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Procurement in Practice: Avoiding Pitfalls June 4, 2013.

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1 Procurement in Practice: Avoiding Pitfalls June 4, 2013

2 Case Law Update Vincent DeRose Lexpert Toronto, ON June 4, 2013

3 3 Ron Engineering 1981 MJB 1999 Martel 2000 Double N Earthmovers 2007 Tercon 2010 SCC establishes Contract “A”/“B” Model Goal: Preserving integrity of competitive bidding system SCC states that it will not interfere with owner’s stated right under a “privilege clause” provided owner does not breach terms of Contract “A” by accepting non- compliant bid “Privilege clause” must be read in harmony with rest of tender documents SCC does not examine degree of required compliance (strict vs. substantial) SCC finds implied obligation on owner to treat all bidders within Contract “A” fairly, equally and consistently Goal: Protecting and promoting integrity of bidding system 5:4 Decision When assessing compliance, no duty on owner to investigate representations on face of bid, although right to do so Would encourage attacks by rival bidders and potentially frustrate integrity of the bidding process Avoid subjecting Parties in Contract “B” to constant surveillance and scrutiny by unsuccessful bidders Duty of Care by tendering authority does not extend to subcontractors 5:4 Decision Court agree in principle that exclusion of liability clauses are enforceable Disagree on whether clause in issue applicable to Tercon’s claim Preserved integrity of bidding system? Design Services Years of SCC Tendering Law Decision

4 Be Cautious With The Incumbent Envoy Relocation Services Inc. v. Canada (Attorney General) (Ont. 2013) An action for damages. In 2002, the Crown issued an RFP seeking bids on a contract to provide services related to re-location of federal employees who had been transferred. The 2002 RFP resulted in a contract awarded to the incumbent, Royal LePage. That contract was eventually cancelled because of a conflict of interest. A second RFP for same services was issued in The RFP requested that bidders include provision for “property management services.” The RFP estimated that such services were required for 7,200 moves per year. On that basis, the Plaintiff Envoy submitted a bid that included provision of $42 million for property management services in 2002 and $48 million in

5 Be Cautious With The Incumbent Envoy Relocation Services Inc. v. Canada (Attorney General) (Ont. 2013) Royal LePage had been the incumbent service provider prior to the issuance of the RFP and was the successful bidder in 2002 and Royal LePage’s participation in the pilot project for the re-location program, and its position as incumbent, led to advantageous knowledge of the assessment process and an unfairly close relationship with personnel who assessed the bids. The Auditor General subsequently determined that Royal LePage possessed inside knowledge showing that between 1999 and 2005 only 183 of the 81,000 relocations utilized property management services instead of the 7,200 moves contemplated by the RFP. 5

6 Be Cautious With The Incumbent Envoy Relocation Services Inc. v. Canada (Attorney General) (Ont. 2013) The bids submitted by Royal LePage in 2002 and 2004 were successful because it had allocated $0 towards those services. Moreover, when it provided such services they were nevertheless billed and paid. In allowing the action for damages, the Court made the following findings: 1.Royal LePage’s bid of $0 value for property management services did not reflect a fair market value; 2.The $0 was unknown to the Plaintiff and competing bidders; 3.The bid submitted by the Plaintiff was based on grossly inflated estimated volumes of contemplated property management services. At trial, no explanation was given by the Crown for this discrepancy which constituted a misrepresentation and conferred an unfair advantage upon Royal LePage; 6

7 Be Cautious With The Incumbent Envoy Relocation Services Inc. v. Canada (Attorney General) (Ont. 2013) 4.Information concerning the repetition of the $0 bid by Royal LePage in the 2004 tender was suppressed from key individuals within government; 5.Royal LePage actually charged for property management services despite its $0 quote - and the Crown knowingly paid; 6.The Crown acted in bad faith in a matter akin to the tort of deceit; 7.Liability was grounded in contract based on a breach of the implied duty of fair and equal treatment in the tender process; 8.The Crown failed to conduct the tender process in a transparent and fully documented fashion. It intentionally misled bidders and refused to acknowledge or seriously consider a conflict of interest in favour of Royal LePage as the incumbent. 7

