Factors To Consider During The Tendering Process

• Published date: 06 June 2020
• Author: Mr Howard Borlack
• Subject Matter: Corporate/Commercial Law, Environment, Energy and Natural Resources, Contracts and Commercial Law, Environmental Law, Water
• Law Firm: McCague Borlack LLP

Case Study: Aquatech Canadian Water Services v Alberta (Minister of Environment and Parks)

This appeal concerns the tendering process used by Alberta Environment and Parks to solicit bids for a contract for the operation, monitoring and servicing of water and wastewater services in the Kananaskis Region. Aquatech Canadian Water Services Inc. ("Aquatech"), the unsuccessful bidder, appealed a judicial review application in the Court of Queen's Bench.¹ H2O Innovation Inc. ("H2O") was the successful bidder.

This case highlights three important factors to consider during the tendering process: mandatory requirements, discretion clauses and remedies. First, let's discuss an overview, before we dive deep.

Overview of tendering in Canada: Contract A and Contract B

The Supreme Court of Canada² has outlined the tendering process.

An owner, the party requesting the bids for a project, makes two offers. The first offer is to consider the bids it receives. The second offer is to enter into a contract to complete the project when a bid is accepted.

Contract A is formed when a bidder accepts the first offer by submitting a bid that complies with the requirements in the tender documents (i.e. a request for proposal). This contract is governed by the express and implied terms of the tender documents.³ To protect the integrity of the tendering process, the owner is required to strictly follow the requirements set out in the tender documents and they have an implied obligation to treat all bids fairly equally, and only accept a compliant bid.⁴

Contract B is formed once a bid is accepted. This contract, to complete the project between the owner and the successful bidder, is governed by the terms of the tender documents and the bid documents.

Factor 1: Consider the mandatory requirements in the request for proposal

In this case, Alberta's request for a proposal included provisions requiring bidders to have at least five in-house certified operators with Level 1 to perform the services required under the contract.

Aquatech made two arguments:

1. The request for proposal required bidders to provide the names of the certified operators. H2O's proposal failed to comply because it did not list these names.
   
   
2. Alberta misinterpreted its own request for proposals as not containing this mandatory requirement and as allowing it to waive any requirement to provide the names.

H2O's bid provided an organization chart and information about how it deals with staffing and recruiting. H2O...