Ron Engineering Case Summary
MJB
Introduction:
Bid for tender was requested by Defense Construction to construct a water pump, and distribution system. Important specifications for tender were a lump sum price, and would submitted a unit price for the construction of the distribution system. Four bids were collected. The contract was awarded to the lowest bid, Sorochan Enterprises Ltd.
Issues:
Does the statement of privilege allow the owner to choose a bid other than the lowest even if it breaches the terms of the tender? Facts:
One of the tender documents was that the lowest bid or tender shall not necessarily be accepted.
There were multiple types of materials that could be used for the sub grade for installing the pipe, and the owner wanted to see only a single …show more content…
price for the pipe bedding. The amounts and type of sub grade was at the discretion of the engineer during construction.
Since Defense Construction is public, the tender was open for viewing. It was noticed that there was a handwritten document stating:
Please note: Unit Prices per metre are based on native backfill (Type 3). If Type 2 material is required from top of pipe zone to bottom of sub-base, material for gravel or paved areas, add $60.00 per metre.
Bid that were rejected complained that the note introduced a conditional requirements which rendered the bid invalid.
Defense Construction declared that it was just a clarification and accepted the bid.
Analysis
The appellant used the Ron Engineering, Supra case to conclude that there was a contracted formed between the owner and each of the tenderers. The contract was Contract A. Since there was a formal contract introduced, the breach by Sorochan Enterprises Ltd. for introducing a stipulation for their bid, in the form of an additional charge, and because Defense Construction accepted this non-compliant bid, the Contract A between the other tenderers was broken.
The appellant argues that because there was a formal invitation to submit a tender for a project, the rules and regulations set forth by Canadian Construction Documents Committee Guide to Calling Bids and Awarding Contracts are applied for this scenario. In order for this to have merit, a statement from M.J.B Enterprises, supra. stating,
“We certify that Tenders for trades named under (a) and (b) below were received through the Alberta Bid Depository Ltd., ... in accordance with the Standard Rules of Practice for Bid Depositories (Federal Government Projects) as required by this
Tender.” must be made within the submitted documents. A statement of this nature was not included into the tender package and therefore are not a valid argument.
The second argument made by the appellant was that in Contract A, the lowest compliant tender is to be awarded the contract. Based solely on the contractual obligations when entering into Contract A during the bidding process, the respondent is in violation of those obligations and had therefore breached Contract A. In this case, the privilege clause that was attached to the bid package must be looked at within the entire context of the tender process.
The privilege clause that was sent with the tender package to the bidders stated “The lowest or any tender shall not necessarily be accepted”.
When interpreting the privilege clause within the entire context of the contracts it complies “with the obligation to accept only a compliant bid” (). It does not comply with the responsibility to entertain the lowest bid.
Defense Construction had intended to only choose compliant bids, which was affirmed by a witness who was a part of the respondent’s organization.
The affirmation that the respondent was acting in good faith that the bid submitted by Sorochan was compliant was not a valid argument which would lead to having breached contract A with the next most qualified candidate.
The compensation which was to be awarded for the damages to prepare the bid, was negotiated prior to the start of the case. The damages were for the sum of $398,121.27, which they were awarded. Two other disputes were raised during the case, the cost of a supervisor, and the money the appellant had included in its tender for the purchase of type 2 backfill of value $229,456.89. These were remanded to the Court of Queen’s Bench of Alberta for determination.
The ruling on this matter of the owner choosing a tender which was in breach of the tender agreements between all bidders is correct. The winning bid had in fact broken the stipulations and regulations for the bid and therefore should have been rejected and the next lowest and compliant bid should have been chosen. The appellant is entitled to the damages of $398,121.27 for lost profits and compensation for costs of tender. As for the other two disputes, from a third party’s opinion and the facts from this case, there was never any stipulation to pre-purchase the Type-2 backfill prior to being awarded the contract, and therefore does not need to be compensated by the owner to the appellant. Background
In 1986 a tender was requested by the City of Edmonton (“The City”) to supply a fleet of equipment for the use at a landfill in the city. Since this 30 month contract was strictly to supply equipment, the tender package included many consecutive pages which outlined rules and regulation for compliance with the tender. There were six bids that were submitted for this contract. The two bids significant to this case were Sureway Construction (“Sureway”) and Double N Earthmovers (“Double N”). These were the third and fourth place bids, respectively. The two lowest bids were disqualified for separate reasons which do not pertain to the facts of this case. The appellant (Double N) sued the City of Edmonton for breach of contract.
