ONTARIO TO END VACCINE CERTIFICATE PROGRAM

In a widely anticipated move, Premier Doug Ford is scrapping the vaccine “passport” program that has been in place in Ontario for the last several months.  

“The extraordinary measures that we introduced during this pandemic were always intended as a last resort. I stood at this very podium and promised you that these tools would only be used for as long as they were absolutely necessary and not one day longer. The removal of these measures has always been our objective,” announced Ford. 

Government officials state that as “public health indicators”  improve, and as other jurisdictions around Canada and the world move in similar directions,  it makes sense to accelerate steps to lift restrictions. 

For instance, this Thursday, “social gathering limits” mandated by the Ontario government will increase to 50 people indoors and 100 people outdoors. Further, all capacity limits will be eliminated in restaurants, bars, gyms, movie theatres and other similar locations. Capacity limits will be extended in grocery stories, pharmacies and retail stores. On March 1, all remaining capacity limits will be lifted in remaining indoor public settings, along with the removal of the vaccine passport.  

For employers, this means the return to normal is fast approaching in Ontario. It is assumed that private employers will have their own set of rules depending on their circumstances, but it may be a good idea to scrap any programs in place for mandatory testing of employees, or the need for employees to be vaccinated as a condition of employment. Further, when the mask mandate is lifted, it would be prudent to make masking optional at your place of business. You will still need to follow all OHSA related guidelines, and differing rules may be in place for differing circumstances, such as if you’re contracted to work at long term care homes or in medical settings.  This is a rapidly changing situation, and we will update you with guidance as we receive more information. 

 Written by Jeremy Power, a lawyer in our Toronto office

CONTROLLING CUSTOMER EXPECTATIONS THROUGH CONTRACTS

The rule of thumb in construction is that one out of every 20 customers will be problematic. The issues could be as simple as a customer not being satisfied with the roof installation or it could involve a dispute regarding payment. Although customer service is always the first line of defense, it is important that roofing contractors review and update their contracts on a yearly basis. Often, contractors treat their contracts like a will, and unfortunately, they decide to review their contracts when it is too late. The purpose of this article is to help ROOFING contractors issue-spot potential problems through provisions in their contracts.

The majority of disputes that arise in construction are a result of the failure to specifically identify the scope of work. Roofing contractors do a decent job in describing what will be installed but often fail to account for work that is not being performed or for extras that may occur on the job. For example, while a contractor is installing a tile roof, the might architect requires that the tilework be reinstalled to account for a previously unidentified problem with the deck. The contract should contain a provision that would either allow the contractor to seek a change order or otherwise identify a time and materials basis for the extra work duct work.

Similarly, one complaint that we often hear from roofing contractors is additional permitting charges that are incurred because the homeowners are not present for the final inspection. This can easily be resolved by adding a provision in the contract that states that: “Customer agrees to be available for any/all inspections by the permitting authority. In the event that the customer is not present, customer agrees to pay any/all additional charges associated with obtaining any/all required inspections.”

One of the things that we routinely advocate is the old saying “An ounce of prevention is worth a pound of cure.” It is important that any contractor’s contract provides for notice and an opportunity to cure any potential defects in its workmanship. Although Rule 16.06(2) of the Rules of Civil Procedure, R.R.O, 1990, Reg 194 provides a statutory opportunity to cure which is pertinent to notice disputes such as this, it is still important that the contractor also put similar language in its contract so that it can rapidly respond to potential issues.

Generally, a simple notice provision will provide the contractor with the required notice necessary to inspect and possibly remedy any potential defect in a timely manner. The notice provision usually has two parts: 1. the customer must provide the roofing contractor with written notice of any defects or claims within a certain amount of time; and 2. if the customer fails to provide that notice within the required amount of time, it waives the ability to seek damages for those defects/claims. A provision such as this will allow the contractor to obtain timely notice, and if the customer fails to give notice, the provision will provide the contractor with a defense to the customer’s claims.

This provision could be especially useful when the roofing contractor may be facing a water damage claim. If the contractor has the opportunity to investigate and remedy any water damage prior to it spreading, then obviously it will be able to control the amount of damages that are caused. However, if the customer waits too long, the water may spread to other areas, cause mold, etc.

