Public Procurement: Late Bids – Where Seconds Matter (1/3)
This is the first in a series of blog posts that provide an overview of Canadian law with respect to late bid submissions.
As the head of a government procurement department in my past life, I was under a duty to ensure fairness in procurement with a view to obtaining the best value for money for the organization and for the taxpayer who funded all of our operations. I wrestled with the idea that we were legally required to reject perfectly good bids arriving just seconds late or that arrived late because of traffic or bad weather. These late bids led me to ask:
- Was it really unfair to other bidders to accept a bid that’s just a few seconds late?
- Was it really unfair to other bidders to accept a bid that’s late because of slow traffic?
The average person would think a few seconds or an unforeseen traffic delay shouldn’t require the owner to disqualify a perfectly good bid that a bidder had invested time and money to prepare. After all, isn’t it in the public’s interest for government buyers to have as many bids as possible in any competitive procurement?
The General Duty to Reject Late Bids
Under Canadian common law, if a bidder submits a compliant bid on time, a contract is formed that is sometimes referred to as the “process contract”. When a bidder submits a compliant bid, the owner and compliant bidder are in a binding legal process in which the owner owes each compliant bidder an implied duty of fairness.
Owners do not owe such duties to non-compliant bidders – ie. bidders who are late in submitting their bids. As soon as a bid is found to be non-compliant, owners can reject it with impunity.
Bids Arriving Seconds Late
Whether a bid was delivered on time is not always obvious. There are Canadian cases where the bid submission deadline was stipulated as MONTH, DAY, YEAR HH:MM but a bid arrived a few seconds after the minute, leaving the owner to wonder whether the bid was technically “late”.
The caselaw is divided on whether a bid due at a certain time but submitted seconds late counts as a late bid. This is illustrated by the following decisions:
Smith Bros and Wilson (B.C.) Ltd. v. BC Hydro and Power Authority and Kingston Construction Ltd. 1997 BSCC – bid due at 11AM but filed between 11:00AM-11:01AM – Late. The court found that 11AM describes a precise point in time, not the time that exists between 11AM and 11:01AM. Bid filed between 11:00AM and 11:01AM declared late.
Bradscot (MCL) Ltd. v. Hamilton-Wentworth Catholic District School Board (1999) OJ No.69 ON CA. Bid due at 1PM filed between 1:00PM and 1:01PM – Compliant. In this case, the bid document stipulated that bids would be accepted “only until” 1PM. The bid was submitted 30 seconds after 1PM and the owner awarded the contract to the late bidder. The Ontario Court of Appeal held that to prevent abuse and unfairness in the tendering of construction contracts, a clear rule is required and held that 1PM was any time before 1:01PM.
In Construction DJL Inc. c. Quebec (Procureur General), 2006 QCCS 5290 – bid due at 15:00 but filed between 15:00-15:01 – Compliant. The owner’s past practice had been to accept all bids time stamped before 15:01. The Court’s position was that, in the face of ambiguity, it was in the taxpayer’s interest to interpret the time requirement in a way that would support a presumption of compliance.
Yukon (Department of Highways and Public Works) v. P.S. Sidhu Trucking et al. 2013 YKSC 105 the bid documents stipulated that documents “must be received before the specified time” of 4:00PM. Bid due before 4:00PM filed exactly at 4:00PM – late. The Court interpreted this to mean that bids received after 3:59PM would not be considered. The court went on to say: “A bid submitted after the tender deadline is invalid, and an owner that considers a late bid would breach its duty of fairness to other tenderers…. To prevent abuse and ensure fairness in cases such as this one what is required is a clear rule.”
In all of these cases, ambiguity came from the owner’s failure to stipulate submission deadlines down to the second. To avoid running into this dilemma, owners should stipulate bid submission deadlines down to the second – DAY, HH:MM:SS.
In my next post, I’ll cover how specific situations that have caused lateness have been handled by owners and the courts.