8 Be Cautious With The Incumbent Envoy Relocation Services Inc. v. Canada (Attorney General) (Ont. 2013) Damages were assessed based on lost profits with contingencies to reflect start-up costs and profits from one of the two available option years. The total award was $32.1 million. In addition to damages, Envoy was awarded pre-judgment interest of approx. $3 million and costs of approx. $4.7 million. Although the conduct of the Crown was “high handed” and “arbitrary”, an award of punitive damages would serve no purpose in terms of deterrence and denunciation. No award for bid preparation costs as they were a necessary cost for doing business to win the tender. 8

9 A Rough Ride Friends of Lansdowne Inc. v. Ottawa (City) (2012 Ont. C.A.) City proposed to redevelop Landsdowne Park through a public private partnership between the City and Ottawa Sports and Entertainment Group (OSEG). June 2010 City passed a by-law advancing the development. Friends applied to quash the by-law. Friends’ application was dismissed. Friends appealed arguing: 1.The approved development provides a “bonus” to OSEG. 2.The City did not follow its own procurement by-law. 3.The City acted in bad faith in approving the proposed development. 9

10 A Rough Ride Friends of Lansdowne Inc. v. Ottawa (City) (2012 Ont. C.A.) The applications judge and the Court of Appeal both set out lengthy reasons for the determination that there was no valid “bonus” being made to OSEG. The courts found that the Plan provided that OSEG was not receiving “something for nothing”, rather it contained a complicated matrix of covenants and intertwining and pooling of revenues and losses creating a “balance” between the benefits and obligations. The courts also found that the did not act in bad faith. The Court of Appeal stated that it is not for the courts to second guess or re-weigh policy and financial considerations. 10

11 A Rough Ride Friends of Lansdowne Inc. v. Ottawa (City) (2012 Ont. C.A.) Friends also argued that the City failed to follow its own procurement by-law. Procurement policies designed to ensure “integrity and transparency” of a municipality’s procurement process. The objective of the City’s Purchasing By-Law is to obtain the “best value” while treating all suppliers equitably. Guiding principle - purchases made using a competitive process that is open, transparent and fair to all suppliers. The City may waive competitive bidding process and replace with negotiations where there is an absence of competition for technical or other reasons and goods, services or construction can only be supplied by a particular supplier. 11

12 A Rough Ride Friends of Lansdowne Inc. v. Ottawa (City) (2012 Ont. C.A.) City relied on the Purchasing By-law for negotiation as OSEG was the only entity that could bring the sports franchises to the table. Court agreed that this was sufficient to trigger exemption. 12

13 When To Cancel? Glenview Iron & Metal Ltd. v. Smiths Falls (Town) (Ont. 2012) The Town issued a RFP for the collection and haulage of garbage. Plaintiff was one of 13 bidders. The RFP included mandatory bid forms, and stated that errors in completing the forms could not be correct unless the bid document was completely withdrawn and re-submitted before bid closing time. It also included a “privilege clause”. One of the bid forms required bidders to quote a monthly rental fee for various sized steel containers (dumpsters). For each size dumpster, the Town provided an approximation of the number of units normally rented. For the sum of (all applicable taxes included) SIZE:(a)3.06 m3 (4 yd3) (6 units approximately) $10/60 (per unit/month) (b)4.59 m3 (6 yd3) (10 units approximately) $10/100(per unit/month) (c)7.65 m3 – m3 (10 yd3 – 30 yd3) $_____ (per unit/month 13

14 When To Cancel? Glenview Iron & Metal Ltd. v. Smiths Falls (Town) (Ont. 2012) Town employee called Glenview to clarify expensive dumpsters – told there was an error. That employee erroneously fixed the error. The Town initially entered into negotiations with another bidder that offered an option whereby much of the garbage would be converted into “green energy”. Glenview complained and threatened litigation, which lead to a re-examination of all of the bids. As part of that process, Glenview’s error and the repair of their bid was discovered. Further, the Provincial Government had recently issued policy statements promoting recycling and other environmentally friendly waste management solutions. The Town was concerned that their failure to act could prejudice its ability to obtain provincial grants for waste disposal. Consequently, the Town cancelled the entire RFP. The Town brought a motion for summary judgment. 14

15 When To Cancel? Glenview Iron & Metal Ltd. v. Smiths Falls (Town) (Ont. 2012) The Court agreed that the Town was entitled to cancel the bid unless it was acting in bad faith. The Town found itself in an unfortunate legal position resulting from its own missteps. However, missteps do not equate with bad faith. Re-tendering was seen as a mechanism as protecting the interests of all parties and protecting the integrity of the tendering process. Policy decisions that fall within the legitimate purview of municipal councils are not open to review by Courts or required to approach this type of municipal decision making with deference. 15

