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ding mark g; 2) trucda. itted rice, make tract oject it of ocess A, in oject quest ould hich ning uled eted orms sion t be the tion uded said, not ified price ctice dity e on PROCUREMENT |21 and accompanying details, which the owner accepted. M.J.B., the next-lowest bidder, launched an action on grounds the alternative price made the Sorochan bid non-compliant and therefore ineligible. The Supreme Court ruled that it is an implied term of all tenders that only complying bids will be accepted and that Sorochan, by submitting an alternative arrangement, did not comply with the terms of the tender. M.J.B. has been read to mean that Contract A can only be formed with compliant bidders, only compliant bids can be accepted and that only compliant bidders have legal recourse. The SCC added that "nuanced" bids can be considered and lowest bids can be rejected. But it's clear that reasons for awarding a contract to someone other than the lowest bidder must be based on specific terms clearly disclosed to all bidders in the original tender/RFP. Martel is the most complex of the big three cases. Martel Building Ltd. owned an office building and leased space to the federal Department of Public Works. As the lease approached expiry the two parties entered into negotiations for its renewal, as contemplated in the original contract. Public Works suggested terms for renewal and Martel used those terms as the basis for an offer. Public Works rejected the offer and called for tenders and, although Martel made the lowest bid, "PROCUREMENT DEPARTMENTS ARE OFTEN SEEN AS OVERLY BUREAUCRATIC AND THEY'RE OFTEN UNDER SIEGE." Public Works eventually accepted a proposal from another bidder. Martel sued for breach of contract, breach of duty of care and breach of duty to negotiate in good faith. For a variety of technical reasons, the Supreme Court ruled that Martel's case failed in all its particulars. The Court found no duty of care in the preparation of tender documents, and also that such a duty would be inconsistent with the rationale of tendering, which it said is "to replace negotiation with competition." But the Court went on to say that tendering carries with it the implied duty that the project owner will be "fair and consistent in the assessment of tender bids" and that "a privilege clause reserving the right not to accept the lowest or any bid does not exclude the obligation to treat all bidders fairly." Martel has been widely taken as saying that the competitive bidding process and any kind of negotiation are mutually exclusive. It establishes tendering as a take-it-or-leave-it process in which bidders accept RFP terms as a condition of bidding and owners select a winner based solely on those terms, allowing no changes to bids once they're submitted (except in cases where changes are allowed as a specification of Contract A). Ira Berg and Carla Salzman of Goodmans LLP spend a good deal of their time drafting tender/RFP documents for various departments of the Ontario Government. They say Lexpert®Ranked Lawyers Katz, Warren M. Keizer, Charles Kelsall, Brian C. Kierans, David B. Kirsh, Harvey J. Koval, Patricia A. Stikeman Elliott LLP (514) 397-3260 wkatz@stikeman.com Torys LLP (416) 865-7512 ckeizer@torys.com Fasken Martineau DuMoulin LLP (416) 865-5493 bkelsall@fasken.com Glaholt LLP (416) 368-8280 hkirsh@glaholt.com Torys LLP (416) 865-7356 pkoval@torys.com Mr. Katz, a member of the firm's Corporate Group, specializes in complex cross-border M&A for public and private companies and investment funds, public offerings, private placements and going private transactions. Mr. Keizer's domestic and international infrastructure and energy practice focuses on administrative and corporate/commercial law in the energy sectors, and includes project development and regulatory matters for sector participants. Gowling Lafleur Henderson LLP (514) 392-9551 david.kierans@ gowlings.com Mr. Kirsh is an arbitrator, mediator and litigator with experience in resolving complex construction claims arising out of domestic and international infrastructure, energy, mining, transportation, industrial, commercial and institutional projects. Ms. Koval practises in corporate finance (including investment funds), securities, M&A and governance. She has 20 years' experience with REITS, including domestic and cross-border IPOs, financings, management internalizations and mergers. ment ional ROB-Infrastructure.indd 21 Mr. Kelsall focuses on domestic and international project finance with an emphasis on infrastructure and PPPs, including the Windsor Essex Highway, Pan Am Athletes' Village and the Colorado/US 36 Highway. He represents lenders, sponsors and investors. Mr. Kierans practises in corporate and commercial law with particular emphasis on secured lending, real estate acquisition and finance, asset-backed and project financing. His experience includes energy generation projects and P3 project finance. 13-08-06 10:14 AM

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