Finally, one issue that comes up frequently is the use of substitute parts. As most of you know, manufacturers may make the same unit that is labeled differently. It is important to add a provision in the contract that says that the contractor is entitled to use substantially equivalent materials provided that all workmanship and manufacturer warranties continue to be honored.

By taking the time to review your contracts and address past customer complaints in your contracts, roofing contractors will be able to anticipate and possibly eliminate future problems that may occur on a job.

Written by Jeremy Power, a lawyer in our Toronto office

DAMAGES FOR DELAY

2022 is shaping up to be a mixed bag for the construction industry. The uncertainty and panic surrounding COVID-19 and its ancillary effects are subsiding or largely have already, being replaced with the daunting realization that project delays could be with us for quite some time.

In 2020, COVID-19 contributed to suspension of work and closure of construction projects all over the world, and throughout 2021 additional delays were caused by a seemingly endless clog in the supply chain of construction materials. Together, the impact of these events on project milestones and completion deadlines have led our clients to ponder who is liable for these delays and how do the contracting parties ease the consequences from such unprecedented delays.

Obviously, project delays are not a new phenomenon – they were common enough before COVID-19 and its associated impacts on the economy. Delays, whatever the source, inevitably cause loss to all stakeholders on a construction project. But not all delays matter when it comes to claims and remedies available to the contracting parties in dispute resolution, where the main focus is on material delays impacting the entire project and on delays the claimant can credibly prove.

Most jurisdictions interpret actionable delays from the contract documents for the project. Without question, reviewing the contract is where one should start before pursuing any remedies for delay. Delay remedies might only buy you extra time, or a time extension plus your additional general conditions, should they be outlined in the contract. Some forms of delay remedies may be barred by the contract’s express terms and may be enforced adversely by the courts when such contract terms are indisputable. Conversely, delay damages that are contractually allowed, such as overtime required by the delays—are usually actionable and recoverable. However, not only the contract terms, but applicable state law, may affect the outcome.

There are other delay remedies that may not be expressly allowed by the contract but may be recoverable if they occurred on the “critical path” of the project schedule and were not caused by the claimant. The term “critical path” is familiar enough as an industry term but is often mistaken as a determinative legal principle.

Therefore, it is imperative to distinguish your burden of proving a material and compensable delay from the critical path methodology. The methodology behind critical path is one way of demonstrating that the delay is actionable, and ideally with testimony from an expert with contemporaneous evidence displaying the impact on the overall project schedule completion date.

Critical path is not all you will need – causation is a key legal element that must be proven along with facts establishing delays on the critical path. A compensable delay is usually a delay caused by someone else on the project, so a contractor cannot cause its own critical path delays and credibly prove it is entitled to delay damages. For example, if the contractor was carelessly late in ordering its materials, the contractor will have a much harder time proving that supply chain complications were to blame for blown completion dates on the critical path. Additionally, a project owner that fails to implement or require a safety protocol for protection of all project personnel from COVID-19 would not be able to prove it was really the contractors who caused an outbreak and then keep the project shut down ad infinitum.

These standard guidelines governing delay claims depend equally upon diligent and timely documentation of the delay. Communication must be in writing confirming the causes of delay and consequences should be contemporaneous and immediate. Delay documentation should also be both detailed and timely enough to put key stakeholders on notice that the delay will impact the critical path, further citing specific contractual provisions that trigger available remedies for the delays. On the other hand, after-the-fact and imprecise documentation of the delay carries almost no sway with judges, juries, and arbitrators and tends to suggest that the delay is neither material nor actionable. Proving a material and actionable delay, therefore, always requires favorable contractual terms, critical path impact, favorable law, and believable documentation demonstrating timely notice and no fault for the delay.