Issues
The terms of the bids for this project were very well defined, all equipment was to be 1980 or newer and the bidder must provide the serial number and license registration number within the bid package. Failure to do so would result in the bid being non-compliant and discarded. The winning bid submitted by Sureway, included two pieces of equipment, the first was a unit manufactured in 1980, and the second was a rental that was written to be either 1977 or 1980. The issue at hand is whether The City awarded the contract to a non-compliant bid. The second issue that is under review is whether The City is obligated to review the compliance of each bid before awarding the contract. This arose because the respondent argues that they were not aware that the winning bid submitted equipment that were pre-1980 until after contract B was awarded.
This ties well with the third dispute, does awarding a contract B negate the obligations the owner has towards contract A with the remaining bids. Once Sureway was awarded the contract, the equipment was registered with the city which is when it was noticed that a 1979 dozer was being supplied by Sureway. The City did not pursue this matter forward.
Facts
The specifications and regulations outlined within the tender package were clear and in some instances repeated, such that the models must be 1980 or newer. Other terms included that the bidders be local, and there be a bid bond that was submitted along with the tender. The lowest two bids were rejected due to failure to supply a bid bond and not being a local contractor. Soon thereafter The City began negotiations with the next two lowest bids, Sureway and Double N to lower their rates for the scraper. Sureway had the lowest bid even after this was done and therefore was awarded the contract.
Double N suspected that Sureway did not own equipment from 1980 and confronted The City. The City gave the benefit of the doubt that since Safeway declared in the tender that they were supplying 1980 equipment that they would. Once work commenced The City required the registration of Sureway’s equipment, it was then noticed that neither Item 1 nor 2 was in compliance with the tender. The City and Sureway developed a memorandum stating that they would upgrade the equipment
Introduction:
Bid for tender was requested by Defense Construction to construct a water pump, and distribution system. Important specifications for tender were a lump sum price, and would submitted a unit price for the construction of the distribution system. Four bids were collected. The contract was awarded to the lowest bid, Sorochan Enterprises Ltd.
Issues:
Does the statement of privilege allow the owner to choose a bid other than the lowest even if it breaches the terms of the tender? Facts:
One of the tender documents was that the lowest bid or tender shall not necessarily be accepted.
There were multiple types of materials that could be used for the sub grade for installing the pipe, and the owner wanted to see only a single …show more content…
price for the pipe bedding. The amounts and type of sub grade was at the discretion of the engineer during construction.
Since Defense Construction is public, the tender was open for viewing. It was noticed that there was a handwritten document stating:
Please note: Unit Prices per metre are based on native backfill (Type 3). If Type 2 material is required from top of pipe zone to bottom of sub-base, material for gravel or paved areas, add $60.00 per metre.
Bid that were rejected complained that the note introduced a conditional requirements which rendered the bid invalid.
Defense Construction declared that it was just a clarification and accepted the bid.
Analysis
The appellant used the Ron Engineering, Supra case to conclude that there was a contracted formed between the owner and each of the tenderers. The contract was Contract A. Since there was a formal contract introduced, the breach by Sorochan Enterprises Ltd. for introducing a stipulation for their bid, in the form of an additional charge, and because Defense Construction accepted this non-compliant bid, the Contract A between the other tenderers was broken.
The appellant argues that because there was a formal invitation to submit a tender for a project, the rules and regulations set forth by Canadian Construction Documents Committee Guide to Calling Bids and Awarding Contracts are applied for this scenario. In order for this to have merit, a statement from M.J.B Enterprises, supra. stating,
“We certify that Tenders for trades named under (a) and (b) below were received through the Alberta Bid Depository Ltd., ... in accordance with the Standard Rules of Practice for Bid Depositories (Federal Government Projects) as required by this
Tender.” must be made within the submitted documents. A statement of this nature was not included into the tender package and therefore are not a valid argument.
