Procurement law

Contract A, the negotiated RFP and other topics discussed during pre-conference seminar at SCMA conference

June 10, 2015
by By Michael Power

Paul Emanuelli SCMA 2015

Procurement lawyer Paul Emanuelli discussed Contract A and the negotiated RFP during a pre-conference seminar at the SCMA 2015 National Conference in Halifax. The Contract A construction is a uniquely Canadian construction, in which bidders are able to sue for lost profits if they’re not awarded a contract. It’s an arrangement that doesn’t really exist in other jurisdictions.

Contract A is formed when a request for proposal is responded to in the form of a valid bid. The owner is obliged to deal fairly and equally with all bidders and must not show favouritism or prejudice towards any bidders. The concept was introduced in 1981 by through the R. v. Ron Engineering and Construction (Eastern) Ltd. case before the Supreme Court of Canada.

“If we’re talking about major contracts, this is a huge risk,” said Emanuelli. For example, not all cases brought to court that dispute the fairness of the bidding process have merit, he told the audience. Frivolous claims end up costing money as well. In the US there are procedural remedies, and it’s possible to make changes.

Bid bonds also don’t prevent litigation, and actually represent how Contract A was formed in the first place, Emanuelli said. When asked, none of the session attendees had ever issued a bid bond, something that Emanuelli noted was legalistic and a confrontational way to do business.

Understanding Contract A
The jurisprudence in Canada recognizes that there are five implied fairness duties under Contract A that apply to the purchasing institution, Emanuelli said. Those duties are:

  • The disclosure duty
  • The duty to reject non-compliant tenders
  • The duty to run a fair process
  • The duty to award the winning bidder
  • The duty to award the contract as tendered

As well, Emanuelli noted that in 1999, the Supreme Court refined the Contract A legal analysis through its MJB v. Defence Construction decision by creating a four-part test to be applied when determining Contract A bid disputes. The analysis includes four questions:

  • Was Contract A created?
  • What are the terms of Contract A?
  • Was there a breach of Contract A?
  • Are there any damages flowing from the breach of Contract A?

But the focal point needs to be directed away from the legal process and back onto the business of purchasing goods and services, Emanuelli said. “I would suggest that at some point, the process took over the purpose,” he noted.