TENDERS AWAY!
Chris Rober ts, BBA , SCMP, CPPB
Procurement Specialist
City of Saint John
DISCLAIMER
 I am NOT a lawyer!
 Procurement vs. Contract Administration
PROCUREMENT
POLICY STATEMENT
The City of Saint John recognizes that the
taxpayers of this City expect and have the right
to receive a high level of service at the lowest
possible cost and that increased competition
results in lower costs.
PROCUREMENT LAWS, TRADE
AGREEMENTS AND POLICIES
 Procurement in New Brunswick is subject to a hierarchy of trade
agreements, law, and policy. The City is subject to these legal
obligations as well as the City’s Procurement Policy.
 The City’s Policy expands on the requirements of the Trade
Agreements and Province of NB Purchasing Act by detailing:
Spending Authorities for Staff
Bidding Processes
Contract Administration
TRADE AGREEMENTS
A greement on Internal Trade
 Goods & Ser vices over $100,000
 Construction over $250,000
Quebec-NB Trade A greement
 Goods, Ser vices and
Construction over $ 100,000
Atlantic Procurement A greement
 Goods over $25,000
 Ser vices over $50,000
 Construction over $100,000
TRADE AGREEMENTS CONT’D
A requirement of all of these agreements is that
Municipalities must advertise tenders over the stated
thresholds on an electronic tendering system approved
by the Province.
The City advertises on the Provinces’ system NBON
(New Brunswick Opportunities Network ).
NEW BRUNSWICK LEGISLATION
The Province has implemented two acts that govern
procurement of goods, services and construction by public
bodies including municipalities.
Crown Construction Act
Public Purchasing Act & Regulation 94-157
CROWN CONSTRUCTION ACT
In New Brunswick, construction tendering is governed by this
act for most crown corporations. Municipalities are not
formally covered under this act but are expected to follow the
basic principles as they are consistent with the trade
agreements.
Note:
If a tender issued by the City indicates that it is being tendered
under the Crown Construction Contracts Act, then the rules and
procedures in the Act must be followed.
PUBLIC PURCHASING ACT &
REGULATION 94-157
This Act and Regulation cover the procurement of Goods
and Services by the Province and public funded bodies
including Municipalities.
It defines the tendering process, responsibilities of
individuals responsible for procurement and defines
circumstances where exceptions can be made.
JUMPIN’ BACK IN TIME TO 1981
 MTV was launched
 Metallica was formed
 Bob Marley passed
away
 Contract A was born!!!!
CONTRACT A??? TELL ME MORE!!!
 Ontario vs. Ron Engineering
 Ontario issued a formal tender call for a construction contract
 RE responded with compliant bid and $ 150k mandatory
deposit
 RE was low bid
 After closing, RE realized they had made an error, tried to
have bid changed
RON ENGINEERING CONT’D…
 Change refused, contract awarded to another tenderer
 Owner kept the bid deposit
 RE sued to have it returned
 Trial Court: Owner was entitled to keep deposit
 Appeal Court: Decision reversed “Contractual doctrine of
mistake”
 Supreme Court: Reversed again, Owner keeps deposit
CONTRACT A
 Contract A is an implied, legally binding contract which is
formed when a tenderer submits a compliant bid in response
to a formal tender-call (i.e. “yes, I accept your of fer of
entering into a contract per your specifications, terms, and
conditions, and I will do the job for X dollars”). Of course, it
carries with it some serious obligations. Pricing (i.e. “low
bid”) then dictates which tenderer moves on into Contract B
(the actual written contract) with the tendering authority to
carry out the work.
 Irrevocability and bid security are key aspects
PRIVILEGE CLAUSES
 “We reserve the right to…….”
 “The lowest or any tender shall not necessarily be accepted ”
 “Except as expressly and specifically permitted in these
Instructions to Proponents, no Proponent shall have any claim
for compensation of any kind whatsoever, as a result of
participating in this RFP, and by submitting a Proposal each
Proponent shall be deemed to have agreed that it has no
claim”
M.J.B. ENTERPRISES LTD. V DEFENCE
CONSTRUCTION (1951) LTD.