16 Let me out! Manitoba Eastern Star Chalet Inc. v. Dominion Construction Co. Inc. (2011 Man. Q.B.) Manitoba, a non-profit organization, owns and operates a seniors housing complex, the Eastern Star Chalet, in the City of Winnipeg. Manitoba retained a Consultant to prepare the drawings, designs, specifications and tender process with respect to expanding the complex. Project budget $2 Million. Three companies submitted proposals, including Dominion. Dominion’s bid ($2,450,000) was lowest. The next lowest bid was $3,097,000. The Consultant reviewed the proposals finding that they were compliant, but noted that the Dominion bid failed to list addendum no. 4, which “should mean credit”. 16

17 Let me out! Manitoba Eastern Star Chalet Inc. v. Dominion Construction Co. Inc. (2011 Man. Q.B.) The next day Dominion contacted the Consultant’s office and was told that it was “low and probable”. Dominion advised there was a problem with its bid. Dominion then wrote to Manitoba advising that it had made a mathematical error and was withdrawing its bid. According to Dominion, there was an error in its computer program and its bid should have been about $600,000 higher. Dominion did not rely on its error to withdraw, but rather argued that its bid was not compliant since (1) its bid was not signed by an authorized signing officer, and (2) it failed to list addendum no. 4 in its bid. 17

18 Let me out! Manitoba Eastern Star Chalet Inc. v. Dominion Construction Co. Inc. (2011 Man. Q.B.) The instructions to bidders required that the Bid Form be signed under seal by the bidder and, in the case of a limited company, be signed by a duly authorized signing officer. Dominion contended that the chief estimator signed the bid, but he was not a duly authorized signing officer. The court rejected Dominion’s argument finding that: 1.It was Dominion’s custom to act as it did and have the chief estimator sign bids. Thus, Dominion intended to make and execute the bid in the manner it did. 2.Manitoba reserved to itself the ability to waive such non-conformity. 3.The instructions did not require bidders to submit proof of signing authority. Allowing the withdrawal would allow contractors to “lie in the weeds”. 18

19 Let me out! Manitoba Eastern Star Chalet Inc. v. Dominion Construction Co. Inc. (2011 Man. Q.B.) Dominion contended that its failure to list addendum no. 4, which included work relevant to its bid, made its bid non-compliant. The court found that it was clear that Dominion had received and considered addendum no. 4 in preparing its bid. The court was also satisfied that Dominion’s bid encapsulated all four addenda and failure to list addendum four in its bid was a typographical error. The cost of any change from addendum no. 4, at most $30,000, was not substantial so as to account for a $647,000 price variance. Therefore, the court found for Manitoba and awarded damages. 19

20 Let me out! Manitoba Eastern Star Chalet Inc. v. Dominion Construction Co. Inc. (2011 Man. Q.B.) As for damages, Manitoba claimed the difference in price between Dominion’s bid and the next lowest bidder. However, Manitoba had negotiated a lower price with Bird ($2,905,571). The project also included change orders that increased this price to a final adjusted contract price of $2,968, The court rejected Manitoba’s damages amount, but awarded the difference between Dominion’s bid price and the final adjusted contract price. 20

21 Excuse me sir, do you have the time? Moorefield Excavating v. Municipality of Arran-Elderslie (Ont. 2012) Municipality issues tender for replacement of water main. Genivar prepared tender documents and supervised tender process. Tender documents contained a discrepancy with respect to the closing time for tenders. Municipality issued an Addendum replacing the Form of Tender which providing for a closing time of 2 p.m. and not 1 p.m. On the closing date representatives of Genivar and the Municipality believed the closing time was 1 p.m. Four tenders were received before 1 p.m. and all were opened publicly shortly after 1 p.m. Moorfield’s bid was the lowest of those received and one of the Municipality representatives departed the room to call Moorefield to advise it was the low bidder. 21

