RC106 MayJune2023 - Magazine - Page 25
pliances and must consider other options. However, the
line between immaterial and material can be difficult to
determine and factually specific, often requiring legal
advice.
A material non-compliance also arises when there is
uncertainty preventing a determination that a Contract A
has been formed between the parties.12 The test is whether the term or terms in question relate to essential aspects
of the prospective contract.13 For example, mistakes and
uncertainty as to price and the identity of a party are
material defects that will render bids invalid.14
Obligation to comply with the duty of fairness
Once all compliant bids are identified, the owner must
treat all bidders fairly throughout the remainder of the
tendering process, in strict compliance with the tendering
documents.15
In situations where none of the bids are compliant,
and the non-compliances are sufficiently material that the
duty of fairness precludes the owner from simply waiving them, the owner has at least three options:
1. START OVER In a perfect world where time, cost, and risk
are not at issue, all non-compliant bids should be rejected.
The owner’s logically cleanest solution is to cancel the
invitation to tender and re-start the tendering process.
However, this obviously poses significant practical
disadvantages. Re-tendering often, if not always, causes
significant costs and delays. If the owner’s tendering documents are perceived to be responsible for bid deficiencies, cancelling the invitation to tender could also harm
the owner’s reputation and disincentivize future bidders
from participating in the tendering process. If mistaken
bid documents did not cause the non-compliances, then
there may be market reasons for the absence of compliant
bids, and the owner should consider engaging in market
sounding exercises prior to commencing a new tender
process for the same scope. However, if all of the bids are
non-compliant for different reasons, re-tendering may be
the only option consistent with the duty of fairness that
is available to the owner. Otherwise, the owner will be at
risk of facing allegations of actual or perceived preferential treatment.
2. WAIVE SPECIFIC CRITERIA If all bids are defective in respect of
one criterion (or the same criteria), the owner may wish
to waive that criterion (or criteria). This option may be
appealing where the bids are otherwise compliant. To be
clear, waiving a criterion for all bidders is different from
waiving a non-compliance in a particular bid. Criteria can
be waived by issuing addenda to the tender documents,
and/or by obtaining the written consent of all bidders to
waive the specific criterion. Waiving criterion after bids
are received can be risky due to the possibility, whether actual or perceived, that the waiver of the criterion
favours a certain bidder. However, where all bidders
failed to comply with the waived criterion, this is of lesser
concern.
This option may be appealing for owners because it
minimizes delay and allows otherwise compliant bids to
remain competitive. However, the owner must be careful
that the defects contained within waived criteria are not
material.
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