ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 09-300-68
DATE: 20120718

BETWEEN:

HER MAJESTY THE QUEEN Respondent – and – BARRY DOWDALL, MARINA DURWARD (A.K.A. MANCINI), PERRY HENNINGSEN, SUSAN LAYCOCK (A.K.A. McGREGOR, WENDIE LOUDON, PHILIP McDONALD, KEVIN O’ROURKE, DONALD POWELL, DAVID GELINEAU, THOMAS TOWNSEND, RONALD WALKER, DAVID WATTS, BRAINHUNTER INC., THE DEVON GROUP LTD., DONNA CONA INC., NORTAK SOFTWARE LTD., TIPACIMOWIN TECHNOLOGY INC., SPEARHEAD MANAGEMENT CANADA LTD., TPG TECHNOLOGY CONSULTING LTD. Applicants

Denis Pilon and Valérie Chénard , for Her Majesty the Queen

William L. Vanveen , for Donna Cona Inc., Barry Dowdall and David Gelineau
Patrick McCann , for Philip McDonald
Peter N. Mantas and Alexandra Logvin for TPG Technology Consulting Ltd.
Donald R. Powell , for Spearhead Management Canada Ltd.

HEARD: April 30, 2012

REASONS FOR DECISION

HACKLAND R.S.J. :

[ 1 ] The applicants seek a certiorari order quashing the order of a preliminary inquiry judge which committed them to stand trial on charges of bid-rigging contrary to s. 47(2) of the Competition Act and conspiring to bid-rig under s. 465 (1) (c) of the Criminal Code of Canada .

[ 2 ] The question before this court is whether there was sufficient evidence produced by the Crown at the preliminary inquiry to support a finding that the Requests for Proposals (RFPs) issued by Transport Canada (TC) and Public Works and Government Services Canada (PWGSC) were calls for bids or tenders within the meaning of s.47 of the Competition Act .

[ 3 ] Section 47 of the Competition Act , at the time of the charges, read as follows:

“Definition of “bid-rigging”

47. (1) In this section, “bid-rigging” means

( b ) the submission, in response to a call or request for bids or tenders, of bids or tenders that are arrived at by agreement or arrangement between or among two or more bidders or tenderers, where the agreement or arrangement is not made known to the person calling for or requesting the bids or tenders...

Bid-rigging

(2) Everyone who is a party to bid-rigging is guilty of an indictable offence and liable on conviction to a fine in the discretion of the court or to imprisonment for a term not exceeding five years or to both.

Position of the Parties

[ 4 ] The applicants are in the business of providing I.T. resources (i.e. professional and technical specialists) to the government and to the private sector. During 2005, TC and PWGSC issued RFPs which were responded to by the applicants. It was in the context of this process that the charges before the court arose.

[ 5 ] The applicants argue that the RFPs in question were intended for the purpose of creating a pre-qualification or standing order for the potential provision of I.T. services by the applicants to TC and PWGSC, if and when such services were required. The applicants’ position is that the preliminary inquiry judge erred in concluding that these RFPs could be considered as bids or tenders because they did not result in the proponents receiving any contractual entitlement to perform any services. They were simply a procurement mechanism designed to create a list of potential suppliers without incurring any obligation on the part of TC or PWGSC.

[ 6 ] The Crown argues that the RFPs resulted in the successful proponents being awarded agreements (the Standing Order Agreement in the TC process and the Contract in the other RFPs) which were contractual in nature even though they may not result in any services being utilized by TC or PWGSC. Therefore, the process was capable of constituting a bid or tender within s. 47(2) of the Competition Act .

Analysis of the Preliminary Inquiry Judge

[ 7 ] In her very careful and thorough reasons, Alder J., the preliminary inquiry judge, concluded that there was some evidence that the RFPs were bids or tenders. In relation to the TC RFP, she stated at paras. 88 and 89 of her reasons:

[88] The RFP itself uses numerous terms including proposals, bids, tenders, offers. It does however clearly state that by submitting a proposal the “bidder” for lack of a better word is offering to enter into a contract with Her Majesty on the terms set out therein. In addition a review of the CJV prepared by some of the accused in this case provides some evidence from which to infer this was a bid or tender. As noted in Powder Mountain this is a question to be determined on the circumstances of the case including the milieu in which the industry operates. Paragraph 4 of the CJV speaks repeatedly of the contract they are attempting to win – indicative of an intention to bid.

[89] While there is evidence to suggest this RFP is not a request for bid or tender and the proposals not bids or tenders there is nevertheless some evidence from which an inference could be made that they are. Given that it is not for this court to weigh competing inferences and where there are competing inferences, the most favourable for the crown must prevail I find there is some evidence that the Transport Canada RFP is a request for bid or tender and the submissions are bids and tenders.

[ 8 ] The preliminary inquiry judge correctly noted that the Competition Act does not define “bids” or “tenders” nor does it define “call or request for bids and tenders”. She also accepted, as do the parties before the court in the present application, that the civil jurisprudence is applicable in ascertaining the meaning of these terms. These terms are to be accorded their ordinary commercial meaning: see Martel Building Ltd. v. Canada , 2000 SCC 60 , [2000] 2 SCR 860.

[ 9 ] The preliminary inquiry judge made reference to the common law Contract A/Contract B paradigm first set out in Ontario v. Ron Engineering & Construction (Eastern) Ltd., 1981 , [1981] 1 S.C.R. 111 at pp. 122-123:

The significance of the bid in law is that it at once becomes irrevocable if filed in conformity with the terms and conditions under which the call for tenders was made and if such terms so provide.....Consequently, contract A came into being. The principal term of contract A is the irrevocability of the bid, and the corollary term is the obligation in both parties to enter into a contract (contract B) upon the acceptance of the tender.

