This story is completely fictional.
On October 1st, a Bob the Baker received an order from the Municipality of Green Deer to make 500 pumpkin pies for a Halloween celebration on October 31. Given the high volume of this order, Bob chose to issue an Invitation to Quote (ITQ) for the main ingredient – pumpkins.
Bob, feeling rushed because of the looming Halloween deadline, quickly created the ITQ with a closing date of October 25th for supply of the pumpkins to the bakery, with the following specifications:
- Must deliver 300lbs of pumpkin
- The cost per pound of pumpkin must not exceed $2.99
- The pumpkins must be delivered to the bakery by 9am on October 29th, and
- The pumpkins must be of fresh quality to be used for baking purposes.
Bob attached the bakery’s standard Purchase Order terms to the ITQ. Feeling proud of his ITQ drafting skills, Bob issued the ITQ by advertising in local newspapers and through various online sources.
Bob received 3 quotes by October 25th:
- A quote that met all specs from Elderbury Farms for $2.99 per pound of pumpkins
- A quote that met all specs from Fresh Farms for $2.89 per pound of pumpkins
- A quote that met all specs from Pretty Pumpkin Fields for $2.69 per pound of pumpkins
Time was running short and Bob was feeling a little rushed, so he quickly called Pretty Pumpkin Fields to tell them they had been awarded the contract based on lowest cost. He then turned his attention to preparing the pastry and other components for the pies.
When delivery day came, Bob not only received the pumpkins, but also received an invoice for “delivery fees” of $1000! As it turns out, Pretty Pumpkin Fields had to hire a food delivery service to deliver the pumpkins to the bakery because of the tight timelines.
Bob argued with the supplier that the ITQ clearly stated that the cost must not exceed $2.99 per pound, and the fine print terms and conditions attached to the ITQ stated that delivery fees were included. In turn, Pretty Pumpkin Fields argued that the cost per pound of pumpkin did not exceed $2.99 and the delivery charge was mentioned in the fine print terms and conditions that Pretty Pumpkin Fields had attached to its price quote. Bob had not objected to Pretty Pumpkin’s terms when accepting the quote.
Pretty Pumpkin Fields has threatened to go to the press and to the Municipality if Bob refuses to pay the delivery charge.
Would you decide that Bob is not required to pay the delivery charges, or would you decide that Pretty Pumpkin Fields is entitled to be paid the cost of delivery? Whose terms prevail and why? Finally, what is one lesson that can be learned from this Halloween story? Let us know in the comments below.
If you’re not 100% sure whose terms prevail, and why, consider reviewing our upcoming PSPP 201 course starting in January, 2019 that covers the details of planning a challenge-free procurement.
As a bonus, we’ve also included a free download of the top 8 considerations for attaching standard legal terms to RFPs by Catherine M. Samuel of McCarthy Tétrault LLP.