Written by Jeremy Power, a lawyer in our Toronto office

FINANCING CONSTRUCTION PROJECTS – PART ONE

Introduction

Anybody who has visited Toronto in the last 10 years will be able to tell you there is one overarching thing they have noticed about the city – lots of construction. It is no different as a construction lawyer practicing in Toronto, where it is impossible not to notice the hundred of builds sprouting all over the city and outer suburbs, both on paper and just by looking around. Increasingly, many of my contractor clients have been getting in on the game, trying to get a piece of the pie as it were rather than just baking it. But how?

To start the new year, we here at Cotney Canada are going to provide a general overview of how financing construction projects works. Some of the issues can get a little complex, but as always we are here to help navigate.

The Basics

Everyone knows construction projects can be immensely complex and as a result, expensive. And on thing that differentiates the financiers of a construction project from the builders is that the builders get paid immediately, whereas the financiers collect after the project is complete. For example, let’s say in the case of a commercial leasing development, the developer will incur costs involved with developing and building the project before it realizes the revenue stream from rents. Costs during the construction period will include payment to the contractor for the build, various other development charges and expenses, and soft costs such as fees and expenses of third-party advisors and consultants. From a developer’s perspective, ensuring that there is sufficient funding available to cover these costs is an essential precondition to getting the project off the ground. Further, contractors and other major project participants will also want assurance that the developer has the financial ability to sufficiently cover all project costs prior to committing their own resources to the project and incurring potential liabilities to subcontractors and other third parties. Financing is therefore a very important part of the construction business. As they say – money makes the world go round.

The Options

Any number of construction financing options are available to developers. In the simplest case, a developer could simply undertake and pay for a project out of their own resources, such as through cash reserves or proceeds of shareholder equity. However, while this simple example may work on a one-off basis, from a realistic perspective, it will be rare that developer undertakes multiple complex projects on a self-financed or “boot-strapped” basis. From this standpoint, other potential avenues of financing may be considered by developers, and there will likely be a host of creative financing options in the marketplace for a sophisticated developer. That being said – our series on construction financing will primarily focus on the main avenue for financing – the construction loan – and it’s associated advantages and disadvantages.

Written by Jeremy Power, a lawyer in our Toronto office

Supply Chain Issues Linger, Causing Headaches for Canadian Construction Industry

Almost two years into the pandemic, COVID-19’s impact on the construction industry’s supply chain, particularly for equipment and materials manufactured overseas, are still causing major problems. Adding to the supply chain issue is high demand and limited domestic manufacturing capacity resulting in an unprecedented degree of interruption to residential and commercial construction in particule. 

From steel to resin to roofing materials, shortages of key materials have driven up prices and, when combined with persistent labour shortages, contributed to delays and higher construction costs. Labour shortages are being addressed however, with Quebec most recently announcing $3.9 billion over the next five years to address the labour shortage in the province in the hopes of requalifying and attracting 170,000 workers in certain priority sectors. We can only hope other provinces follow their lead. The current pain felt by contractors and consumers alike, however, may be short term. 

It boils down to COVID. If we assume that in the spring – variants notwithstanding – that things go semi back to normal (a big ask), there’s no reason to believe that the supply chain issues will be with us for years. Until then, economists warn that problems with supply and higher prices for some goods will continue. They also note that the current troubles might encourage some creative approaches to procurement and encourage existing pre-pandemic logistical trends, like sourcing goods a little closer to home. 

Crowded ports all over the world, stranded shipping containers, particularly in the ports of Southern California, and limited manufacturing capacity (because of labour shortages and Covid protocols) are all working to create a sluggish pace of delivery for some materials. The massive increase in demand for housing and improvements has compounded all these issues. Demand for new residential construction is producing competition for materials, like prefabricated steel products, that have lately become scarce. 

The most recent flash estimates of the Industrial Product Price Index (IPPI), released by Statistics Canada earlier this month, reflect the real-world shortages felt on construction sites. The cost of fabricated metal products and construction materials were up 3.3% in September over August, and up a whopping 28.5% from the previous year. 

Plastic and rubber products were up 10.5% year-over-year; Cement, glass and other non-metallic mineral products were up by a relatively more modest 6.7%. One bright spot was lumber, whose price has been sliding steadily in the second half of 2021 after historic highs (and frustrating shortages) that began shortly after the pandemic did. Statistics Canada puts the August to September drop at 2.5% and the year-over-year drop at 6.3%. 

