• A Non-Compliant Response to a Tender Call Is Not Always Invalid
  • March 20, 2015 | Author: Scott Brearley
  • Law Firm: Singleton Urquhart LLP - Vancouver Office
  • When submitting a tender, what level of compliance with tender specifications is required? A recent decision, Newfoundland and Labrador v. Marine Contractors Ltd., in the Supreme Court of Newfoundland and Labrador suggests that technical compliance with tender specifications is unnecessary, provided that the bid is responsive in substance to the terms of the tender specifications.

    In this case, the province’s Crown sought a declaration from the Court respecting the validity of a bid submitted by Marine Contractors, the lowest bidder in a tender call issued for an upgrade to a municipal sewerage system.

    When submitting its bid, Marine Contractors used the original tender document form provided, rather than the form set out in an addendum issued following the distribution of the original documents. The addendum removed sequential numbering next to items listed in a schedule of quantity and prices contained in the tender document; the numbering was thought to be potentially confusing to bidders. Otherwise, the revised form was identical to the original.

    Marine Contractors acknowledged receiving the addendum but used the original form inadvertently. A company employee testified that “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.”

    The second lowest bidder, Cougar Engineering and Construction, argued that, because Marine Contractors failed to follow the formal rules of the specifications issued to bidders (which included a clause stating that tenders not submitted on the tender form provided were unacceptable), the latter’s bid was non-compliant and therefore invalid.

    In determining that Marine Contractors had submitted a valid bid, the Court conducted an extensive review of Canadian jurisprudence addressing the issue of formal tender compliance. It concluded, referring to the 1993 decision of British Columbia’s Court of Appeal in British Columbia v. SCI Engineers & Constructors Inc., that, while the law requires “compliance with the terms of the tender . . . the key element [is] responsiveness to the terms of the tender specifications.” If a tender document is substantially compliant with the terms of tender specifications and provides the information required by those terms, it will be considered compliant.

    Conversely, in circumstances where a failure to use an appropriate form has an impact on, for example, the price applicable to certain materials or results in information specifically required being withheld, courts have found bids invalid. A failure to respond in a substantive way to the requirements of a bid, even in a minor area of the requirements, will be considered non-compliance.

    Marine Contractors’ bid, the Court found, responded to “the requirements of the tender in every aspect” except the use of the form stipulated in the addendum. While noting that the use of the required form was necessary to ensure fairness amongst bidders, the Court held that, ultimately, “the form must serve the [tender] process.”

    The most important factor was whether the bid was fully responsive to the tender call and was presented in a manner that facilitated comparison with other bidders. Marine Contractors’ bid, while not technically compliant, was substantively compliant.

    In reaching the conclusion that the bid was valid, the Court also noted that Marine used the original form by mistake. The mistake afforded them no advantage over other bidders and had no real effect on the information provided.

    At its core, this case suggests that courts will not favour a formalistic approach to tender compliance that disqualifies bids on the basis of technical irregularities. It joins a growing list of decisions which adopt a common sense, policy-based, approach designed to ensure that the credibility and integrity of the public tendering process are upheld.