The Town of Conception Bay South appears to have fallen into a legal rabbit hole because the price of a specific-size manhole was not included in the winning company’s bid on a tender for water and sewer work in the summer of 2011.
That’s even though that particular size and type of manhole may not have been required for the work, and indeed was listed as “zero quantity” on the tender’s quantities and prices table.
The Newfoundland and Labrador Supreme Court ruled in a decision filed last week that the omission makes the winning bid non-compliant according to the “instruction to bidders” and the town should not have accepted it.
Coady Construction and Excavating Ltd. had asked the court to rule that the town was liable for damages it suffered after it lost that tender for water and sewer work on Topsail Road in the summer of 2011.
Coady Construction was the second lowest bidder out of six bids the town received for the work.
Coady Construction stated that because the lowest bidder omitted a unit price for a four-metre to 4.5-metre pre-cast manhole, that bid did not conform to the tender document rules and should have been disqualified.
“The tender documentation was in the Government of Newfoundland and Labrador’s Department of Municipal Affairs standard form for a Unit Price Contract,” court documents state.
“Coady, the second lowest bidder, maintains that because it had included the unit price, it was the lowest compliant bid and should have been awarded the contract.”
In its defence, the town stated the failure of the lowest bidder to insert a unit price did not affect the total bid because it could not have changed the order of the bids.
Provisions contained in the tender documentation stated that in completing the tender form, “The attention of the bidder is drawn to the necessity of legibly pricing each and every item in any schedule of quantities and of calculating the units and totals exactly correct to agree with the tender amounts. Failure to do so will be sufficient grounds for rejection.”
The tender documents also stated that incomplete tenders will be rejected, and incorrectly prepared tenders may be rejected.
The documents add that “under a Unit Price Contract, bidders are required to enter a unit price for each and every item bid; this includes lump sum bid items. If any unit price is omitted by the bidder then the bid shall be considered incomplete and automatically rejected.”
And that: “tenderers shall promptly notify the engineer/architect of any error, inconsistency, or omissions discovered during the review of the contract documents.”
In an affidavit filed with the court, Coady’s Construction stated, “it is not unusual for tenders to include and oblige bidders to price items with an estimated quantity of zero in the schedule of quantities. This is often done because unit prices form the basis for payment in a unit price contract and, by settling the price of an item that is not required for the work as specified but conceivably could be required depending on actual circumstances, issues regarding costs are avoided.”
An engineering consultant who gave information on behalf of the town said that while he had no problem with the tender documents, he did have concern with the omission in the tender submitted by the lowest bidder. The consultant stated there was no logical reason for the zero quantity item to be in the quantities and pricing table in the first place.
The consultant stated the presence of the zero quantity item was an error “likely left in from a master specification document.” He further stated that had the error been identified it would have been addressed so there would be no ambiguity.
The consultant, however, felt there was no concern with unbalanced bids in the tender in question.
In the court’s decision, Justice Deborah J. Paquette stated the town’s position — that the failure to include a unit price for an item identified as zero quantity did not affect the bids received — is not supported by the evidence.
Paquette also noted there was evidence that the absence of a price for the four-metre to 4.5-metre manhole rendered the bid incomplete.
“The written instructions to bidders and supplementary general conditions alerted all bidders in clear language to the necessity of pricing each item and expressly cautioned that failure to do so would result in automatic rejection,” the justice said. “The town failed to provide the court with evidence, independent or otherwise, to establish that the failure to price the item in question could have no impact on work to be performed in the tender bid.”
The court ruled the town is liable to Coady’s Construction for breach of its obligations pursuant to the tender. Damages are to be assessed at a later date.
The town is also ordered to pay Coady’s Construction’s legal costs in the matter.
