Review of the Significant Canadian Federal Government Contracting Cases in 2016

All procurements in Canada are, at common law, founded on the principles articulated in the Supreme Court of Canada decision in The Queen (Ontario) v Ron Engineering.¹ Ron Engineering introduced the concepts of “Contract A” and “Contract B” into Canadian procurement law. The Court in Ron Engineering held that when a call for tenders is issued, this constitutes an offer, and when a compliant bid is submitted by a potential supplier, this constitutes acceptance and a unilateral contract (Contract A) is created at that moment. This gives rise to binding obligations on the Crown, including the implied duties to conduct a fair competition, to award the contract to the winning bidder, and to award the contract as tendered. Finally, by submitting a bid, the potential supplier is accepting the terms of the bid solicitation documents. Contract B is formed between the purchaser and the successful supplier once the winning contractor is selected. A breach of any of these implied duties under Contract A may give use to civil action in damages by the unsuccessful bidder in the courts.

Notwithstanding this procurement regime at common law, Canada’s federal bid challenge regime falls under the jurisdiction of the Canadian International Trade Tribunal (“Tribunal” or “CITT’). This quasi-judicial regime applies to some, but not all, of the purchasing undertaken by the federal government.

The Tribunal conducts inquiries into complaints by potential suppliers considering federal government procurements that are covered by the North American Free Trade Agreement (“NAFTA”), the Agreement on Internal Trade (“AIT”), and the Revised Agreement on Government Procurement.

Where a complaint is upheld, the Tribunal generally makes recommendation for appropriate remedies. These recommendations can be far reaching and can significantly impact the affected parties. These may range from recommendations for re-evaluation of bids or a re-tender of the requirements after the Crown has made appropriate changes to the solicitation documents, to recommendations for payment of bid preparation costs or lost profits, or payment of compensation for lost opportunity to profit on a contract. The Tribunal may also recommend that a contract awarded pursuant to a flawed process be terminated and that the contract be awarded to the complainant.2

Click here for an overview of some of the more significant recent cases.