Still, the increased cost of other goods is driving up overall costs, a situation perhaps made worse by high fuel prices. Energy and petroleum product prices in September 2021 are up 60.6% from a year ago. 

So, what is a contractor to do about all this? Ensure your contracts are airtight with regard to materials pricing and try to squeeze in substitution of materials provisions wherever possible. As always, please reach out to us for assistance with any construction related dispute because of these unprecedented times.  

Written by Jeremy Power, a lawyer in our Toronto Office

Procurement and Tendering Process: Part Six

In the 6th article in our series on the procurement and tendering process, we examine how bidders can conduct efficient and effective due diligence prior to responding to an RFP.

Objectives

Prior to responding to the RFP, a prospective bidder will want to ensure it has had all access to all relevant information. It will want, in other words, to have conducted its own due diligence regarding procurement. The goal of the bidder’s due diligence it to enable it to decide whether to bid on the procurement opportunity, on what terms and at what price. This process will assist the bidder in determining the value of the proposed transaction, identifying the issues that needs to be addressed in the negotiation of the definitive agreement, and developing positions, if appropriate, for negotiation of the definitive agreement. IN the absence of any contractual terms, the burden on the owner will be to provide relevant information and take steps to be satisfied that the information which is made available in the data room is generally accurate. However, many procurements will impose a due diligence process on the bidder, at least in respect of aspects of the procurement, including issues such as design, site conditions, and so forth. This thereby imposes a burden on the bidder to “satisfy itself” in respect of the information.

Representations and Warranties

Permitting a bidder to satisfy itself is to be contrasted with relying on owner representations and warranties in the procurement agreement. A representation and warranty is a statement made by a party to a contract that a certain fact, circumstance, or even it accurately represented in the contract. If the owner is giving the representation and warranty (as in, making the statement on the basis that it is true and can be relied upon as being true), the onus shifts to the owner to ensure its accuracy and truth.

It is common for the owner to attempt to limit the extent to which it will give representations and warranties. From the owner’s perspective, this has the desired objective of “shifting the risk” to the bidder, but it may come at a cost. The additional risk being transferred to the bidders may result in bidders factoring into their pricing a contingency for the “unknown” part of the risk they are taking on. This risk can be reduced through due diligence but cannot be eliminated.

In considering the extent to which the owner should give representations and warranties, a distinction should be made between representations and warranties of a factual nature and those of a qualitative nature. For example, it is usually not onerous for the owner to represent and warrant that:

  • The assets to be transferred to the bidder are as set out in the list appended to the RFP;
  • The employees to be transferred to the bidder are as set out in the list appended to the RFP; or
  • The contracts to be assumed by the bidder are as set out in the list appended to the RFP.

It is more difficult for the owner to give representations and warranties that require an evaluation or judgment:

  • All of the contract being transferred are in good standing and neither party thereto is in default, and there is no event or circumstance that has occurred which would result in such contracts being in default,
  • The assets are in good operating condition and fit for the purpose for which they are intended to be used, reasonable wear and tear excepted; or
  • The employees being transferred are the only employees the bidder will need to perform the contract.

These representation and warranties are typically negotiated in that the party giving the representation will try to qualify them or limit them and the party who is the recipient of the representation will try to keep them as broad and unqualified as reasonably possible.

The more judgment or evaluation that goes into the representation, the greater the risk of liability if the judgment or evaluation is wrong. Parties will mitigate this risk, for example, by making any judgment representations subject to qualifications such as “to the best of the owner’s knowledge” or, limiting the period of time that the owner would be at risk of a claim in the event such representation proved to be untrue.

In the construction context, this issue arises in respect of such things as subsurface site conditions, any environmental concerns, existing building materials, or in a renovation or tenant improvement. While some of these concerns are addressed in the CCDC documents, not all of them are. Therefore, it is on owners and contractors to carefully review contractual language with their counsel to ensure the optimal risk allocation is accurately reflected.

Next time, we will look at the timing and extent of due diligence, and best practices for organizing your due diligence for a bid.

