In Choice Properties Limited Partnership v Penady (Barrie) Ltd., 2020 ONSC 3517, the Ontario Superior Court of Justice weighed in on what constitutes a fair and reasonable sale procedure during the ongoing COVID-19 pandemic.read more
Tendering and COVID-19: bidders beware (or at least be aware)
Amid the messages of complex and difficult times it should be no surprise that a traditionally challenging topic – procurement – would be even more complex these days. The attention needed to sustain the health of any business is even greater as we struggle to “flatten the curve” through self-isolation. But industry dare not stop altogether: given the lead times for project approval, design, award and performance, there is a straight line between sustaining industry and ensuring that viable procurement is not interrupted.
The message is clear as government and industry proclaim that they will continue to publish tender calls but caution that “adjustments could occur.” The burden is on the bidder to keep an eye on those adjustments as the law of tendering is not suspended by current circumstances. Considerations of Contract A on the bidding competition process and Contract B on the ultimate award continue as ever; the only accommodation for the impacts of pandemic is insofar as specific provision is made. Even when expressly recognizing public health advice and directives and the efforts to “carry on” there is no presumed accommodation, it must be clearly stated.
A quick review of government tenders issued locally from the end of March to mid-April, 2020 confirms an awareness of the current reality – such as in expressly requiring enhanced COVID-19 protocols integrated in the Site Specific Safety Plan and updated as recommendations and directives evolve – but suggesting no facilitation for how such requirement could be reasonably met, either as an indefinite cost or a potentially impossible obligation if, for example, PPE or personal protective equipment is simply not available. To the extent that force majeure considerations might apply if a Contact B is awarded, bid documents do not include such provisions for Contract A. This appears to be advanced as “one more risk for bidders to price” even though there are no benchmarks for what might reasonably be expected: that is after all what is meant when the word of the day is “unprecedented.”
Provision does seem to be available, however, to assist the bid calling authority. For those public bodies governed by the Public Procurement Act (NL) section 6.(iv) of the Public Procurement Regulations has been widely invoked to excuse the requirement for public opening of submissions. The provision can also excuse public bodies from the requirement to issue an open call for bids, perhaps opening the option of negotiating contracts directly or extending or modifying current contracts. The legislation does not extend flexibility to the corresponding obligations of bidders; they continue to be bound by bid documents and the contracts that flow from them. Similarly, the adjustments to facilitate the tender process may seem to favour the owner and give little regard to the bidder:
- Tender calls continue to use standard form instructions to bidders and general conditions. These requirements should be familiar to most bidders, but meeting them may require new contemplation, such as how bid security is coordinated and delivered in time to meet requirements to include bonds with original seals and signatures with bid submissions.
- Requirements for site visits may be waived, but expectations on bidders and presumed knowledge of the site are unclear, especially when bidders are directed to use tender forms that begin with the affirmation: “Having carefully examined the site of the proposed work and all conditions affecting such” as confirmed by an addendum issued April 21, 2020 on one local tender.
- Initiatives to make the process more “contactless” can unexpectedly frustrate. For example, mandatory e-bidding glosses over issues when networks are overburdened or unable to process requisite data file sizes, or are simply unavailable even temporarily. Restricted building access can complicate the submission of hardcopy bids (which are still required in some circumstances). While both adjustments appear to be reasonable accommodations, neither anticipates the consequences to bidders if they cannot meet strict closing deadlines – there is no presumed extension for bid submissions unless deadlines are specifically relaxed.
Staying on top of protocols for questions and requests for clarification during the bid process has rarely been more important.
Unless they are expressly invited, however, in no circumstance should it be assumed that qualifications will be an acceptable work-around for any uncertain aspects of a bid. Most tender calls make provision for excluding bids with conditions or qualifications from being considered. Similarly, omitting required information like leaving a unit price blank, whether intentionally or not, can render a bid incomplete and subject to disqualification. Even in the rare instance where these concepts are not covered in the bid documents, it is possible that a qualified or incomplete bid would be rejected as non-responsive: a bid has to respond to the tender call with certainty, without imposing variables on specification, timing or price.
As the call goes out for good faith and collaboration in weathering the current public health emergency, it is important not to assume too much. Canadian courts have held parties to a standard of good faith and honesty in performing their contractual obligations, including with reference to Contract A, but what that means exactly can be very fact-specific and will always be considered in the context of any documents. Even as good faith in general can be expected, it is not a band aid for unforeseeability and it is certainly no substitute for prudence, healthy skepticism and clear communications about expectations.
As procurement continues, it is equally important to “keep your eyes on the prize” and understand and anticipate obligations under the Contract B that is the objective of the tendering competition. Agreements entered into during and after the current health crisis will be interpreted through the lens that parties knew or ought to have known to anticipate the implications of a pandemic in contract performance.
This article is designed to provide a general overview of its topic. It does not cover every issue or exception and is not intended to form a legal opinion in relation to any specific set of facts. Neither Cox & Palmer, nor its partners, associates or staff shall be liable for any loss or damage arising out of the use of this information or the application of concepts set out therein. Individuals are advised to obtain legal advice when it comes to their specific circumstances.