22 Excuse me sir, do you have the time? Moorefield Excavating v. Municipality of Arran-Elderslie (Ont. 2012) After the bids were opened, two new bidders submitted bids taking the position that the closing time was 2 p.m. and not 1 p.m. Genivar and the Municipality reviewed the tender documents and concluded that the correct closing time was 2 p.m. and not 1 p.m. and accepted the 2 bids. Genivar and the Municipality had determined that following the order of precedence contained in the tender documents, Addenda, ranked ahead of the Instructions to Bidders (which contained the discrepancy) and therefore since the Addendum replaced the Form of Tender, which provided for a 2 p.m. closing time, that time governed. The 2 bids were opened immediately (not waiting for 2 p.m.) and the contract was awarded to Harold whose was lower than Moorefield’s bid. Moorefield sued the Municipality. 22

23 Excuse me sir, do you have the time? Moorefield Excavating v. Municipality of Arran-Elderslie (Ont. 2012) The court found that the revised Form of Tender did not resolve the conflict in favour of a 2 p.m. closing date. The Addendum itself was silent on any change to the closing time. The Addendum merely provided that the revised Form of Tender was “enclosed” and did not specifically advise that it was “attached hereto and forms part of” the Addendum. Merely enclosing the revised Form of Tender to the Addenda it did not elevate the Form of Tender to an Addendum. Form of Tender ranked behind the “Instructions to Tenderers.” Since the discrepancy would otherwise be resolved to provide for a 1 p.m. closing time, that was the correct time. 23

24 Excuse me sir, do you have the time? Moorefield Excavating v. Municipality of Arran-Elderslie (Ont. 2012) In arriving at its decision, the court considered the intent of the Municipality and noted that the Municipality and Genivar both believed that the closing time was 1 p.m. Since the Municipality opened the four tenders after 1 p.m. it committed itself to the 1 p.m. closing time and was estopped from awarding to a bidder whose bid was received after this time. Damages were not determined on the motion. 24

25 Evaluate – and Re-Evaluate – Everyone the Same Mastermeter Products Canada Inc. v. North Bay (City) (Ont. 2012) Judicial Review of the City to purchase water meters from Neptune. Mastermeter alleged that it was denied procedural fairness because of the way in which the City conducted the bidding process for the contract. North Bay issued an RFP for the supply and installation of water meters. Three companies submitted proposals. The City initially assessed the net present value (“NPV”) of the proposals on a 15-year evaluation period. The NPV assessment was subsequently re-assessed on a 5-year evaluation period. Neptune received the best score under both the 15 and 5-year evaluation period. 25

26 Evaluate – and Re-Evaluate – Everyone the Same Mastermeter Products Canada Inc. v. North Bay (City) (Ont. 2012) Further, during the course of negotiations with Neptune, the City discovered nominal additional costs that would be incurred that were not reflected in Neptune’s proposal. On this basis, the Evaluation Committee re-evaluated all three proposals. Neptune still had the highest technical rating. Mastermeter argued that the NPV and re-assessment of nominal costs constituted improper undisclosed evaluation criteria The Court concluded that the RFP was fair and the decision to award the contract to Neptune was reasonable. In coming to its conclusion, the Court observed that the Evaluation Committee applied the same set of criteria and undertook the same evaluation for all three proposals. 26

27 Changes in the Procurement Dynamic Rick Shaban

28

29 Case Study – You Be the Judge Gerry Stobo Lexpert Toronto, ON June 4, 2013

30 30 Case Study – You Be the Judge Your role is Chief Procurement Officer for Clearview Condominiums “Clearview”. The Chief Executive Officer of Clearview has asked that you oversee the procurement process to identify a contractor to build a condominium tower. The RFP has been issued and three bids have been received.

31 Case Study – You Be the Judge (cont’d) The following mandatory requirements were in the RFP: Bidders are required to indicate their total price (including HST). Although not stated to be a mandatory requirement, the bid form broke down the price into five components and bidders were asked to provide the pricing for each of those components; Bidders were required to post a bid bond for $500,000 valid for 90 days; Bidders were required to have bids sealed with the company seal and signed by a duly authorized officer of their company; Bidders were required to attach all addenda issued before bid closing; Bidders were prohibited from bidding if the key personnel of the company, or the company itself, had been convicted under the Corruption of Foreign Public Officials Act. 31

32 Case Study – You Be the Judge (cont’d) The RFP also indicated: i.bids would be assessed on a substantial compliance basis, ii.the lowest-priced bid would not necessarily be accepted, and iii.the owner may negotiate with bidders on any item. Before the bids were submitted, one of the builders – Smith Co. – wrote to the contract authority saying: “I hear that Brown Ltd. is going to submit a bid. I heard from my head office in New York that Brown Ltd.’s Indonesian subsidiary was convicted last week in Indonesia for bribing a member of the Royal Family to get a mining concession. They shouldn’t be allowed to bid. Keep this strictly confidential.” 32