 

Written by Jeremy Power, a lawyer in our Toronto office.

Non-Competes No More In Ontario

The Government of Ontario has introduced a new law that seeks to amend a series of provincial employment laws, promising to give employees within the province new and novel legal rights.  

The legislation, called Bill 27: Working for Workers Act, 2021 includes proposed amendments to various pieces of employment-related legislation as we discussbelow. The proposed changes stem from recommendations made by experts on the Ontario Workforce Recovery Advisory Committee.   

If Bill 27 is passed, amendments to the Employment Standards Act, 2000 will include the following: 

Banning Non-Competes 

Employers will be prohibited from entering into non-compete agreements with their employees. Non-compete agreements are intended to prevent employees from pursuing other work opportunities that are in competition with their previous employer's business after the termination of employment (e.g., 12 months following the end of employment). Though not overly common in the Roofing industry, non-competes have become more ubiquitous in recent years. The amendments will not prohibit: (1) an employer from prohibiting an employee from competing with the employer's business during employment; or (2) the use of a non-compete agreement tied to the sale of a business.

The amendments will also not prohibitan employer from protecting their confidential information, intellectual property and client relationships through the use of narrower clauses, including non-solicitation clauses prohibiting the solicitation of employees and customers.

As it is currently drafted, the prohibition on non-competes appears to be effective as of October 25, 2021 and does not affect non-competes already in place. 

Disconnect From Work Policy  

Employers with 25 or more employees (as of January 1 each year) will be required to develop a “disconnecting from work” policy by March 1 of that year. This policy will relate to the practice of not engaging in work-related communication such as telephone calls or emails, past a certain hour of the day, in order to allow the employee to be free from the performance of work. The details on the information to be included in the policy will be included in a Regulation that has not yet been released.

The policy will be required to be in written form and a copy of the policy will need to be provided to all employees within 30 days of the preparation of the policy. An employer will also be required to retain a copy of every written policy on disconnecting from the workplace for three years after the policy ceases to be in effect. It is likely there will be several exemptions to this policy for certain industries, including construction. 

Licensing Requirements 

Temporary help agencies and recruiters will be prohibited from acting as such without first procuring a license from the Director of Employment Standards. The amendments will also prohibit persons or companies from using the services of an unlicensed agency or recruiter.

Licenses will have to be renewed yearly and will be non-transferrable. A public database that lists all active, revoked or suspended licenses will also be available.

The amendments also include a prohibition against any possible act of reprisal by a recruiter against an employee due to an employee complying with the Employment Standards Act, 2000 or asking that a recruiter do the same.

The government's press release indicates that this portion of the Bill may not come into effect until 2024. 

The proposed amendments to the Workplace Safety and Insurance Act, 1997include the following: 

  • Surpluses: The Workplace Safety and Insurance Board (WSIB) will be permitted to distribute surpluses in its insurance fund among Schedule 1 employers in order to alleviate some of the impacts of COVID-19. 
  • Streamlining Services: WSIB will be permitted to work with entities like the Canada Revenue Agency in order to streamline remittances for businesses. This will allow businesses to have a more efficient way to submit premiums and payroll deductions. 

A notable amendment as pertaining to the construction industry regards internationally trained professionals. Regulated professions will be prohibited from including a “Canadian experience” requirement as a qualification for an internationally trained professional to obtain a license to practice in the profession. Certain exemptions to this prohibition are included for public health and safety reasons.  

Conclusion 

Many employers have historically included non-competition provisions in their standard employment agreements in an effort to protect their business, understanding that given case law there was a risk a court might not enforce the non-compete. Employers should review their template employment agreements to consider whether they will continue to use non-compete clauses. Although Bill 27 has not passed and therefore is not yet the law, it is likely to pass given the majority government in Ontario and the effective date for the prohibition on entering non-compete agreements would then be October 25, 2021. In addition, employers may want to review and update their non-solicitation provisions to ensure they are likely to be enforceable and may provide some protection in the absence of a non-compete.  

