The B.C. Construction Association (BCCA) is raising a red flag about the removal of Contract A from the procurement process. It is the first time ever that the association has issued an industry wide alert because the removal of Contract A is “the most significant violation of public sector procurement processes that the construction industry has seen to date.”
“We want to make sure contractors are aware of the level of risk when they submit bids on projects where owners have removed Contract A from their procurement documents,” said BCCA president Chris Atchison during an industry webinar.
In Canadian contract law, Contract A ensures fairness, openness and transparency between the owner and each compliant bidder who responds to a procurement call.
“The concept of a bidding contract is to ensure that everybody knows what the rules of the procurement are and everybody follows the rules,” said Michael Demers, legal counsel for BCCA.
But without Contract A, BCCA is cautioning there are no rules and it’s not business as usual.
The growing and problematic number of public owners, including some municipalities, school districts, universities, and crown corporations, who are removing Contract A from their procurement documents is a major concern and impacts the entire supply chain from the general contractor to the electrician to the plumber.
“This is not just an issue for general contractors,” stressed Katy Fairley, BCCA consultant and principal of Fairley Strategies. “Some of these owners have started writing in language explicitly into a wide variety of procurement documents (RFP, RFQ) that are removing terms that expressly avoid owners having to act fairly.”
So what does it mean for companies choosing to submit bids? It means no fairness, bias and bid shopping, according to Fairley.
“They don’t have an obligation to treat bids fairly or consistently and could share your submission price. They could now disclose your bid to people who didn’t even bid in the first place. There are no rules,” she said. “The reason we issued this alert is to identify these risks and then it’s your choice whether to continue to do business with them.”
The implications for industry are significant and include:
- Submissions can be withdrawn at any time, changed at any time.
- Submissions can be qualified, resulting in an apples vs oranges situation
- There may be no obligation on trade subcontractors or suppliers to keep their prices firm.
- There may be no binding bid security.
- The underlying construction contract terms are open for negotiation so that bidders could all be bidding on different terms and conditions for different scopes of work.
Fairley also dispelled some myths from owners about the removal of Contract A such as public entities in B.C. and the rest of Canada are moving this way to ensure the public gets quality and value for taxpayer dollars.
She said not all public entities are doing this, citing that Infrastructure BC leads procurements and they don’t remove Contract A. The largest government funded projects in the province are still delivered with Contract A intact.
Several recommendations were offered by Fairley.
“Read all procurement documents carefully. Do not assume that they are the same as you previously saw from this owner. Understand the intent and consequences of all the procurement and contract terms,” she advised. “Consider qualifying your bid as long as you know the risks associated with doing that and are prepared to accept the consequences.”
Cheryl Mah is managing editor of Construction Business.