33 Case Study – You Be the Judge (cont’d) Three bids were received as follows: Jones Inc. – $4,150,000; Smith Co. - $4,900,000; Brown Ltd. - $5,250,000. As Chief Procurement Officer for Clearview, you opened the bids publicly and the bid prices were read out. All three bidders were present. 33

34 34 Case Study – You Be the Judge (cont’d) When the prices were read out, the representative from Jones Inc. was surprised that its bid was so much lower than the next closest bid price. He thought that something must have been missing from Jones’ bid and looked at the bid form his company had submitted with its bid. In reviewing this, he noticed that his company had failed to include pricing for one of the five components, an item that would typically have been priced at about $800,000. Recognizing this mistake he shouts out: “There has been a mistake in our bid price. I withdraw our bid.” You and other bidders are surprised at that outburst and perplexed about next steps. You say that you need to think about what has just happened.

35 35 Case Study – You Be the Judge (cont’d) The Jones representative runs back to his office, called his lawyer and, upon instructions from his lawyer, writes a letter to Clearview saying that the bid was withdrawn. The letter also said the bid could not be accepted in any event because it was non-compliant for the following reasons: i.it failed to include all of the addenda; ii.although the bid did have the company seal, the person who signed the bid on behalf of Jones had not been authorized by the Board of Directors to sign proposals on behalf of the company; and iii.the required bid bond was valid for 60 rather than 90 days. The letter concluded by saying the price was clearly a mistake and should not be accepted in any event.

36 36 Case Study – You Be the Judge (cont’d) The Clearview CEO wants to accept this bid as it is the only one within the company’s budget for this condominium project. That budget is $4,750,000. You have been instructed to communicate with Jones to say that the company cannot withdraw the bid and you intend to award it the contract. You include in your letter a copy of the construction contract and ask Jones to sign and return it. Jones refuses to sign the construction contract. In view of this position, you communicate with the other two bidders saying that Jones has refused to sign the construction contract but Clearview still needs the work done. You go on to state however that the prices of Smith and Brown are too high and you want them to go back and sharpen their pencils, and give Clearview their “best and final offer” (“BAFO”).

37 37 Case Study – You Be the Judge (cont’d) You did not ask Brown about the bribery conviction in Indonesia. There is nothing in its bid about the bribery conviction. Smith, the second lowest bidder, responds saying “No, the RFP didn’t provide for a BAFO process and if we participate all we are really doing is bidding against ourselves. We request that the contract be awarded to us for the price indicated in our bid.” Brown says that it will participate in the BAFO process and submits a revised price of $4,750,000. Clearview then decides to award Brown the contract.

38 Case Study – You Be the Judge (cont’d) Clearview then instructs its lawyers to sue Jones for the difference between its bid and Brown’s bid. Smith sues Clearview for breach of contract saying that it should have been awarded the contract because the RFP did not provide for a BAFO process. Smith also sues Clearview for awarding the contract to a company convicted of bribery and, as a result, did not meet the mandatory requirements of the RFP. You be the judge. 38

39 Procurement Document Drafting Tool Kit Ian J. Houston Lexpert: Tendering and Procurement June 6, 2012

40 40 Overview A.Preliminary Considerations B.Template vs. Customized C.Selection of Process D.Proposal Form and Content E.Evaluation F.Contract Form G.Key Provisions H.Conclusion

41 41 A.Preliminary Considerations 1.RFP, tender or hybrid 2.Regulatory context 3.Prequalified proponents or open process

42 42 1. RFP, Tender or Hybrid Considerations: Objectives and constraints of procurement process Market conditions Evaluation criteria Intention to initiate contractual relations?

