Duties of Public entities

• Increasingly, Courts are articulating the concept that public procurements are not simply commercial transactions that are governed by contractual principles.

Public procurements also have a public law aspect, involving fiduciary obligations and common law duties of fairness. The trend appears to be to hold public authorities to higher standards of conduct than might be applicable to private commercial parties.

• A duty of fairness applies to the tendering process for government procurement contracts.

This duty of fairness includes such legal obligations as the duty to ensure a fair process for all bidders, a duty of impartiality, and a duty to disclose relevant information to bidders.

The Courts have held that procurements by public bodies are not simply commercial transactions governed by contractual principles. Because they involve the expenditure of public funds, and are intended to produce best value for the government, they are also subject to implied legal obligations of fair treatment of bidders.

The duty of impartiality means freedom from a reasonable apprehension of bias.

Public authorities may be held to higher standards of disclosure of relevant information than their private sector counterparts.

• Good faith in the performance of contractual obligations should be imposed on all contracts.

At a minimum, a party must not act in bad faith. The necessity for its application to government tendering is to "protect the integrity of the bidding system."

See Kencor Holdings Ltd. v. Saskatchewan , [1991] 6 W.W.R. 717; Health Care Developers Inc. v. Newfoundland (1996), 136 D.L.R. (4th) 609; R. v. Ron Engineering & Construction (Eastern) Ltd ., [1981] 1 S.C.R. 111; George Wimpey Canada Ltd. v. Hamilton-Wentworth (Regional Municipality), [1997] O.J. No. 3644 (Gen. Div.)

• Competitions are required to be fair and open with all the terms and conditions transparent .

Competitions are not to be conducted in private and the actual competition is not to be a mere formality.

See Complaint by Waters Chromatography, CITT File No. E91PRF6601-021-0022

• It is possible to submit a bid protest without destroying customer relations with your government client.

Every major supplier agonizes to some degree over this issue. No vendor likes to become engaged in litigation against a customer, nor to obtain the reputation of being a litigious supplier.

There are strategies for managing disputes with the government so as to minimize the impact on overall relations. Moreover, while this may be controversial, there is definitely a view among some consultants and practitioners that it is the supplier who is prepared to complain that gets respect. Contrary to what might be expected, instances of retaliation against suppliers who complain are rare. Most public officials are aware that suppliers have access to legal remedies, and are seldom affronted if a supplier resorts in good faith to those remedies.

It is important to manage such disputes, however, to ensure that they do not result in burnt bridges. In terms of submitting a protest without destroying client relations, the cornerstones of such a strategy are:

1. Satisfy yourself that the complaint has merit, is worth pursuing, and is relevant to the outcome of the competition. Don't complain simply out of anger at losing a competition.

2. Weigh the importance of the complaint in the context of your overall dealings with the government.

3. Seek a resolution of your complaint with government officials before launching a formal protest (but be aware of any time limitations on initiating a formal complaint).

4. Be well-prepared to discuss your complaint. Present logical arguments in support of your position.

5. If your complaints to government official do not result in any remedial action, then proceed with a formal legal challenge.

6. Whatever the forum, present your case in a reasonable and logical manner. Avoid using inflammatory language and making personal attacks against individuals. A legal challenge is not a place to vent your frustration or annoyance. The case will be won or lost on its merits, and not the heat of the language used.