"Procurement Law Basics - Part 2" looked at the case
of MJB Enterprises, where the Supreme Court of Canada implied a
term into Contract A that only a compliant bid may be accepted by
the owner. The next Supreme Court of Canada case we are going to
look at is Martel Building Ltd. v. Canada, a case from
2000. In this case, the government was looking for rental property.
The terms of the tender were such that bidders were invited to
propose a rent per square foot. However, the evaluation provisions
in the bid documents stated that the government would make
estimates as to the costs needed to set up the rental premises,
moving costs and so on. The evaluation was stated to be on the
basis of the offer that would yield to the government "the
Martel offered a low rate per square foot, and on this basis
would have been the lowest bidder. However, the government added
around $1,000,000 to their price for fit-up costs. Martel argued
that the addition of fit-up costs was unnecessary and therefore the
government should not have done this.
Duty to be fair and consistent
The court held that it was appropriate to imply "a term to
be fair and consistent in the assessment of the tender bids".
This was justified on the basis of the presumed intention of the
owner and the bidders. The court believed this intention would have
been there, on the basis that bidders will only submit bids if they
believed that they will be treated fairly and consistently by the
owner. The privilege clause, allowed the government not to accept
the lowest or any bid, did not exclude the obligation to act
In this case, the court held that the government had not
breached this duty to act fairly. It had expressly reserved the
right to apply fit-up costs to the bid, and did so on the basis
that was consistent across all bidders.
Other cases have considered the question of when an owner is
acting fairly. For example, the BC Court of Appeal held in Elite
Bailiff Services Ltd. that it would be unfair to assign a fixed
number of points to certain aspects of their proposal as opposed to
properly assessing the proposal on an individual basis and in
Chinook Aggregates Ltd. that owners must evaluate bids on the basis
of the criteria set out in the bid documents, not on any hidden
The next installment of Procurement Law Basics will look at
questions of time - when is a bid due?
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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