May 2017
PFD | Municipal
Call for tenders

Minor versus major irregularities

By Stéphanie Provost Lawyer

Determining whether an irregularity is minor or major is critical when awarding a contract as part of a call for tenders. Indeed, tender documents generally set out eligibility conditions that must be taken into account. However, when should non-compliance with these conditions lead to the disqualification of a bid?

Established caselaw dictates that a municipality must avoid formality so as not to prejudice the primary aim of the call for tenders: obtaining the best value for money spent.

Even so, a municipality's flexibility must not prejudice certain bidders. Therefore, whether the contract is granted according to weighting scheme or to the lowest bidder, the municipality must reject the bids that contain a major irregularity.

In Tapitec inc. v. Ville de Blainville (2017 QCCA 317)*, the Court of Appeal set out three questions to determine whether an irregularity is minor or major:

  1. Is the requirement of public order?
  2. Do the tender documents expressly state that the requirement is essential?
  3. In light of the uses, constructive obligations and intentions of the parties, does the requirement translate into an essential or accessory element of the call for tenders?

If one of these questions is answered in the affirmative, then the bid must be rejected.

The first question is relatively simple. For example, if the municipality requires that the contractor be licensed by the Régie du bâtiment du Québec and the bidder does not hold the license, the bid will be rejected since it does not comply with a requirement of public order prescribed by law.

The second question pertains to tender requirements that include a statement that non-compliance with the requirement will automatically result in the disqualification of the bid since the municipality considers non-compliance to be major irregularity.

In the remaining cases, it is important to ask the third question, which requires an analysis of the tender documents. The use of the imperative in formulating the requirement must be taken into account and the municipality's intent will also be important to determine the minor or major nature of the requirement. The Court reiterates that the integrity of the bidding process must remain the primary consideration. Therefore, a municipality may not waive a critical requirement after the bidding period has ended since doing so would impact the process.

For example, in the Tapitec case, the municipality included the following clause in the technical conditions of the call for tenders: 

" L'installation du revêtement doit être faite par un entrepreneur ayant sa principale place d'affaires et opérant depuis au moins cinq (5) ans au Québec. " [The installation of the flooring must be carried out by a contractor whose principal place of business has been located and operated in Québec for at least five (5) years.]

The clause does not expressly state that the requirement is essential. However, the Court of Appeal concluded that the contractor's experience was a key element for the municipality to ensure that the work would be carried out correctly. The requirement was therefore interpreted as an essential element of the call for tenders.

Moreover, it is important to note that the eligibility conditions are not limited to those included in the general terms and conditions of the tender documents. The clauses in the technical specifications may also detail essential requirements such as the contractor's years of experience, for example. The tender documents and bids that are received must therefore be analyzed carefully before a contract is awarded.

When assessing a bid, should a municipality answer yes to any of the three questions listed earlier, it must reject the bid since it does not comply with an essential requirement described in the tender documents. A municipality that illegally awards a contract could eventually face legal action brought by the other bidders.

*At the time of writing, no appeal had been filed.