By: Paul Emanuelli

Dealing with incumbent contractors and disclosure duties in a new tendering process can create significant challenges for a purchasing institution. The following list provides governing principles for dealing with these issues.

  1. Material Disclosure Duty. Purchasing institutions are under a duty to disclose material information under their rightful control that is otherwise not available to all bidders. Material information includes information that could impact the cost of performing a contract. The failure to meet these disclosure duties can result in delay claims and extra cost claims by contractors who, after winning the bidding process, discover a material deviation or omission in the conditions of the contract due to inaccurate or incomplete information provided by the purchasing institution during the bidding process.
  2. Legacy Information and Unfair Advantage. The duty to disclose material information includes the duty to provide historic data from the prior contract that would inform bid prices in the newly tendered contract. In addition to potentially resulting in delay claims or extra cost claims from new contractors, the failure to provide this legacy information can also result in unfair bidding advantages to incumbent contractors who are privy to that historical information.
  3. Duty to Level the Playing Field. To offset unfair incumbent advantage, purchasing institutions are under a duty to level the playing field to the extent possible by ensuring that competing bidders are provided material information that is in the rightful control of the purchasing institution at the time of the new bidding process.
  4. Natural Incumbent Advantage. While incumbent contractors are not entitled to special treatment in a new tendering process, purchasing institutions are not required to offset natural incumbent advantages obtained through the skill and experience gained by incumbents in performing prior contracts.
  5. Confidentiality Duty. Unless they obtain the formal consent to do so, purchasing institutions do not have the right to divulge the confidential information of competing bidders, including incumbents, to other bidders during the bidding process.
  6. Defining Ownership of Data in Contracts. To better enable future compliance with their disclosure duties and avoid disputes about the right to disclose information, purchasing institutions should ensure that their contracts define the ownership of information created under their contracts.
  7. Contract Administration Protocols. Where the information owned by a purchasing institution under a contract remains under the de facto control of the contractor during contract performance, the contract should include protocols to ensure that the incumbent co-operates in the repatriation of that information to the purchasing institution to facilitate material disclosures in the next round of tendering.

Following the above-noted principles will help purchasing institutions deal with their disclosure duties when retendering contracts involving incumbent suppliers.