43 43 2.Regulatory Context Trade Agreements (AIT) Procurement Directive Procurement By-Law Fairness Monitor

44 44 3.Prequalified vs. Open Technical, commercial/financial, process considerations Special technical skill set, experience, proprietary rights needed? Given nature and size of procurement, does it make sense to identify short list (cost to bid)? Complexity of evaluation

45 45 B.Template vs. Customized Template/precedents are important “tools” but beware of heavy reliance on boilerplate Procurement document needs to be tailored to the objectives and requirements of specific procurement Revisit template wordings and obtain debriefs from previous procurements Invest time and thought up front

46 46 C.Selection of Process Timetable Communications protocol -Prohibited contacts and lobbying prohibition -Media releases, public disclosures -No collusion -Data room

47 47 Selection of Process (cont’d) Meetings with proponents/bidders -Pre-bid meetings -Commercially confidential meetings -Scheduled site visits

48 48 Selection of Process (cont’d) Changes to proponent/bidders or their teams -No changes without consent -Change request protocol -Dealing with changes made without consent -Post submission changes

49 49 Selection of Process (cont’d) Conflict of interest and ineligible persons -Prompt disclosure -Discretion to deal with conflicts -Ineligible persons list -Conflict adjudicator

50 50 D.Proposal Form and Content Submission requirements -Submission deadline -Withdrawal -Amendment -Irrevocability -Format and context

51 51 E.Evaluation Evaluation team Clarification and verification Evaluation process -Compliance review (mandatory criteria) -Substantive review and scoring (financial and technical) -Final score and ranking

52 52 F.Contract Form (Finalizing Contract B) Simple award (tender) Invite comments and feedback CCMs Negotiation with preferred proponent Multiple negotiations

53 53 G.Key Provisions 1. Privilege clause 2. No liability/limit of liability 3. Litigation exclusion 4. Bid protest procedure

54 54 1.Privilege Clause Discretion re management of process – disqualification Discretion re evaluation – non-compliance Discretion re award – negotiation Post-submission addenda, re-issuance of process Cancellation Don’t overreach!

55 Sample Privilege Clause The Sponsors may, in their sole discretion: a)reject any or all of the Proposals; b)reject an Innovation Submission in any Proposal; c)reject the Key Personnel proposed in a Proposal and, if not satisfactorily substituted, reject the Proposal; d)reject the Financing Plan contained in a Proposal and thereby reject the Proposal; e)request a replacement Financing Plan if the Financing Plan contained in the Proposal is, in the opinion of the Sponsors, uncompetitive or incomplete, or both; f)accept any Proposal; 55

56 Sample Privilege Clause (cont’d) g)if only one Proposal is received, elect to accept or reject it or enter into negotiations with the Proponent; h)elect to discontinue the RFP Process at any time before the end of the RFP Process, including after the identification of a Preferred Proponent but before Commercial Close; i)at any time prior to Commercial Close, engage, on behalf of the Clients, any one or more of the Proponents to perform any part of the Work or other related work as early start works provided, however, that in the event that the Sponsors do so nothing therein shall create any obligations under this RFP or otherwise with respect to any of the Proponents other than as set out in the express agreement with respect to the early start works; 56

57 Sample Privilege Clause (cont’d) j)alter the Timetable, the RFP Process or any other aspect of this RFP; and k)cancel this RFP Process and subsequently advertise or call for new submission(s) for the same or different subject matter of these RFP Documents with the same or different participants. 57

58 58 2.No Liability/Limit of Liability Consider enforceability – be specific (Tercon) Be commercially reasonable – don’t overreach Limitation of liability and honoraria/bid fees

59 Sample Limit of Liability Clause Except as provided in Section [.], the Proponent agrees that if the City commits a material breach of its obligations under or in connection with this RFP (that is, a material breach of the bidding contract or Contract A), the City's liability to the Proponent and the aggregate amount of damages recoverable against the City for any matter relating to or arising from that material breach, whether based upon an action or claim in contract, warranty, equity, negligence, intended conduct or otherwise, including any action or claim arising from the acts or omissions, negligent or otherwise, of the City, shall be the lesser of: a)the Proposal preparation costs that the Proponent seeking damages from the City can demonstrate; and b)[$.] or the Honorarium, if applicable. 59

60 60 3.Litigation Exclusion Consider issue at pre-qualification stage Any litigation versus relevant matters Make it part of submission requirements and evaluation methodology

61 Sample Litigation Exclusion 61 The City may, in its absolute discretion, reject a Proposal submitted by Proponents if the Proponent, or any officer or director of the Proponent is or has been engaged either directly or indirectly through another corporation in a legal action against the City, its elected or appointed officers and employees in relation to: Any other Contract for works or Services; or Any matter arising from the City's exercise of its powers, duties or functions under the Local Government Act or another enactment within five years of the date of this Request for Proposal.