 1999 Supreme Court of Canada Decision
 MJB were lowest compliant bid
 DC awarded contract to lowest cost bid which was non compliant on the basis that it “contained conditions and
qualifications” pertaining to material quantities
 Supreme Court ruled that DC had in -fact awarded to a noncompliant bidder and had violated Contract A
 MJB were awarded damages
TERCON CONTRACTORS V
BRITISH COLUMBIA
 2010 Supreme Court of Canada Decision
 RFP for major highway construction project
 BC shortlisted to Brentwood and Tercon
 Brentwood were selected for contract
 Brentwood’s bid actually involved a joint partnership with an
ineligible partner (based on a previous procurement)
 Tercon sued
TERCON CONT’D…
 SCC ruled in favour of Tercon as BC had violated Contract A
 Judges were 5-4 split in favour of Tercon
WHAT DOES THIS ALL MEAN FOR PUBLIC
PROCUREMENT FOLKS?
 Can’t sleep at night
 High blood pressure
 A constant state of general terror
 The need to be extremely clear in bid documents
 Fair treatment of all bidders
 Strict adherence to procurement legislation, policies and
procedures
CITY OF SAINT JOHN
POLICY FOR THE PROCURMENT OF:
GOODS
SERVICES
AND CONSTRUCTION
CIT Y OF SAINT JOHN PROCUREMENT POLICY
 Materials Management
 Procurement of Goods, Services and Construction
(excluding Infrastructure)
 Providing procurement advice
 Monitoring compliance with this policy , legislation and trade agreements
 Notifying management staff of non-compliance
 Department Heads
 Procurement activities within their department and are accountable for
ensuring the objectives of the policy are met.
SPENDING LIMITS
Previous Levels
New Levels
C o u n c il
over $25,000
C o u n c il
over $75,000
City Manager
$25,000 or less
City Manager
$75,000 or less
Commissioner
$15,000 or less
D e p a r t me n t H e a d s ( * ) $ 2 5 , 0 0 0 o r l e s s
D e p a r t me n t M a n a g e r s $ 5 , 0 0 0 o r l e s s
Division Managers (*) $15,000 or less
Line Manager
Line Manager
(*) Title Change
$2,500 or less
$7,500 or less
COUNCIL APPROVAL
The following contracts are subject to Council approval :

C o n t r a c t s w i t h a v a l u e g r e a te r t h a n $ 7 5 , 0 0 0
 C o n t r a c t s p r e s c r ib e d b y S t a t ute to b e m a d e b y C o u n c i l ,
 w h e r e t h e B i d p r i c e i s h i g h e r t h a n t h e B u d g et ( s ) a n d t h e n e c e s s a r y a d j u s t me n t s
cannot be made,
 w h e r e a S u b s t a n t i ve O b j e c t io n h a s b e e n f i l e d
 w h e r e a m a j o r i r r e g ula r i t y p r e c l ud e s t h e Aw a r d o f a Te n d e r to t h e l o we s t b i d d e r,
 w h e r e a C o n t r a c t i s a r e s u l t o f a p u b l i c p r i va te p a r t n e r s hi p ( “ P 3 ” ) o p p o r t uni t y.
BID SOLICITATION METHODS
Procurement Methods
Project Cost
Petty Cash
$75 or less,
Corporate Purchasing Card
$2,500 or less,
Request for Quotation or Proposal
(Invitation)
Goods Less Than $25,000,
Services Less Than $50,000,
Construction Less Than $100,000
Request for Tender or Proposal
(Advertised)
Goods $25,000 and greater
Services $50,000 and greater
Construction $100,000 and greater
Request for Standing Offer (Supply Agreement)
Any cost
Non-Competitive Purchase
Any cost
QUESTIONS & ANSWERS
 Why are bids opened publically?
 Transparency. Tenders, proposals (technical only) and quotes all
opened publically at CSJ and become public record.
 Why is it necessary to quote bids both with numerical figures
and written-out in full?
 At CSJ, written supersedes numerical in the event of error (tough to
make decimal error when written-out).
 Can a witness to a tender quote be anyone?
 In our documents: “Each person whose signature appears on the
accompanying Tender has been authorized by the Tenderer to
determine the terms of, and to sign, the Tender, on behalf of the
Tenderer”
Q&A CONT’D…
 Why does a corporation need a certified copy of a resolution
naming the signing authority while a non -corporate entity
doesn’t?
 One person cannot make decisions on behalf of a corporation.
Company designates those with signing authority.
 What happens if a bidder does not fill out all the fields in the
bid form? Can you award anyway at your discretion?
 Maybe… Depends on how the document was structured. For typical
Contract A/B arrangement, bid would be non -compliant. For RFP
with rectification period, different story.
