This article is an excerpt from Government Procurement, which is available for purchase.
In its January 2013 decision in Surespan Construction Ltd. v. Saskatchewan, the Saskatchewan Court of Queen’s Bench rejected the government’s application for summary dismissal of a claim launched by a bidder whose bid was rejected as non-compliant.
The case dealt with a tender call for the construction of the structural steel for a bridge across the South Saskatchewan River near St. Louis, Saskatchewan. The plaintiff, Surespan, submitted an $8.4 million bid but was rejected on the grounds that the bid failed to provide the required proof of the welding certification. Surespan challenged its rejection, arguing that the welding certification was a contract performance term that was relevant only once a contract was awarded and was not required with the submission of bids. As the court noted, the relevant requirement read as follows:
13 The Special Provisions section of the Invitation to Tender package contained various clarifications, directions, specifications, rates, work rules and other provisions that would apply to the contractor. One such provision stated:
- CONTRACTOR QUALIFICATIONS
2.1
Further to General Provision 1200.3, the Contractor shall be certified by the Canadian Welding Bureau to the requirements of CSA Standard W47.1-92, Division 1.
The government argued that the lawsuit should be dismissed since the welding certification had to be provided at the time of bid submission and the bidder’s failure to meet the requirement rendered it bid non-compliant and doomed its lawsuit to failure. The bidder countered by arguing that the timing of the requirement, and its alleged non-compliance, was not clear and required a full trial to properly determine the issue:
20 The plaintiff responds that the bid competition did not require it to hold the specified welding certification at the time it submitted its bid. All that was required, the plaintiff says is that it provide an assurance that its fabricator, when engaged, would be properly certified. Therefore, the plaintiff says, its bid was compliant with the terms of the tender Competition. Alternatively, the plaintiff argues that if its bid was not compliant with the terms of the Competition, the non-compliance could be, and was in fact, waived by the defendant.
21 In support of its argument that the requirement for the welding certification contained in Special Provision 2.1 was not material, the plaintiff notes that it was not found in the list of criteria in subsection 1200.1.3 of the Invitation to Tender – that is, the criteria which, if not complied with, would result in rejection of the bid. The plaintiff also notes that the requirement for the welding certification did not apply to a Bidder, but to a Contractor – a term that by definition applied to those who have been awarded a contract. This, it says, should lead to the inference that the welding certification could be obtained after the award. Finally, the plaintiff argues that the requirement for the welding certification was effectively waived when the defendant’s “A/Deputy Minister” accepted the recommendation that the plaintiff receive the contract.
22 For these reasons, the plaintiff says that its claim should not be struck under Rule 173(a) because it is not plain and obvious it will not succeed.
In considering the arguments, the court ultimately sided with the bidder and rejected the government’s application for summary dismissal of the lawsuit. It found that the alleged non-compliance was not obvious when reading the relevant tendering provisions and ordered the matter to proceed to trial so that all of the relevant evidence could be considered:
32 In my view, the answers to these questions are not as plain and obvious as the defendant suggests. No doubt the defendant is in a position to make a number of persuasive arguments. In addition to its arguments based on material non-compliance, it may argue that because the plaintiff’s bid was submitted subject to the qualification that it would acquire the welding certification at some point in the future, the bid was a “conditional or qualified” one that had to be rejected under subsection 1200.1.3 of the tender provisions. It may argue that the plaintiff was not asked to provide “clarification” of its welding certification status under subsection 1200.3 of the tender provisions, but to furnish “other required information” under subsection 1200.4.1.5, leaving it open to reject the bid under subsection 1200.4.2. (I have earlier noted that although the plaintiff’s reply was filed on this application, the defendant’s request was not.) However, if the nature of the defendant’s request is to be an issue, it will have to be dealt with by way of evidence in due course rather than on an application under Rule 173(a).
33 Notwithstanding these and other potential arguments, based on the principles of tender law raised by the pleadings and documents in this case it is uncertain whether the Special Provisions of the tender were intended to apply to Contract A, containing the terms and conditions governing the tendering process, or to Contract B, detailing the goods to be supplied and the manner in which the work was to be carried out. Many of the special provisions relate to the practices and procedures to be followed after the award and during construction, and by their very nature were incapable of enforcement at the time of the submission of the bid.
34 While it is arguable that Special Provision 2.1 was different from other special provisions in that it was intended to eliminate any bidders from the competition who did not already hold the specified welding certification (that is, its purpose was to pre-qualify bidders), that conclusion is not apparent from the tender provisions.
As this case illustrates, purchasing institutions should ensure that their solicitation documents clearly identify and define bid submission requirements since these requirements inform the compliance of a bid and the valid rejection of bids for non-compliance. To avoid post-bid controversies and potential litigation, tender compliance requirements should be clearly distinguished from: (i) requirements that must be met by only the selected bidder prior to contract award and; (ii) requirements that must be met after contract award during contract performance. As the court concluded, in this instance, the tender call terms failed to clearly specific when the proof of welding certification was required. Compounding the confusion in interpreting the requirement was the government’s use of the term “contractor” (implying a post selection or award requirement) rather than “bidder” (which would imply a pre-award requirement that had to be satisfied at the time of bid submission or, at minimum prior to contract award). Since the timing of compliance was unclear, the government was unable to convince the court that the rejected bidder’s claim was obviously doomed to fail and should therefore be summarily dismissed. This ambiguity therefore had the dual detrimental effect of creating the controversy over bid rejection in the first place and then prolonging the legal proceedings since the interpretation of the requirement could not be resolved without recourse to a full trial. In order to avoid being drawn into similarly protracted legal proceedings over tender compliance disputes, purchasing institutions should ensure that their compliance requirements are not subject to multiple interpretations.
