Procurement

How BC law treats it

Canadian tender law starts with R v Ron Engineering & Construction (Eastern) Ltd, [1981] 1 SCR 111. Where the owner intends it, submitting a compliant bid in response to a formal call for tenders creates Contract A between the owner and each bidder. Contract B is the actual construction or supply contract signed with the winner. Under Contract A, a bid is usually irrevocable for the stated period and the owner must follow its own tender terms. In MJB Enterprises Ltd v Defence Construction (1951) Ltd, [1999] 1 SCR 619, the Supreme Court held that a privilege clause ("lowest or any tender not necessarily accepted") does not let an owner accept a non-compliant bid. Owners also owe an implied duty to treat all compliant bidders fairly and equally. In Tercon Contractors Ltd v British Columbia (Transportation and Highways), 2010 SCC 4, a BC case, the Province breached its tender rules by contracting with an ineligible bidder, and an exclusion clause did not protect it. Whether Contract A arises depends on the documents. Many requests for proposals are drafted so that no contract forms until negotiations finish, which limits bidders' remedies. Public bodies in BC are also bound by trade agreements such as the Canadian Free Trade Agreement and the New West Partnership Trade Agreement, and by their own procurement policies. The BC Procurement Strategy is government policy, not law, and it does not impose fines. A bidder's usual remedy for breach of Contract A is damages, often measured by the profit it would have earned on Contract B. The basic two year limitation period under the Limitation Act, SBC 2012, c 13 applies.

What it means for your business

Contractors and suppliers that bid on public or large private projects need to read tender documents closely: one missing signature or qualified price can make a bid non-compliant and unrecoverable. Owners, in turn, can face lost profit claims if they change the rules mid-process, negotiate privately with one bidder or accept a non-compliant bid. Knowing whether a process creates Contract A shapes how bids are prepared, how evaluations are run and whether a losing bidder has a viable claim. Example: A Surrey paving contractor submits the lowest compliant tender for a municipal works yard, but the city awards the job to a bidder that missed the mandatory site meeting. The contractor may have a claim for breach of Contract A measured by its lost profit.

Risks and common mistakes

Treating a privilege clause as permission to accept a non-compliant bid. Submitting a bid with qualifications or missing documents that make it non-compliant. Assuming every request for proposals creates Contract A, when many are drafted to avoid it. Owners negotiating changes with the preferred bidder that were not offered to others in the process. Waiting too long to claim, despite the two year basic limitation period.