Courts regularly rule on calls for tenders. Let’s take a closer look at the legal principles governing calls for tenders, more specifically in rulings on bid compliance.

In the recent decision in Benoit Tremblay Entrepreneur général inc. c. Garage Martin Gaudreault inc.,[1] the Superior Court of Québec had to rule on an application for the annulment of the contract awarded to the second-lowest compliant bidder. The applicant also sought damages for lost profits.

The application is based on the contention that the lowest bidder made misleading statements. The key matter at issue was a discrepancy between the equipment set out in the bid and the equipment used to carry out the contract. 

The facts

In summer 2022, the Municipalité des Éboulements (the “Municipality”) launched a public call for tenders for snow removal covering a portion of its territory during the winters of 2022-2023 and 2023-2024.

Two businesses, the applicant and the respondent, bid on the tender. At the opening of tenders, the respondent was the lowest bidder and the Municipality awarded it the contract.

After the contract was awarded, the applicant’s representative contacted the Municipality. He suspected that since the respondent had already been awarded a snow removal contract by the neighbouring municipality, it would not have enough equipment to meet both municipalities’ tender requirements at the same time.

After endeavouring to obtain information about the respondent’s tenders for both municipalities, the applicant discovered that the respondent had acquired or leased equipment to be able to carry out this contract, whereas at the time of tendering, the respondent had included in its tender documents the equipment it used to carry out snow removal for the neighbouring municipality.

Deeming that the respondent had committed a civil fault and a deceptive manoeuvre, the applicant applied for the annulment of the snow removal contract, and made a claim against the respondent and the Municipality totalling $77,533.75, namely its lost profits for winter 2022-2023.

Representations of the parties

The applicant argued that the respondent had committed a civil fault by listing in its tender the registration numbers of snowplows already used the previous winter for snow removal in the neighbouring municipality. Since at the time of submitting its tender, the respondent did not own other snowplows compliant with the technical specifications, the applicant contended that the respondent had made a false and misleading statement.

The respondent, meanwhile, argued that the applicant had no standing to seek the annulment of the snow removal contract. The snow removal contract is the performance contract, Contract “B.” Once Contract “B” is entered into, the other bidders have no legal standing to apply for the annulment of a contract to which they are not party.

The Municipality held that the contract need not be annulled. It contended that it had upheld the principles of fairness between bidders.

Decision

In his testimony at the hearing, the respondent’s representative clarified the situation with his company’s equipment.

He stated that the tender schedules did list the two snowplows used the previous winter for the snow removal contract of the neighbouring town. However, he never intended to use those trucks for the contract at issue, which is why he first rented a truck and, after submitting his tender, acquired another truck.

In short, the trucks used to carry out the contract were not those set out in the tender, but rather trucks leased and/or purchased after the tender was submitted.

The Court had to rule on whether the respondent’s  tender was compliant.

The Court first referred to the tender requirements:

[Translation] The required equipment, namely the two (2) snowplows, must, in accordance with section 12, be in the bidder’s possession at the time the tender is submitted, and the bidder must provide the list of equipment with the serial numbers and the registration and insurance certificates.

The Court found the respondent’s tender to be compliant: it had provided the schedule and the required information, it owned the equipment at the time the tender was submitted, and the equipment complied with the technical requirements of the tender specifications.

The Court also found that the respondent was not prohibited from substituting the equipment while performing the contract, provided the requirements of the specifications were met at the time of tender. Moreover, the Court noted that it ought not interfere in the management and organization of the tendering entity when analyzing the compliance of a tender.

In essence, the applicant failed to show that the respondent made a misleading statement. As a result, there was no fault within the meaning of article 1457 C.C.Q. The claim for damages was dismissed. The Court also confirmed that the applicant had no legal standing to seek annulment of the contract, as it was the performance contract, Contract “B.”

Conclusion

In summary, the Court reiterated that some leeway must be afforded when analyzing whether a tender is compliant. The Court also noted that a bidder other than the successful bidder has no legal standing to apply for the annulment of the performance contract.

[1] Benoit Tremblay Entrepreneur général inc. c. Garage Martin Gaudreault inc., 2024 QCCS 4550.