Q&A CONT’D…
 Generals often leave out subs and if successful, negotiate for
better price. Is this legal ?
 Depends. If tender called for disclosure of all Subs, bid would be
rejected as non-compliant. If tender did not call for disclosure,
General is responsible for his/her own dealings. No contractual
relationship exists between the Owner and the Subs.
 If the bid documents have a mandatory site visit and bidders
do not show up, can they still bid?
 No. For CSJ, mandatory means mandatory.
 If proper records are not kept and delivered by the contractor
to the Owner, what recourse does the Owner have?
 Depends. Owner would likely only be able to hold back appropriate
amount.
Q&A CONT’D…
 If a contractor fails to provide a construction schedule as
specified, what recourse does the Owner have?
 Construction schedule is usually due early in the project. Owner
could delay start of project until schedule is submitted.
 When is a bid bond necessary? How much does it typically
cost? What does a contractor need to do to become a
bondable company?




Necessary when requested by the tendering authority
Costs run from $5 - $8 per $1,000
Bonding companies typically audit contractors quarterly and annually
Better financial shape of Contractor = more bondable, and lower
bonding rates
Q&A CONT’D…
 When is it necessary to request a performance bond? What is
involved with obtaining one?
 Necessary when Owner wants assurances that contract will be
completed. Similar to bid bond as far as auditing, etc.
 How does a contractor get a release for the bonds? Why do
only some insurance companies follow -up with release of the
bonds?
 Bonds have an expiry date. Can be extended if needed.
Q&A CONT’D…
 When is it more appropriate to request a certified cheque in
lieu of a bid bond and why is it normally for 10% of the bid?
 CSJ typically allows for both as bid security. It is typically left up to
the bidder as to whether they want to tie up capital in the form of a
cheque or pay the cost of the bond. 10% typically used as it is a
“reasonable” amount.
 When does a certified cheque, used in lieu of a bid bond, get
returned to the contractor? What paperwork should be used
for this transaction?
 If unsuccessful, after award. If successful, either returned (by
registered mail) or incorporated into performance security. Typically
handled with email for paper-trail.
Q&A CONT’D…
 If no performance bond is required, what should the Owner do
to protect themselves against an unacceptable product?
 CSJ will retain an appropriate amount from the Mechanic’s Lien
Holdback:
“If deficiencies are identified and remain outstanding prior to the release of
Mechanics’ Lien Holdback, then the City may retain from the Mechanic’s
Lien Holdback an amount equal to twice the Engineer’s estimate of the cost
of remedying the deficiencies until the said deficiencies are remedied to the
satisfaction of the Engineer.” – CSJ General Specification, 6.20.02.b
Q&A CONT’D…
 If a Contractor fails to obey the stipulated procedures,
whether not getting approval prior to advancing to the next
task, concealing items prior to acceptance, or for notifying of
a fertilizer application, is the full cost to uncover the item the
responsibility of the Contractor?
 Depends on contract.
 “If any work should be covered without the approval or consent of the
Engineer, it must, if required, be uncovered for examination and made
good at the Contractor's expense.” – CSJ General Specification, 7.14
 Why is a 15% holdback commonly applied? When and how
should the holdback be released?
 15% is common for Mechanic’s Lien. Released when payment of
Subs is evident.
Q&A CONT’D…
 What is the legal definition of Substantial Completion?
 Depends on how contract defines it.
 “The Engineer shall issue a Certificate of Substantial Completion once the
Engineer is satisfied that the Work has been substantially completed, and
the Work has passed any final tests required under the Contract, and the
Contractor has given a written undertaking to complete any outstanding
work expeditiously.” – CSJ General Specification, 6.19.01
 E.g. for CSJ it could be after base asphalt is laid
 Why are deficiencies typically valued at twice their estimated
value?
 It typically costs more to bring in a 2 nd Contractor to remedy a
deficiency left by the original.
Q&A CONT’D…
 Why should a Contractor ask for a written Certificate of
Completion?




Good record keeping
For requirements defined by bonding company (if applicable)
To mark beginning of warranty period
For Mechanic’s Lien
 Why does the first progress billing claim typically not need a
statutory declaration while all subsequent ones do?
 Statutory declarations serve to show that expenses have been paid
for the previous period. The first progress billing typically doesn’t
encompass enough time to make a statutory declaration relevant.
Q&A CONT’D…
 What is a Commencement of a Lien and how is it dif ferent
than a warranty period?
