This article is an excerpt from Government Procurement, which is available for purchase.
In its February 2014 decision in Newfoundland and Labrador v. Marine Contractors Ltd., the Newfoundland and Labrador Supreme Court granted the provincial government’s application for a court declaration that a contested low bid was compliant and capable of acceptance. The case dealt with a tender call for a sewage system upgrade collector system for the Town of Bishop Falls. Prior to the receipt of bids, the provincial government issued a number of addenda, including one replacing an original bid submission form with a revised form. The low bidder, Marine Contractors Ltd., used the original bid form instead of the revised form, which raised concerns over the validity of the bid. The court explained the background circumstances as follows:
4 Subsequent to the distribution of the Tender Specifications, there were five addenda to the Contract Documents. The first, Addendum No. 1, is relevant for the purposes of this application. It was issued on September 6, 2013. It appears to have arisen from concerns of Mr. Baird about possible confusion from the sequential numbering of some of the items contained in lists. The original appears to have listed several units as follows:
Item 02070
Removal of Culverts1, 600 mm dia.
[quantity]2, 900 mm dia.
[quantity]3, 1050 mm dia.
[quantity]5 Mr. Baird gave evidence by affidavit and viva voce testimony that he decided to re-issue this document after concerns were expressed about the numbering of some of the items contained therein. The sequential numbering of each listed item, with a comma following, was thought to be potentially confusing for a bidder. It was decided to reissue the form, deleting the numbering on the each of the lists. Apart from the deletion of the numbering, the new document set out identical specifications and quantities as the original. Addendum No. 1 was re-issued on September 6, 2013 and showed the same specifications for culverts as the original. There were several lists of culverts which were changed in this manner, but in each, the list remained the same. In the case noted, the new form contained the same listing of 600, 900 and 1050 millimetres. It was set out without the numbering. That example was changed so it would read:
Item 02070
Removal of Culverts600 mm dia.
[quantity]900 mm dia.
[quantity]1050 mm dia.
[quantity]6 There were several other lists in the Schedule of Quantities and Prices (SQP) where the Addendum contained the same specifications, but removed the numbers from the listing in a manner similar to the example shown. There was no evidence that anyone was misled or confused by either the form in the original documents, or the form in the Addendum.
7 The facts are that Cougar submitted the form set out in the Addendum No. 1. Marine, on the other hand, used the form set out in the original Tender Documents. Marine had acknowledged receipt of the Addendum. Mr. Wayne Walsh of Marine testified that the wrong form was used by inadvertence — he made a mistake. He said they received the forms in electronic format, and transferred the numbers to a spreadsheet program for the purpose of calculating the bid. The results were then written on a printout of the form and submitted.
8 The documents forming the record submitted indicate that Marine’s bid is lower — $4,520,242.78 vs. $4,847,702.26.
9 The issue appears to be whether the submission of Marine, being presented on a form which had been revised, was compliant with the terms of the tender.
As the court noted, the information contained in the two forms was identical, except for the commas that were removed in the latter version to prevent confusion. The second-lowest bidder took issue with the compliance of Marine’s bid, arguing that the use of the old form rendered the bid non-compliant and ineligible for acceptance.
In considering the issue, the court acknowledged the implied Contract A duty that requires purchasing institutions to reject non-compliant bids. It also provided a detailed summary of the law relating to substantial compliance, noting that this implied standard typically allows purchasers to acceptance bids containing minor immaterial irregularities:32 The law has been consistent — there must be compliance with the terms of the tender. However, the Court recognized that in order to be compliant, the key element was responsiveness to the terms of the tender specifications. Referring to the British Columbia Court of Appeal in British Columbia v. SCI Engineers & Constructors Inc. (1993), 22 B.C.A.C. 89, 1993 CarswellBC 925, it affirmed, at paragraph 51, that “Substantial compliance with the conditions of the tender call is the test”.
