This article is an excerpt from Government Procurement, which is available for purchase.
In its June 2013 decision in Provincial Fence Products Ltd. v. Conception Bay South (Town), the Newfoundland and Labrador Supreme Court dismissed a bid-shopping claim brought by a low bidder after a tendering process was cancelled and rebid for budgetary reasons.
The case dealt with a tender call issued by the Town of Conception Bay South for playground and outdoor fitness equipment. The Town cancelled the initial tendering process due to budgetary considerations and then issued a revised tender call. The contract was awarded pursuant to the second tendering process to a bidder that was non-compliant in the first round of bids. Provincial Fence took issue with the initial cancellation, disputing the claim that it was cancelled for budgetary reasons and alleging that the Town had engaged in bid shopping. It declined to bid on the second tender call and instead sued the Town.
Provincial Fence maintained that, since it was the lowest compliant bidder in the first tender call, the Town was under a duty to negotiate a reduced scope with Provincial Fence if its original bid was too high. Citing case law to the contrary, the court disagreed with this position. Rather, it held that the Town was under no obligation to award to Provincial Fence and that it was within its rights to cancel and retender for budgetary reasons. It also held that Provincial Fence had failed to prove that the Town had engaged in bid shopping:
54 Here, the public body determined that all the bids exceeded its budget. There were no post-closing discussions or negotiations with the bidders. Instead the tender was cancelled and a new tender advertised for a different scope of work.
55 Provincial Fence bears the onus to demonstrate that the Town’s conduct failed to uphold the integrity of the tendering process in its decision to cancel Tender 09-11. To the contrary, I find that the evidence establishes that the Town acted in good faith in its call for tenders for playground equipment. The testimony of both Mr. Tibbo and Mr. Freake and the documentary record relating to their email exchanges and Town and Committee meeting minutes all support the overriding budgetary considerations. They were accountable to the Town Council for appropriate spending in the context of the Town’s budget.
The claim was therefore dismissed. As this case illustrates, while cancelling a tendering process for budgetary reasons may be a high risk decision that can attract bid shopping claims, particularly by the lowest compliant bidder, the ultimate determination of any resulting legal challenge will turn on the specific facts of each situation and on the credibility of the purchasing entity’s budgetary constraints defence.
