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Review of tender requirements essential in bids

Getting your “fax” straight
Friday, August 7, 2015
by David Claassen

Despite developments in technology and the constant use of email and text messaging in the construction industry, the somewhat antiquated fax machine remains central to bidding on many construction projects. The recent decision of the British Columbia Supreme Court in True Construction Ltd. v. Kamloops (City), 2015 BCSC 1059, provides guidance on the manner in which bid documents must be submitted and the importance of carefully following the rules in the tender documents. In particular, this case addresses the impact and use to be made of last minute fax revisions to bids.

In this case, True Construction submitted a bid to the City of Kamloops for the construction of the city’s Aberdeen Fire Hall. While True Construction’s bid was the lowest bid submitted, it was rejected by the city on the basis that it was non-compliant. The construction of the Fire Hall was instead awarded to the second lowest bidder. True Construction subsequently sued the city on the basis that it should have been awarded the work and that its bid was in fact compliant with the tender instructions.

The tender instructions required a potential bidder to submit the bid documents, including all addenda and appendices. There were six appendices – A, B, C, D, E, and F. Appendix F was a document that allowed bidders to revise their total price by fax prior to the bid deadline. As is common in the bidding process, the potential bidders were required to submit the bid documents, including completed appendices A-E, in a sealed envelope which was not to be opened until the time for the submission of bids had ended.

True Construction submitted its initial bid in a sealed envelope, as it was required to do. The submission of the sealed bid was done approximately 24 hours prior to bid closing. However, it failed to include a completed Appendix A or B. Appendix A was a three page document that listed the bidder’s subcontractors for various aspects of the Fire Hall and Appendix B was alternative prices for changes to the scope of work. Instead, True Construction only submitted the first page of Appendix A with its sealed bid and omitted Appendix B altogether.

Following the submission of its sealed bid, True Construction faxed in a revision to its bid using Appendix F, reducing its bid price by approximately $500,000. In addition to the properly completed Appendix F, True Construction also faxed completed Appendices A and B, which had not been included in its sealed bid. The fax was received approximately 15 minutes before the deadline for receipt of bids. After these revisions, True Construction’s bid was $3,435,526.00, which was approximately $150,000 less than the next lowest bid.

The city opened the bids shortly after 2:00 p.m. and quickly realized that the sealed bid from True Construction was missing two pages of Appendix A and the totality of Appendix B. The city considered the issue internally and eventually determined that the bid submitted by True Construction was materially non-compliant with the tender documents because the completed appendices had not been included with the sealed bid.

True Construction took the position at trial that its bid was compliant, as the tender documents did not specifically require the appendices to be included in the sealed bid. The court rejected this argument and found that Appendix F only allowed for the revision of the price of the bid, and did not allow for the addition of materials that were supposed to be included in the bid itself.

True Construction also argued that if its bid was not compliant, then such non-compliance was not material and the city should have waived the irregularity and accepted its bid. The court also rejected this argument on the basis that True Construction used the time between submitting the sealed bid and the completed appendices to continue to negotiate with suppliers and subtrades to acquire a better price, and True Construction’s production of those prices in Appendices A and B in a non-sealed format prior to bid closing had the potential to impact the fairness of the bid process. The court concluded that the True Construction bid was materially non-compliant and that the city was right to reject it and accept the second lowest bid.

The important takeaway from this case for bidders, as with so many decisions dealing with tendering, is to ensure that you carefully review the tender instructions and follow all of the requirements for the bid. Other lessons to be learned from this case include:

  • As a bidder, read the instructions to the bidder carefully and ensure that you have enclosed all of the required information in your sealed bid, including any appendices, as a failure to do so can result in your otherwise low bid not being selected;
  • As a bidder, do not assume that you can rectify mistakes in your bid through the use of a revision form, as the use of those forms will be governed by the terms of the tender documents and is most likely limited to a revision in price and nothing more; and
  • As an owner, carefully review tenders to ensure they meet the requirements you set, and consider obtaining legal advice early in the process in the event of confusion.

 

David Claassen is a lawyer at Jenkins Marzban Logan LLP. His practice focuses on the litigation of construction related disputes.

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