The court summarized a number of cases that have considered the types of omissions that constitute material deficiencies, noting that the bids in question were found to be substantially non-compliant since they failed to respond to substantive bid requirements. Examples from the cited cases included bids containing handwritten qualifications in a bid price, bids with missing pages or other omissions in the price form that resulted in a failure to respond to key price elements, and bid submissions that used incorrect forms and resulted in the omission of significant information. However, in considering the facts of the case, the court determined that Marine’s failure to use the revised form did not result in a material omission since all of the information contained in both versions was the same and the updated version simply corrected what could be considered a typographical error. The court also observed that purchasing institutions are increasingly using digital forms to replace the paper forms that were traditionally distributed to bidders:
49 Arising from these authorities, I have to decide two issues. First, was the bid responsive to the requirements of the tender? Second, was an incorrect form actually used, and if so, does it lead to non-compliance?
50 On the first point, there is no disagreement that Marine’s bid was responsive to the requirements of the tender in every aspect, with the exception of the form specified by Addendum No. 1.
51 On the second point, a little more analysis is useful. It is important that the forms specified by the specifications be used because they are a vehicle for ensuring that an owner has information set out in a uniform manner. In this way, a fair comparison of bids may be made for the purposes of evaluation, so that all bidders are on a level playing field. Use of the proper form permits a fair comparison among the bidders.
52 But technology has changed the nature of what constitutes the form. In the evidence, there was indication that the existence of a single form may be notional rather than real. In years past, the form would have been a specific package of paper materials, with the requirement to return a specific physical form with the information either written or typed in. Today, it is clear that, notwithstanding the amount of paper that was submitted in this case, many of the documents are sent out by facsimile or by e-mail in digital form. The evidence of Mr. Wayne Walsh of Marine was that the forms were received electronically, the information entered into a spreadsheet program, and then transferred manually to a printout of the appropriate form. A physical form does not always exist, in the sense that in the past, a form would have been provided in paper format, filled out and then returned.
While the court emphasised the importance of using standard bidding forms to better ensure that bidders submit their information in a manner that enables the fair comparison of competing bids, it also noted that forms should ultimately serve the process, rather than the process being slave to the forms:
53 While it is critical that the form used by all bidders be consistent, to what extent does the form have to remain unchanged from the original version? For example, if, in a form distributed electronically, a typographical error was corrected, would it thereby be non-compliant as not being the exact form distributed? That would be an absurdity. In this case, the amended form corrected what could have been termed a printing error, or even a typographical error. The new form did not change in any substantive way.
54 I consider this approach not to trivialize the question before the court, but only to affirm that what is important is responsiveness to the tender call. The use of the form is important because it ensures fairness among all of the bidders when bids are evaluated. It is a vehicle for transmitting information in a manner in which the tendering process may be facilitated in a fair way. It is not to be disregarded. However, the form must serve the process. The process must not be a slave to the form. What is important is that the submission is fully responsive to the tender call and is presented in a way that facilitates comparison to other bidders in a fair manner.
In considering the trivial difference between the original bid form and the revised bid form, the court ultimately found that the low bid using the original form was substantially compliant and capable of acceptance, and that rejecting the bid for what could be considered a frivolous reason would undermine the credibility and integrity of the bidding process:
60 With due respect to those arguing the contrary, I believe rejection of Marine’s bid because the wrong form was used, in this case, could be termed a frivolous reason. To take such a position would undermine the credibility and integrity of the tendering process. Failure to use the proper form by mistake, when it had no effect on the response of bidders, should not be classed as non-compliance. The test of compliance should be whether there is responsiveness to the requirements of the tender call. Therefore in my view, the bid by Marine was compliant with the terms of the tender specifications.
The court therefore granted the government’s request, declaring Marine’s bid compliant and capable of acceptance. As this case illustrates, with large contracts awards hanging in the balance, even minor bid irregularities can escalate into legal disputes. Purchasing institutions would therefore be wise to edit their tender call documents carefully prior to proceeding to market since the subsequent release of correcting addenda, given the inherent risk of bidder oversight under tight tendering timeframes, inevitably increases the risk of tender irregularities and resulting compliance disputes.
