In large recurring procurements, it is not uncommon for the same bidders to respond, and to have business dealings outside of the procurement process. Are there circumstances in which there is an implied contract between these bidders to treat each other fairly when responding to the procurement?
Test your understanding of the convergence of contract law and procurement principles with a recent decision of the Alberta Court of Queen’s Bench that considers such a claim.
Background
LaPrairie Works and Ledcor were competing bidders on an RFP for a highway maintenance contract in Alberta. LaPrairie argued that Ledcor, the successful bidder on an Alberta government contract, had used improper means to obtain confidential information about LaPrairie’s operations, breaching its implied contract to treat fellow bidders fairly.
LaPrairie advanced a number of arguments: that parties to a procurement must “act in good faith and honestly”; that both parties belonged to the Alberta Roadbuilders and Highway Construction Association, the Canadian Construction Association and the Alberta Construction Association – all of which encouraged fair conduct and a “level playing field” in responses to procurements; and that LaPrairie had understandings and expectations of other bidders’ conduct.
In contrast to other jurisdictions, Alberta had not enacted “bidder conduct” legislation, and had not imposed a “fair and honest bidding conduct” requirement on all bidders in this RFP. There was no evidence that the bidders had agreed to such a requirement amongst themselves.
The statements of the various construction associations were not incorporated into contracts between bidders, and the parties had no separate written contract that set out obligations and the consequences of breach. The only operative document was the RFP issued by the Alberta government.
LaPrairie sued Ledcor, arguing that Ledcor had breached an implied contract of fairness between all participating bidders in various ways that caused LaPrairie damages. Ledcor sought summary dismissal of this part of LaPrairie’s claim, asserting that the claim had no merit.
What do you think? Should LaPrairie’s claim against Ledcor succeed?
Answer
In LaPrairie Works Inc. v. Ledcor Alberta Limited, 2019 ABQB 701, the court ruled that LaPrairie had failed to meet its onus of proving the existence of a “bidders’ contract”, and dismissed the claim without a trial.
The court dismissed LaPrairie’s arguments in no uncertain terms: “Party “A” must follow the rules to avoid the consequences of breaching them (e.g. disqualification). Party “B” must do the same. That does not mean they have a duty to each other to follow the rules. . .”
The statements of construction associations were insufficient to be the source of a “duty to act in a particular way, let alone a contractual duty owed to other bidders”.
The court concluded that any duty to play by the rules was Alberta’s alone – “it is for Alberta to evaluate the bids fairly and to act honestly in selecting the winning bid”. No public policy reason existed for implying the contract sought by LaPrairie – Canadian law has not recognized such a stand-alone obligation.
What Does This Decision Add to Procurement Law?
LaPrairie’s dismissed claim demonstrates that unsuccessful bidders may advance even the most creative of legal arguments in an attempt to obtain damages. It seems that such lawsuits may be constrained only by the imagination of counsel seeking to create new law.
It is interesting to note that, in a separate action, LaPrairie sued the province for alleged shortcomings in the bid evaluation and selection process, and settled that claim without proceeding to trial.
Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case. For any particular legal problem, seek advice directly from your lawyer or in-house counsel. All dates, contact information and website addresses were current at the time of original publication.
In large recurring procurements, it is not uncommon for the same bidders to respond, and to have business dealings outside of the procurement process. Are there circumstances in which there is an implied contract between these bidders to treat each other fairly when responding to the procurement? Test your understanding of the convergence of contract […]
What happens when the key employee running a procurement process sends information about an RFP, including the pricing of opponents’ bids, to the incumbent, and socializes with that incumbent before and during the procurement process? Can the employer fire this employee for cause, and therefore pay no damages? Test your understanding of the intersection of […]
Hawboldt Industries v Department of Public Works and Government Services, CITT April 27, 2018 PR-2017-045 Background In June 2017, the Department of Public Works and Government Services (“DPWGS”) on behalf of the Department of National Defence (“DND”) issued a Request for Proposals for supplying 16 replacement electro-hydraulic marine cranes for the Royal Canadian Navy’s Halifax […]
Background In February 2014, the City of Toronto (“the City”) issued a Request for Quotations for diving services at its water treatment facilities (RFQ#1). ASI Group Ltd. (“ASI”) was the lowest compliant bidder at the public opening for RFQ#1, but the City elected to cancel that process and re-issued the RFQ in April 2014 for […]
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checkbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.