Employers with 25 or more employees may wish to begin considering what any “Disconnect From Work” Policy could look like for their organizations. Some employers already have policies about after-hours communication, but for those that do not, if Bill 27 passes, it may require a cultural shift in the organization's approach to after-hours work and early consideration by management will make the transition smoother. 

 

Written by Jeremy Power, a lawyer in our Toronto Office

The Procurement and Tendering Process: Part Five

In the 5th iteration of our procurement and tendering process, we take a look at how to evaluate the RFP opportunity and prepare a successful response. In Part 6, we will look at this in more detail, such as how due diligence should be conducted on behalf of the bidder.

Information Exchange During the RFP Process

The ability of all potential bidders to receive and review the information is critical to an informed and responsive bid and a fair process; therefore, no one bidder should be advantaged by receiving specific information that was not available to the other bidders. This helps ensure a level playing field and avoids potential complaints and disputes about the procurement process. To this end, many RFPs provide that failure to adhere to the communications requirement is grounds for disqualifying the bidder.

Another important part of evaluating the opportunity is bidder due diligence. The RFP usually has a communications section dealing with the process under which bidders can make enquiries. Typically, the RFP establishes a single point of contact as well as a process for dealing with responses so that each of the bidders has access to all of the responses that have been given to enquiries made.

Nonetheless, a successful response to an RFP starts with a thorough understanding of its requirements. While the observation is overused, understanding starts with reading the RFP. The RFP documentation must be read over and over again in detail  by the bidder’s project team and its professional advisors.

Confidential Enquiries

RFPs sometimes include an enquiry procedure that allows the bidder to specify its enquiry as “confidential” or “proprietary” versus “non-proprietary”. Confidential enquiries are used when the nature of the bidder’s question is such that the bidder feels that it would not be appropriate to disclose its question (and possibly the owner’s response) to its competing bidders, as this might put the bidder at a competitive disadvantage (or obligate it to share an advantage) or require it to disclose proprietary or confidential information that would not be appropriate for competing bidders to see.

Attend Bidder Information Meetings

A bidder information meeting is an efficient way to for the owner to exchange information with all bidders. It also provides an opportunity for bidders to obtain additional clarification or information for preparing their response. Here, the RFP will specify the process for submitting questions to be answered at the meeting in order to help the owner ensure that the appropriate persons are available to answer the questions. As well, the RFP should specify whether the information sessions is mandatory or optional. The RFP may also specify the number of individuals from each bidder that can be in attendance and the process for notification of who will be attending. This may be helpful where there are a large number of bidders and capacity and time constraints exist.

Written by Jeremy Power, a lawyer in our Toronto office

The Procurement and Tendering Process: Part Four

In Part 4 of Cotney Canada’s series on the procurement and tendering process, we take a look at final four items to be aware of before an RFP opportunity is evaluated and a response is prepared, which we will examine in more detail in Part 5.

Specific Rules and Restrictions

Depending on the particular procurement, the RFP may include provisions that specifically seek to limit the owner’s obligations arising from Contract A or from a flawed tender process. For example, these provisions, such as privilege clauses or limitations of liability, may specify that no representation is made as to the accuracy or completeness of any data in the RFP and that the bidder has the onus of verifying such data. The RFP may also provide that the bidder is not entitled to compensation from the owner for any time, effort, or expense in preparing its bid. Furthermore, the owner usually reserves its right:

  • Not to award any contract at all;
  • Not to award the contract necessarily to the lowest-priced bidder (but rather to the bidder offering the “best value”);
  • To conduct negotiations with one or more bidders in the event that the negotiations with the first bidder are unsuccessful;
  • To conduct a survey of potential bidders to obtain clarification of their proposals as part of the evaluation process;
  • To cancel and reissue the RFP; and
  • To extend any deadlines and amend the procurement process.

While such clauses are typically stated quite broadly in RFPs, they do have limits. The Supreme Court of Canada has held that those who issue tenders for construction work with the clause that “the lowest or any tender shall not necessarily be accepted”, cannot use it to accept a non-compliant bid over compliant bids. This does not mean one should not place close attention to the RFP and its terms, as this is crucial to a successful procurement.