62 Sample Litigation Exclusion (cont’d) In determining whether to reject a Proposal under this clause, the City will consider whether the litigation is likely to affect the affect the Proponent's ability to work with the City, its consultants and representatives and whether the City's experience with the Proponent indicates that the City is likely to incur increased employees and legal costs in the administration of this Contract if it is awarded to the Proponent. 62

63 63 4.Bid Protest Procedures May be required (Ontario Procurement Directive) Process of directing disputes to achieve early identification and resolution Use of debriefing Expedited mediation/arbitration

64 Sample Bid Protest Procedures In the event that a Bidder wishes to review the decision of the Purchaser in respect of any material aspect of the RFT process, and subject to having attended a debriefing, the Bidder shall submit a protest in writing to the Purchaser within 10 Days from such a debriefing. Any protest in writing that is not timely received will not be considered and the Bidder will be notified in writing. A protest in writing shall include the following: 64

65 Sample Bid Protest Procedures (cont’d) A specific identification of the provision and/or procurement procedure that is alleged to have been breached; A specific description of each act alleged to have breached the procurement process; A precise statement of the relevant facts; An identification of the issues to be resolved; 65

66 Sample Bid Protest Procedures (cont’d) The Bidder's arguments and supporting documentation; The Bidder's requested remedy; Purchaser shall respond to Bidder’s protest, in writing, within 10 days of receipt of the protest, and such response shall contain an explanation of Purchaser’s reasons for agreeing with or rejecting Bidder’s protest (the “Response”). In the event that the Response does not resolve the protest, either party shall be at liberty to pursue any other method of dispute resolution to resolve the protest. 66

67 67 Conclusion Customized over boilerplate Plain language over legalise Commercially reasonable over extreme provisions Do your homework

68 Procurement from the Trenches/Complex Procurements Kasim Salim

69 Lexpert/BLG Course Tendering and Procurement: Mastering the Complexities Toronto - June 4, 2013

70 Procurement from the Trenches: the Anatomy of a Complex Procurement Process Kasim Salim - Ottawa

71 71 The Public Procurement Landscape What does public procurement look like What is being procured? What is being spent? Types of projects in progress The forecast for future public procurement activities

72 72 Objectives of Session The focus of this session is on a “complex procurement process”, which means certain assumptions will be made, such as: This may be a unique or on-off project for the sponsor This may be a new procurement method for the sponsor The sponsor will need to consider its internal structure and capacity to implement to procurement This session will draw broadly from our experience in complex. procurement processes and is not limited to any one project or type of public procurements This session will focus on both practical and legal issues and considerations

73 73 Initial Considerations Understanding the legal framework for public procurements Legislation and regulations Internal and external agreements Policies and directives The rise of, and role of, public procurement offices and agencies Special public procurement considerations Value for money Open, transparent, accountable and fair Competitive Policy considerations

74 74 Overview: The Stages of a Complex Procurement Process Stage 1: Procurement planning Stage 2: Project organization and pre-procurement activities Stage 3: Procurement The “in market” period Evaluations Negotiation with the preferred proponent Award of contract / closing the deal

75 75 Stage 1: Issues in Procurement Planning Planning the procurement What is being procured and how is it being procured? Determining and obtaining required internal project approvals Defining the scope of the project Authority given for project implementation

76 76 Stage 2: Issues in Project Organization and Pre-Procurement Activities Developing a roadmap for the procurement process Developed based on the goal/mandate of the procurement Identifying necessary internal and external procurement resources (and securing those resources) Identifying and understanding applicable timelines and the sequence of events Developing a decision-making structure within the procurement, such as “Business as usual” Steering/advisory committees Separate project office/entity

77 77 Stage 3: Issues in the In-Market Period The link between technical/financial specifications and the “legal” procurement documents

78 78 Stage 3: Issues in the In-Market Period Managing internal stakeholders during the procurement process

79 79 Stage 3: Issues in the In-Market Period The influence of external stakeholders on the procurement process

80 80 Stage 3: Issues in the In-Market Period Managing time and schedule: what to do when what you thought was going to happen doesn't happen (or doesn’t happen on time)

81 81 Stage 3: Issues in the In-Market Period Managing parallel procurement processes

82 82 Stage 3: Issues in Evaluations, Negotiations and Award of Contract The importance of clear evaluation guidelines and process for the conduct of evaluations

83 83 Stage 3: Issues in Evaluations, Negotiations and Award of Contract Managing the scope of negotiations

84 DM#


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