Author: Nicolas Roche

There are few decisions where a court orders a public sector organization to compensate the lowest bidder whose bid was dismissed in a public tender process.

Nevertheless, this is the conclusion that was reached by the Superior Court in Groupe Atwill-Morin inc. v. Defence Construction Canada[1].

Context

In January 2018, Defence Construction Canada, a federal governmental corporation, issued a public tender for the repair of roofing, masonry and soffits of its Saint-Jean Garrison.

Defence Construction Canada included in its call for tenders the obligation to provide, via the Merx electronic tender management platform, a bid security in the form of an electronic bid bond or a bank transfer, namely ambiguous wording which would constitute the core of the dispute.

In order to comply with the obligation to provide bid security, Groupe Atwill-Morin inc. (“Atwill-Morin“) submitted on the Merx electronic platform a scan, in PDF format, of the original bid bond document issued by the company Intact. The PDF document is uploaded on the Merx platform without any error message and a filing confirmation is generated.

Although Atwill-Morin was the lowest bidder, it was informed by Defence Construction Canada that its bid was rejected because the bid bond submitted in PDF format was not digitally signed and sealed and could therefore not be digitally verified. Defence Construction Canada considers that it has no discretion to allow Atwill-Morin to correct this irregularity. Conversely, Defence Construction Canada considered the lack of a witness’ signature on the second lowest bidder’s electronic bid bond – which was a condition of the tender documents – to be a minor administrative anomaly and awarded the contract to the second lowest bidder. Atwill-Morin unsuccessfully tried to suspend the contract award to the second lowest bidder and subsequently turned to the Superior Court to be compensated for its loss of profits.

The Decision

The Honourable Daniel Urbas grants Atwill-Morin’s action in damages and orders Defence Construction Canada to pay $646,156, plus interest and the additional indemnity as of 2018. Justice Urbas concluded that there was indeed an irregularity in Atwill-Morin’s bid, but that this was a minor irregularity since, among other things, it did not affect the principle of equality between bidders.

Defence Construction Canada therefore committed a breach of contract in rejecting Atwill-Morin’s bid without even evaluating whether it was appropriate to allow for the correction of this minor irregularity. Justice Urbas concluded, on the balance of probabilities, that had Defence Construction Canada not been mistaken on the minor nature of the irregularity and exercised its discretion, it would have allowed Atwill-Morin to correct its bid in order to save public funds, especially since the authentication of the bid security required only a few minutes.

The Court also found that Defence Construction Canada’s instructions to the bidders as to what constituted an electronic versus digital bid security were confusing and that its own representatives had difficulty interpreting them. This being said, Defence Construction Canada was not in a position to reproach Atwill-Morin for not following the instructions as it would have liked them to be understood.

It should be noted that the Court came to this conclusion despite the fact that Defence Construction Canada’s representatives were found to have acted in good faith, as good faith is not a defence to a breach of contract.

What to remember?

The victory of Groupe Atwill-Morin – who was represented by Nicolas Roche and David Joanisse from LCM Attorneys – was significant given the rarity of the situations in which the Courts grant actions seeking compensation for damages incurred by bidders whose bids were erroneously rejected in a public tender process.

This decision highlights the fact that when public sector organizations managing public funds have the discretion to allow for the correction of minor irregularities in a bid, which could result in saving taxpayers money, they must exercise it. Defence Construction Canada has filed an appeal of the Superior Court judgment – stay tuned!

[1] 2022 QCCS 4512.