Looking for Tenders

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Procurement Perspectives: Unfavourable interpretations of contractor bids

0 100 Government

by Stephen Bauld

I have written about this topic before and stated that the purpose of a tender is not to engage in a game.
Stephen Bauld
Stephen Bauld

For example, chess is played according to defined rules and conducted solely for its own entertainment value.

Government procurement decisions are a vital aspect of the business of government.

Bidders should not be ruled offside when it is clear that even on the most unfavourable interpretation of their bids, the price that has been offered by them is still far lower than that of their competitors.

In such a case, the "bid repair" does no hardship to the other suppliers. They have bid too high and they lose for that reason. On the other hand, compelling the municipality to reject a low bid and accept a higher one imposes an unjustified burden upon the taxpayer.

Requiring a government to spend more simply due to a clear bidding error by the low bidder does not serve the public interest. I have made the statement before that the tender system is employed for the benefit of the taxpaying public, not for the benefit of government suppliers.

Significantly, in the example of the Mardave case, the municipality does not appear to have included any specific reserved privilege permitting it to correct obvious errors and clarify any ambiguity within a bid.

Although many municipalities do include provisions of this sort, for the most part the authority conferred is generally exercised in clear cases, for instance where a bidder has left a space blank, but has provided the required information elsewhere in the bid, which are minor departures from required wording and the like.

While the implicit obligation to reject non-compliant bidders may clearly be negated by wording of this type, even in extreme cases at a certain point to effect any further "corrections" of a bid would be to seek to impose on the non-compliant supplier an "offer" that it has simply never approved.

It is questionable whether such an "offer" is one that would be capable of acceptance under the law of contract.

Thus the market imposes a discipline on the exercise of a reserved privilege to "clarify" or "correct" a bid, even where the literal terms of the contract competition permit such steps to be taken.

One of the rules that grows out of the rule of tender is that (subject to any specific rights under the terms of the tender) the contract may only be awarded to a bidder who submits a compliant bid: that is, a bid that complies with the requirements of the tender both as to substance and form. In determining whether a particular bidder's bid is so compliant, the courts have tended to avoid an overly technical approach.

Even so, the specific requirements set out in the request for tender or RFP cannot be ignored. Clearly the view taken by the contracting authority as to what is necessary for a bid to include will be highly relevant in deciding whether a particular bid is compliant.

Cases are rare in which the decision by a contracting authority to reject a bid has been overturned, where the ground for doing so was that the bidder failed to comply strictly with the requirements of the tender or RFP.

On the other hand, the courts have been willing to allow contracting authorities to wave strict compliance, where doing so does not seem unfairly prejudicial to the other bidders.

Nevertheless, contracting authorities do not have absolute discretion in this regard. They too must abide by the rules of the tender that they have themselves prescribed.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.

Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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