification of, the time of closing for tenders was a reason or explanation for the substitution of the Form of Tender is borne out by the conduct of Genivar and the Municipality after issuance of the Addendum. They each continued to believe that the time of tender closing was 1:00 p.m. and acted on that belief. (paras. 13-17)
The court determined that the municipality breached the tendering rules when it accepted bids from competing bidders after the 1:00 p.m. deadline. It therefore rejected the consultant’s motion for summary dismissal and instead found the municipality liable for the tendering infraction, ordering the case to proceed to trial to determine the amount of lost-profit damages payable to the plaintiff bidder. As this case illustrates, purchasing entities are under a duty to reject non-compliant bids and the courts tend to strictly enforce adherence to procedural compliance. Bid submission rules should therefore be carefully drafted and strictly followed in order to avoid breaching tendering protocols and incurring legal liability.
