Bidder: Can I talk to the Mayor and City Council? COA: No, Follow the Contract
Bidders in public solicitations have many remedial rights against the procuring entity in theory, however, the many of those rights can be circumscribed by way of contract. In this case, the courts held that even complaints about the process must go through the channels laid out in the solicitation documents.
Of bidders of interest, the court provided some commentary on the duty of equal and fair treatment on the part of the procuring entities.
In the facts of this case, not only did the bidder have a long-term relationship with the procuring entity, which in this case was a city, but it also had relationships with the council members of the municipality, the Mayor and also provided the city with donations!
The court ultimately found there was nothing improper about these intertwining relationships. However, the court took issue with the fact the bidder persisted that it should be able to present its proposal and prices in a meeting before city council. This is persistence it was led to them being disqualified.
The RFP required the bidder to execute a confidentiality agreement and prohibited it to make pronouncements to the media.
The RFP also required the bidders of the solicitations to contact the purchasing supervisor of the municipality for all issues related to the solicitation. This person would be the sole contact.
The RFP, as expected, stated a bidder would be disqualified if they fail to comply with any of the terms and conditions of the solicitation documents.
The bidder objected to these conditions and consistently sought to make presentations before city council.
After failed attempts to persuade the city officials, the bidder, or its owner I should say, gave an interview with the local newspaper stating he would never be a part of a secret process. Alluding to the solicitation process set out by the city.
The bidder ended up being disqualified. Another bidder won the contract. The bidder commenced an action against the City.
There was a long trial and the judge concluded that the bidder breached the RFP for failing to sign the confidentiality agreement it was required to do so. The court also found the bidder breached the sole contact provision of the RFP. Lastly, the judge found that the bidder breached its obligation to publicly announce or disclose to the media the issues with the solicitation.
The bidder appealed on some technical grounds. The ones that Court of Appeal entertained were:
Whether the bidder was permitted to raise process concerns to individuals other than the sole point of contact as prescribed in the RFP?
Did the trial judge err by treating an expert report as a part of the ‘factual matrix’?
Did the city breach its duty of fair and equal treatment?
Court of Appeal
1. Whether the bidder was permitted to raise process concerns outside the sole point of contact?
The bidder lodged a technical argument that trial judge asserting that two interpretational errors were made he was interpreting the RFP. The operative premise of the bidder’s arguments is the trial judge erred by not viewing the “sole point of contact” provision as only applicable to operational communications during the RFP.
The bidder submitted that provision does not capture concerns about the RFP process. Therefore, the bidder was allowed to raise issues about the process to other individuals at the city without breaching this provision.
The Court of Appeal in response to this argument held that sole point of contact provision of the RFP was designed to ensure consistency and fairness in the RFP communications. The provision was wide enough to capture concerns about the process. Therefore, the bidder was obligated to raise their concerns to the sole point of contact.
The bidder’s objective was to be able to present before the council. However, on the advice of the Process and Fairness Advisor, the city viewed that this would politicize the process which may cause a loss of confidence in the fairness and integrity of the process.
The Court of Appeal on this issue ruled that trial judge’s interpretation was reasonable and entitled to deference: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at para. 52.
2. Did the trial judge err by treating an expert report on as a part of the factual matrix?
Before we begin, a brief summary about the 2005 Bellamy Report is warranted. Madame Justice Bellamy issued a substantive report on the procurement practices at the City of Toronto. This was at the backdrop of a City of Toronto procurement that doubled in cost, which obviously resulted to unhappy taxpayers.
Without going into the detail about the Bellamy Report, at trial the report was used as evidence to inform the trial judge of procurement practices the municipality used in its procurement.
The bidder argues that this report became a part of the factual matrix, which the effect being that court treated the bidder’s breach of the report’s recommendations as opposed to a breach of the RFP.
The Court of Appeal concluded that the trial judge did not find that the report was a part of the “factual matrix”. The trial judge heard evidence from fact witnesses that gave evidence that the report influenced the design of the RFP.
The Court of Appeal held that trial judge was entitled to consider the underlying principles
that was informed by the City’s choice of the structure of the RFP. These principles were that the RFP was designed to keep the council separate from the evaluation process.
3. The Duty of Fair and Equal Treatment
Procurement law practitioners know very well that there are a handful of duties that come into play that impose standard of conduct on the public-sector entity when engaging in procurements.
One of these duties is the duty of fair and equal treatment.
The bidder asserts this duty was breached as it was not properly treated equally relative to how one of the other bidders was treated when that other bidder provided a non-compliant bid. Also, the bidder argues that this duty continues on though it was disqualified. In other words, the bidder is owed that duty even after it was disqualified.
The Court of Appeal held that the other bidder’s breaches were not of the same magnitude to the asserting bidder. The asserting bidder threatened the integrity of the RFP process itself, whereas the other bidder’s breach was a technical breach that did not require any convening with the Fairness Advisor.
On the issue of whether the duty of fair and equal treatment lasts is still owed in the face of
the party who is owed the duty is in the breach of the RFP, the Court of Appeal, was relatively silent and assumed that even if it was owed the duty after the disqualification, the municipality had the discretional powers to wave deficiencies and non-compliance.
Therefore, the municipality was entitled to waive the other bidders’ breach.
Public-sector entities are charged with great responsibility in selecting bidders based on criteria they have set out in their respective solicitation documents. This job becomes challenging when there are only a handful of bidders in the region that are capable of providing the service or good the public-sector entities. Such solicitations have a high risk of claims that may result in alleged improprieties in the solicitation process.
A bidder’s ability to expose such improprieties is limited to what rights it can assert pursuant to the contracts. A bidder should be aware of its rights before it bids. For once the contracts entered upon, the bidder, in theory, may have has effectively given up those rights.
Talk to Daniel Ebady issues related to yours bids on public-sector solicitations.