The BC Construction Association (BCCA) is warning its members and the industry at large of the implications and potential risks of the removal of Contract A from procurement documents issued by several public owners across the province.

The association says the absence of Contract A in these documents leaves general and trade contractors open to being treated unfairly in the contracting process, and possibly without legal recourse for addressing any wrongs.

Contract A is a legal concept that emerged in construction bidding in the early 1980s. It established the existence of a bidding contract between the owner and compliant bidders. Prior to the Supreme Court of Canada decision that led to Contract A, bidders were subject to the misconduct of unscrupulous owners, and owners did not know their position with non-compliant bidders.

Case law has evolved in the years since, and Contract A has become the cornerstone for ensuring that the procurement process is fair for everyone involved. It effectively sets bidding rules that all parties need to follow, and allows for the award of monetary damages to both bidders and owners if and when the other party failed to play by those rules.

With Contract A, an owner has a duty to treat all bidders fairly and equally. They must review all qualifying bids and reject any that do not meet the stated requirements. Contract A forces a duty of care on owners to follow their own stated procurement requirements. It also bidders to enter into the construction contract, which is known as Contract B, if they are selected in accordance with the procurement documents.

Without Contract A, BCCA says, general contractors and subcontractors have no legal recourse for being treated unfairly and they should not assume that they will be treated fairly. Moreover, by removing Contract A, public sector owners are not bound to follow their own procurement documents.

The association says it is seeing a growing number of public owners in the province include language in their instructions to bidders and requests for proposals (RFPs) that says no Contract A will come into existence through the procurement process.

The answer may lie in substance over form: Leduc

When asked about this strategy, Ottawa Construction Association executive member and Ottawa-based lawyer Dan Leduc commented that even though an owner may try to present a procurement process as an RFP and expressly try to avoid the engagement of a Contract A, some law may be available to answer this strategy.

In Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, the Supreme Court of Canada determined that the procurement process was a tender, not an RFP even though the tender documents characterized it as an RFP. In its analysis, the Court considered the following factors:

1. Intent to create contractual obligations: The procurement documents indicated an intent to form binding contracts, characteristic of a tender.
2. Contract A and Contract B framework: The process aligned with the "Contract A and Contract B" framework, creating binding obligations upon bid submission. These can typically include a fixed closing date and time, bid security (bid bond) and rules applicable to each submission to be made.
3. Evaluation and acceptance criteria: Detailed criteria for evaluation applicable to each submission suggested a tender process.
4. Obligations of fairness and compliance: The implied obligations to treat all bidders fairly and only consider compliant bids were consistent with a tender process.
5. Purpose of the process: The aim was to secure a binding commitment from a contractor, typical of a tender.

Leduc says the court's reasoning appears to hinge on the procurement documents' structure and intent, predefined evaluation criteria, and inherent fairness and compliance obligations, leading to the BC ministry's breach of the tendering process and the exclusion clause's unenforceability.

“In other words, the substance over form appears to be the guiding consideration and even though you may say that it’s an RFP and there is no Contract A, it still may qualify as a tender and actually have a Contract A engagement,” says Leduc.

‘Significant violation’ of public procurement processes: BCCA

Meanwhile, in its advisory to members, BCCA calls the removal of Contract A, “the most significant violation of public sector procurement processes that the construction industry has seen to date.”  It adds that, “with the removal of Contract A, combined with other poor or eroding procurement practices, the construction industry can no longer assume they are participating in fair, transparent and competitive procurement.”

It also cautions that firms choosing to bid those projects that include the no-Contract A language could face all kinds of unpleasant and unfair procurement practices, such as a lack of fair or consistent treatment, bias in contract awards, or even bid shopping.

The association is recommending that individual firms proceed with extreme caution in the face of what it calls “unprecedented legal landscape resulting from the removal of Contract A.”

BCCA is hosting a webinar on the implications of the removal of Contract A on June 25.