Background

Ontario Infrastructure and Lands and the Liquor Control Board, two public agencies, issued an RFP for the redevelopment of a large piece of Toronto waterfront. When the agencies disqualified a bidder, CG Acquisition (CG), because an ineligible person was listed in its bid, CG then sought a reconsideration. The agencies upheld the original disqualification, and CG appealed.

CG accepted that the original decision to disqualify was fair, but argued that, once the agencies undertook a reconsideration, they owed a freestanding duty of fairness based on the RFP terms, the agencies’ representations in the pre-proposal phase, the involvement of a fairness monitor, and government procurement policies. The crux of the argument was that the agencies had failed to adequately involve the fairness monitor in the reconsideration process.

CG sought damages based on a breach of this duty.

Court Decision

In CG Acquisition Inc. v. P1 Consulting Inc., 2019 ONCA 745 (CanLii), the Ontario Court of Appeal dismissed CG’s appeal, as it failed to establish that the agencies had acted unfairly in their conduct of the reconsideration. Although the court did not decide whether or not a duty of fairness exists in such circumstances, it reviewed the facts and found no unfairness to CG.

The agencies took these steps when reconsidering CG’s disqualification: they circulated the affidavits that explained the erroneous inclusion of the ineligible person to senior management and the fairness monitor, sought legal advice from external counsel, and advised the fairness monitor that the original decision would stand. The agencies found that CG’s explanation did not warrant rescinding the disqualification. The fairness monitor reviewed and concurred with the agencies’ decision after being assured that the agencies would take a consistent position in future RFPs.

In response to CG’s argument that the fairness monitor was insufficiently involved, the court ruled that there was no legal relationship between CG and the fairness monitor. The latter was contracted solely with the agencies to provide impartial advice on the fairness of the procurement process and had no authority to evaluate bids or provide legal advice.

Relevance to Procurement Law

The court declined to rule definitively on the existence of a freestanding duty of fairness in a reconsideration. However, the conclusion that the agencies’ steps were adequate and fair is a strong indication that owners who engage in a similar process will be protected from claims for damages.

This case serves as a reminder of the importance of documenting the process followed in both the initial evaluation of bids and any reconsideration of a decision.

Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case.  For any particular legal problem, seek advice directly from your lawyer or in-house counsel.  All dates, contact information and website addresses were current at the time of original publication.