This article is an excerpt from Government Procurement, which is available for purchase.
In its December 2013 decision in Asphalte ABC Rive-Nord Inc. v. Canada (Attorney General), the Federal Court rejected an unsuccessful bidder’s judicial review challenge. It found that a competing bidder’s failure to submit a bid deposit before the bid deadline was a minor irregularity that did not impact the validity of its award to that competing bidder. The case dealt with a bidding process for the sale of government land. The applicant, along with the winning bidder, had submitted initial offers on the parcels of land in question. The government’s agent sought follow-up bids in what was characterized by the court as an informal bidding process that permitted bidders to improve their initial offers on the land.
As the court explained, the eventual high bid was delayed in submitting the required bid security but the government ultimately selected that bid as the best financial offer:
11 It appears that the first meeting at 1 p.m. took some time because Mr. Mihalcean, accompanied by his son, had to rush to his Saint-Jérôme office in order to arrive before 2 p.m.. He waited there for Eric Demers, one of Demers Inc.’s representatives, who was in possession of two documents: the amended promise to purchase for $2,350,000 and a corporate resolution authorizing it. However, the cheque required to improve Demers Inc.’s bid, which constituted a deposit on it, did not arrive until a few minutes after 2 p.m.. For reasons that were explained with difficulty, Robert Demers, another representative of Demers Inc., had a cheque for $30,000 certified at 12:45 p.m. on July 12 but chose to have a quick lunch before driving to Saint-Jérôme. Traffic problems were the explanation for why he was not present at 2 p.m.
12 There is no dispute that Mr. Mihalcean sent the improved bids to purchase submitted by Asphalte ABC and Demers Inc. later in the afternoon of July 12. Indeed, it appears that the facsimile transmission took place around 4 p.m. PWGSC was not told that Demers Inc.’s cheque had been delivered after 2 p.m.. PWGSC accepted Demers Inc.’s bid, the one that had the highest purchase price, with a difference of $90,000.
The applicant argued that the bid was non-compliant and incapable of acceptance since the required bid security, in the form of a certified cheque, was provided after the bid deadline. It argued that the bidding process had created Contract A and thereby restricted the contract award to compliant bids only. It also maintained that the administrative law principle of legitimate expectations applied to the circumstances and required the government to follow its process rules and reject a bid with the late bid security. While the court ultimately considered the issue from an administrative law context, rather than as a Contract A claim, it held that the result would not change even under Contract A since the irregularity in question was minor:
38 Whether one invokes the theory of A and B contracts, which is much more involved with contract law, or administrative law’s reasonable expectations, in either case the minor error cannot taint the decision that was made. If it is true that the issue must be considered from an administrative law perspective given the remedy chosen, both approaches lead, in my view, to the same result.
The court then held that, given the minor nature of the irregularity, the government’s decision to select the better financial offer was not unreasonable:
41 The irregularity at issue is minor. As such, PWGSC’s decision to award the contract to Demers Inc. was not unreasonable. Nor was it incorrect because the minor irregularity does not trigger an automatic rejection in a case like ours where the process was intended to be informal, was informal and was accepted as such by the participants. A minor irregularity does not prevent a bid from being considered, and it certainly does not contravene reasonable expectations. The application for judicial review will therefore be dismissed.
In support of its conclusion, the court noted that the bidding process in question had been informal, that the process had allowed for follow-up bids, and that the government had acted in the best interest of the taxpayer:
49 I cannot bring myself to see in the promise to purchase and the improved promise to purchase of July 4, 2012, the strictness that Asphalte ABC would like to give to them. The process was informal, the government was looking to maximize the sale proceeds for the benefit of taxpayers, and Demers Inc.’s intention to improve its offer to purchase was evident and was never withdrawn. The arrival of the cheque a little after 2 p.m., but almost two hours before the promises to purchase were sent to PWGSC, does not seem to me to be the type of irregularity that renders the decision to accept that promise to purchase unlawful. Asphalte ABC suffered no prejudice. It only presented a promise to purchase that was $90,000 lower than that of Demers Inc.
50 We do not have before us the type of strict conditions, expressed as such, in the case of very narrow invitations to tender. The bids were not time-stamped as some processes require. There are, for example, documents that provide that “
[r]ules relating to the conformity of tenders shall state the cases that will be automatically rejected, in particular where (5) the place and deadline for receiving tenders have not been complied with” (RSQ, c A-6, r 5.001 and c A-6.01, r 0.03, as cited in Construction DJL inc. c PGQ, 2006 QCCS 5290, 2006 RJQ 2753. Regulation respecting supply contracts, construction contracts and service contracts of government departments and public bodies). That was not the case here.
As this case illustrates, administrative law principles do not necessarily compel the rejection of non-compliant bids where the non-compliance in question is seen to be minor and the strict application of process rules would otherwise compel the rejection of the best financial offer.