Qualifications

The RFP may also specify the technical qualifications required of prospective bidders. These are often a confirmation of the qualifications outlined in the RFQ relating, generally, to the same provisions: financial history, managerial experience, claims history, and workplace and safety compliance. Depending on the type of procurement and the goods and services to be supplied, there may also be regulatory qualifications. These could include requirements to hold certain licenses or that relate to safety and security clearances for the bidder’s premises or personnel.

Consortium Agreements

If it is anticipated that the bidder will be a consortium, then the RFP may require an executed copy of the bidder’s joint venture agreement. Such an agreement will specify the establishment and mandate of the consortium; how the business of the joint venture will be structured, managed, and financed; and who will be the bidder’s key contact with the owner. The owner may require financial information, shareholder status and other relevant information from consortium members.

Developing a Short List

The owner may want to reduce the number of bidders at either the RFQ or the RFP stage. The advantage to the owner is generally that a shorter list of bidders means that those left are more likely to invest more time and money into their bids because the chance of success goes up with fewer bidders.

During the RFP process, a short list of successful bids allows the owner, who will select a preferred bidder, to have an alternate on hand should a satisfactory contract not be reached with the first bidder. Having an alternate may also make the first-place bidder more amenable to an owner’s desire for better pricing or creative “value-engineering”.

However, the short-list process is usually used only on large-scale contracts. In most circumstances, the owner and winning bidder go straight to the contract finalization phase after the owner has evaluated the bids.

Written by Jeremy Power, a lawyer in our Toronto office

Procurement and Tendering Process: Part Three

The final step in the process of gathering information from bidders is the RFP and is the key document in the procurement process. It outlines the scope of the project in detail, provides evaluation criteria for selecting a successful bidder, typically including a points system; outlines the business and legal issues in the project; provides, if appropriate, the draft contract to be signed by the successful bidder; and will provide the rules of the selection process. A well-structured and well-organized RFP ensures that the procurement process is clear, accurate and fair to all bidders. It provides an efficient and effective tool for communicating to multiple potential suppliers all at one time. It will also answer many of the potential bidders’ questions and reduce the amount of administrative time the owner is required to devote to answering such questions.

Understanding the rights and obligations arising from an RFP can be crucial, as its terms will govern the legal relationship between the owner and the bidders until and unless the subsequent contract for the construction of the project is finalized. Legally speaking, it is owner’s draft of Contract A. Part 3 and later Part 4 of our series on procurement and tendering therefore outline the key legal and business issues surrounding the RFP.

Delivery and Timing of RFP Response

An important aspect of any RFP is setting out the terms and conditions for the bid procedure. This includes the delivery requirements, such as the time for deliver of the response, the address for delivery, the number of copies, the language of the response and any other special delivery details. One of the fundamental principles for any RFP is the requirement that the bid be submitted on or before a specified time. The RFP should contain an express provision that any bid delivered after that time is disqualified and will be returned unopened. Many RFPs also contain a provision that prevents bidders from forwarding supplementary material for consideration after the deadline or supplementary material for consideration after the deadline. The acceptance by the owner of a bid that has missed the deadline or supplementary material can lead to a dispute and a potential legal wrangle. In addition, the receipt of supplementary material also interferes with the timeliness of the procurement process, since the supplementary material would then have to be evaluated and that bid reassessed. An RFP should also have a provision indicating how long a bidder’s offer must remain outstanding for consideration by the owner. The RFP also usually contains a timetable that the owner hopes to follow in the procurement process. There is no “standard” timetable so this should be negotiated carefully.

Bid Format

The RFP should also specify the prescribed format for the response, such as whether the bid may be submitted electronically and, if large numbers of copies are required, the designation of a “master copy”, which would be deemed the “official” bid proposal. In designing the prescribed format for the response, the owner should attempt to solicit bids that may be easily compared and evaluated. It may also provide template forms to bidders to assist in ensuring a more uniform and, therefore, a more easily assessed response from bidders.

Written by Jeremy Power, a lawyer in our Toronto office. This article is not legal advice and should not be construed as such.