 Sub/Supplier would file Lien against the property under the
Mechanic’s Lien Act. Warranty period typically begins after Final
Completion date.
 Who is liable if a worker is hurt on the job and that worker
was not wearing the stipulated safety equipment?
 Can’t answer, more of an OHSA question. CSJ ensures all Contractors
working on City property have WorksafeNB coverage (where
applicable).
Q&A CONT’D…
 When a contract carries a fine for each day the project is late,
how is a settlement typically reached for weather or shipping
delays?
 For weather delays, typically behind closed doors, unless Contract
specifically addresses. For shipping, Contractor is responsible.
 For a Unit Price Contract, if Owner fails to have an Inspector on
site to record and measure, who is responsible for discrepancies
in the quantities? Should Contractors get approval for quantities
above the estimate prior to delivering the materials to the site?
 CSJ addresses as such:
“The Engineer shall determine the amount, if any, to be added to, or deducted
from, the Tender Price, in respect of any additional work done, or work deleted
pursuant to the Engineer’s order. The Engineer shall, in his absolute discretion,
determine whether all such work shall be valued using the Schedule of
Quantities and Unit Prices.” – CSJ General Specification, 6:17
Q&A CONT’D…
 If the bid documents stipulate that a Contractor may be held
liable for costs associated with extra Consultant inspections
due to the Contractor not completing all the deficiencies
before requesting an inspection, is this a legal recourse to
withhold that Consultant’s fees from the final billing?
 Contract specific.
 If a Contractor is not willing to perform a task within a
reasonable timeframe, can the Owner have it done by another
party and charge it against the contract, assuming suf ficient
notification to do so has been given?
 If the task in question is a part of the performance of the contract,
yes.
Q&A CONT’D…
 If the plant list varies from the plants shown on the drawing
and the Contractor is stipulated to notify the Consultant of
discrepancies and in fact doesn’t, is the Contractor
responsible for the extra plants shown on the plan but not on
the list?
 I don’t know. Unless it is specifically spelled -out in the contract
which documents supersede others, it is open for interpretation. In
the above example, there would be a lot of nasty fighting. For CSJ:
“This division shall be read in conjunction with and take precedence where
they may prove at variance with the City of Saint John, General
Specifications, Municipal Operations & Engineering.” – CSJ General
Specification, Div 3
Q&A CONT’D…
 What obligation does a Consultant have to record and monitor
payments to the Contractor by the Owner? What should
Consultants do to stipulate their role in Contract
Administration of this type?
 Depends on contract between Owner and Consultant. Consultants
should clearly articulate and negotiate their role.
 What should a Sub do if the GC requests more work than in
the tender? Refuse with revised contract? Go to
Owner/Consultant?
 Yikes. Firstly, Owner has no contract with Subs. Legally, they would
be within their rights to negotiate with the GC to resolve.
Q&A CONT’D…
 What rationale is there for invited tenders compared to
publically invited tenders?
 Dictated by value of contract (see table)
Q&A CONT’D…
Procurement Methods
Project Cost
Petty Cash
$75 or less,
Corporate Purchasing Card
$2,500 or less,
Request for Quotation or Proposal
(Invitation)
Goods Less Than $25,000,
Services Less Than $50,000,
Construction Less Than $100,000
Request for Tender or Proposal
(Advertised)
Goods $25,000 and greater
Services $50,000 and greater
Construction $100,000 and greater
Request for Standing Offer (Supply Agreement)
Any cost
Non-Competitive Purchase
Any cost
Q&A CONT’D…
 Is there a minimum requirement for an advertising period for
public tenders? It seems to vary from Owner to Owner?
 The New Brunswick Regulation 94-157 Under the Public Purchasing
Act States:
“For tenders requested by public advertisement under paragraphs 4(1)(a)
and (b) of the Act, the tender shall not specify a closing date sooner than
fifteen days after the date the tender is first advertised, exclusive of the
date the tender is first advertised and the closing date.’ – Item 14
 Why is it necessary to acknowledge receipt of all addenda in
the bid?
 Good idea to send in acknowledgement so tendering authority
can have notice that bidder’s have received addenda. Necessar y
to submit signed addenda with bid as proof that changes have
been included in the price.
Q&A CONT’D…
 What happens if the Contractor significantly misses the
completion deadline they committed to in the bid.
 Depends on contract. Could be penalties imposed, could be
negotiated, etc.
THANKS FOR YOUR TIME!
HAPPY TENDERING.