The second argument made by the appellant was that in Contract A, the lowest compliant tender is to be awarded the contract. Based solely on the contractual obligations when entering into Contract A during the bidding process, the respondent is in violation of those obligations and had therefore breached Contract A. In this case, the privilege clause that was attached to the bid package must be looked at within the entire context of the tender process.
The privilege clause that was sent with the tender package to the bidders stated “The lowest or any tender shall not necessarily be accepted”.
When interpreting the privilege clause within the entire context of the contracts it complies “with the obligation to accept only a compliant bid” (). It does not comply with the responsibility to entertain the lowest bid.
Defense Construction had intended to only choose compliant bids, which was affirmed by a witness who was a part of the respondent’s organization.
The affirmation that the respondent was acting in good faith that the bid submitted by Sorochan was compliant was not a valid argument which would lead to having breached contract A with the next most qualified candidate.
The compensation which was to be awarded for the damages to prepare the bid, was negotiated prior to the start of the case. The damages were for the sum of $398,121.27, which they were awarded. Two other disputes were raised during the case, the cost of a supervisor, and the money the appellant had included in its tender for the purchase of type 2 backfill of value $229,456.89. These were remanded to the Court of Queen’s Bench of Alberta for determination.
The ruling on this matter of the owner choosing a tender which was in breach of the tender agreements between all bidders is correct. The winning bid had in fact broken the stipulations and regulations for the bid and therefore should have been rejected and the next lowest and compliant bid should have been chosen. The appellant is entitled to the damages of $398,121.27 for lost profits and compensation for costs of tender. As for the other two disputes, from a third party’s opinion and the facts from this case, there was never any stipulation to pre-purchase the Type-2 backfill prior to being awarded the contract, and therefore does not need to be compensated by the owner to the appellant. Background
In 1986 a tender was requested by the City of Edmonton (“The City”) to supply a fleet of equipment for the use at a landfill in the city. Since this 30 month contract was strictly to supply equipment, the tender package included many consecutive pages which outlined rules and regulation for compliance with the tender. There were six bids that were submitted for this contract. The two bids significant to this case were Sureway Construction (“Sureway”) and Double N Earthmovers (“Double N”). These were the third and fourth place bids, respectively. The two lowest bids were disqualified for separate reasons which do not pertain to the facts of this case. The appellant (Double N) sued the City of Edmonton for breach of contract.
Issues
The terms of the bids for this project were very well defined, all equipment was to be 1980 or newer and the bidder must provide the serial number and license registration number within the bid package. Failure to do so would result in the bid being non-compliant and discarded. The winning bid submitted by Sureway, included two pieces of equipment, the first was a unit manufactured in 1980, and the second was a rental that was written to be either 1977 or 1980. The issue at hand is whether The City awarded the contract to a non-compliant bid. The second issue that is under review is whether The City is obligated to review the compliance of each bid before awarding the contract. This arose because the respondent argues that they were not aware that the winning bid submitted equipment that were pre-1980 until after contract B was awarded.
This ties well with the third dispute, does awarding a contract B negate the obligations the owner has towards contract A with the remaining bids. Once Sureway was awarded the contract, the equipment was registered with the city which is when it was noticed that a 1979 dozer was being supplied by Sureway. The City did not pursue this matter forward.
Facts
The specifications and regulations outlined within the tender package were clear and in some instances repeated, such that the models must be 1980 or newer. Other terms included that the bidders be local, and there be a bid bond that was submitted along with the tender. The lowest two bids were rejected due to failure to supply a bid bond and not being a local contractor. Soon thereafter The City began negotiations with the next two lowest bids, Sureway and Double N to lower their rates for the scraper. Sureway had the lowest bid even after this was done and therefore was awarded the contract.
Double N suspected that Sureway did not own equipment from 1980 and confronted The City. The City gave the benefit of the doubt that since Safeway declared in the tender that they were supplying 1980 equipment that they would. Once work commenced The City required the registration of Sureway’s equipment, it was then noticed that neither Item 1 nor 2 was in compliance with the tender. The City and Sureway developed a memorandum stating that they would upgrade the equipment