This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its March 2012 decision in Moorefield Excavating Ltd. v. Arran-Elderslie (Municipality), the Ontario Superior Court of Justice rejected a summary dismissal motion and instead rendered a summary finding of liability against a municipality that mistakenly included two different bid deadlines in a solicitation document. The dispute dealt with a municipal tendering process for the replacement of a water main. The municipality hired a consultant to draft the tender call documents and administer the bidding process. The tender call documents contained two contradictory statements regarding the bid deadline, stating 1:00 p.m. in the main document and 2:00 p.m. in a subsequently issued addendum. As the Court summarized, this resulted in significant confusion on the day of the bid submissions, which was compounded by the fact that the bidding process contemplated an immediate opening of 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.
The deadline controversy resulted in a lawsuit brought by one of the losing early bidders. The Court ruled that the 1:00 p.m. deadline in the main solicitation document was the correct deadline since the 2:00 p.m. deadline referred to in a subsequent addendum was not properly incorporated to form part of the bid documents:
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.
The Court determined that the municipality broke the rules of the tendering process by accepting a bid that was submitted after the 1:00 p.m. deadline and therefore rejected the summary dismissal motion, finding the municipality liable. It then directed the dispute to trial court to determine the amount of lost profit damages that would be owing to the plaintiff bidder. As this case illustrates, small drafting errors in solicitation documents can result in significant downstream consequences. Purchasing institutions should therefore establish thorough editing controls over their tendering documents, including the addenda documents that tend to be produced under tight time constraints during the period between the original solicitation posting and the bid submission deadline.
