Spring Summer 2010 Issue - Ontario Road Builders' Association

TENDERING LAW
Trends in Tendering Law
The principles of tendering
law are a “moving target and
a very active part of law right
now” Charles Powell, Associate, Glaholt
LLP told delegates attending a
February 1 session on Recent Trends
in Tendering Law at the 2010 ORBA
Convention in Toronto.
The Supreme Court, in deciding
an appeal in regard to a Tercon
Contractors Ltd. v British Columbia
(Ministry of Transportation and
Highways) case, could wipe out a 1981
R v Ron Engineering and Construction
(Eastern) Ltd. Supreme Court
decision regarding tendering law,
stated Powell.
Tercon was one of six contractors bidding
on a Ministry of Transportation
highway project and submitted the
second lowest bid.
“The company with the lowest bid,
Brentwood Enterprises Ltd., decided
it did not have the capacity to
complete the project on its own and
approached another firm to submit a
proposal as a joint venture,” explained
Powell. “The other firm was not one of
the qualified RFEI bidders. The Ministry
told Brentwood to submit in its
name only and awarded the contract
even though it had knowledge of the
joint venture. The court ruled in favour
of Tercon and awarded approximately
$3.5-million in damages.”
The trial decision was overturned by
a British Columbia Court of Appeal
decision that reasoned that Tercon
was an experienced bidder and
therefore an exclusion clause barred
Tercon’s claim.
“The Supreme Court judgment has
been reserved for over a year,” said
Powell. “The Supreme Court’s decision
will be interesting.”
Tendering law is based on contract law,
involving an offer, consideration and
acceptance, said Powell.
“Before 1981 there was no formal contractual
law for tendering and a call for
tenders was simply an invitation and
an offer could be withdrawn prior to
acceptance if a bidder had made a mistake
in a bid,” he said. “Then, in 1981
came the Supreme Court of Canada
decision in the R v Ron Engineering
and Construction (Eastern) Ltd. case
which stated that a contractor who
submits a bid cannot withdraw during
the period of irrevocability stipulated
in a call to tenders even in the case of
an error in the bid.”
In the 1981 case, Ron Engineering’s
bid was the lowest by $630,000 and realizing
there was a mistake in their bid,
wanted to withdraw it but the Ontario
Government refused withdrawal and
said it wanted to accept the bid. Ron
Engineering refused to sign the construction
contract and the government
refused to return Ron Engineering’s
$150,000 tender deposit and awarded
the contract to the next lowest bidder.
This court decision introduced the
concepts of a Contract A and Contract
B with Contract A being the submission
of a bid and Contact B being the
construction contract.
The Road Builder 51