And she also referred to the decision of the Ontario Court of Appeal in Chippewas of Mnjikaning First Nation v. Ontario (Minister Responsible for Native Affairs), 2010 ONCA 47 , [2010] 2 C.N.L.R. 18 (Ont. C.A.):

An RFP process differs from a tender process. As noted above, the Contract A/Contract B analysis may not always be triggered. It depends upon whether the parties intend to initiate contractual relations by the submission of a bid in response to the invitation to tender: M.J.B. Enterprises , at para. 23. In some cases, depending upon the wording of the request for proposals, the successful proponent may acquire a contract with the party calling for tenders on some matters, and the right to negotiate with the owner on others. In other cases, the only effect of being selected as winning bidder is to position the bidder as a negotiating party, with the content of the winning proposal serving simply to outline the bidder’s opening negotiating position. Authors Paul Sandori and William M. Pigott explain these principles as follows in Bidding and Tendering: What is the Law?, 2d ed. (Toronto: Butterworths, 2000), at p. 239:

The owner that wants submissions from interested parties but does not wish to create Contract A, may choose to issue a request for proposals (RFP). Properly drawn, an RFP asks parties for expressions of interest and sets out the owner’s intention to consider those expressions of interest and then to undertake negotiations with one or more parties whose proposal(s) appeal to the owner.

[ 10 ] The preliminary inquiry judge appreciated the applicants’ argument that the RFPs were not requests for bids or tenders and the proposals submitted in response were not bids and tenders. She noted that the various RFPs used different terminology, sometimes referring to proposals and other times to bidding and bids such that little if anything should be inferred from the names used in the documents. She also noted that the RFPs were very detailed, both as to procedures and to contents of the proposals.

[ 11 ] The preliminary inquiry judge also referred at paras. 76-79 to the evidence of certain Crown witnesses which she accepted. These witnesses explained that the goal of the RFPs was to “win a standing offer” with a view to subsequently getting “a contract where we would issue Task Authorizations”. The process was described as “similar to a supply arrangement”.

[ 12 ] The essence of the preliminary inquiry judge’s decision so far as the matters raised on this application are concerned, is to be found in paras. 80 and 81 of her reasons, which I set out in full:

[80] I am satisfied that there is some evidence that the CBSA RFPs were requests for bids or tenders and the proposals submitted were bids or tenders. The “winners” did receive a contract for services albeit one that required a further step (i.e. task authorization). The acceptance of the proposal resulted in contractual obligations for both parties. It must also be remembered that there is no requirement that a contract be awarded – the party calling for the bid or tender may decide not to award a contract and this does not affect the nature of a bid. The issue is whether the award would be a contract . In addition as noted in paragraph 39 above, an industry’s view as to what a bid is may help determined if a process or solicitation is in fact a bid or tender as per section 47 of the Competition Act . A review of the e-mails and CJVs prepared by the accused in this case and filed as exhibits would indicate that they viewed these RFPs as requests for bids. A great deal of time and effort was exerted in order to try to win the contracts. In addition it is relevant that these RFPs were for human resources, there had to be by necessity some further discussions after the contract award. The resources listed in the RFP may no longer be available, there must be a process to ensure the available resource still meets the requirements. [Emphasis added.]

[81] As noted the Act does not provide a definition of bid or tender and the case law does not provide a determinative definition of bid or tender. The cases emphasize that this is a question to be answered having regards to the circumstances of each case. The evidence in this case establishes that these RFPs were complex, detailed requests by the government to pre-qualified companies to submit proposals, in accordance with clearly defined requirements. These proposals would then be evaluated according to technical and financial criteria which is also identified in the RFPs. The three highest scoring companies would then be awarded contracts . Following these awards, the companies would be the only ones permitted to compete for task authorizations. The winner of the task authorization would then supply the resource . In addition, the highest scoring company would be offered the first task authorization without a further competition. These facts and circumstances are capable of supporting the inference that these CBSA RFPs were bids or tenders for the purpose of section 47 of the Act. This is a logical and reasonable inference based on the evidence and that is all that is required at this stage of the proceedings. [Emphasis added.]

[ 13 ] As noted in the underlined portion of the preliminary inquiry judge’s reasons in the previous paragraph, she recognized that, once the award was made to the three highest scoring companies, a further step was required (the issuance of a Task Authorization) before the proponent would be permitted to compete further in order to be engaged to provide I.T. services. She stated:

... there is no requirement that a contract be awarded – the party calling for the bid or tender may decide not to award a contract and this does not affect the nature of a bid. The issue is whether the award would be a contract.

[ 14 ] I understand the preliminary inquiry judge to be saying that, with respect to the award of the Standing Offer Agreement or the equivalent to the three successful proponents, the issue is whether such award is a contract. She concluded that there is some evidence for the jury to consider that this award is indeed a contract.

[ 15 ] She also expresses the opinion that the potential decision of the government not to award any work under the Standing Offer Agreement does not affect the issue. She noted “this does not affect the nature of a bid”. In other words, the preliminary inquiry judge was of the opinion that if the award of these supply agreements constitutes a contract then the proposals made by the applicants in response to the RFPs are indeed bids. And this is so even if (as is the case) TC or PWGSC are free to decide not to award any work under these agreements.

Analysis and Law

[ 16 ] I am of the opinion that the preliminary inquiry judge was correct, based on the evidence in concluding that the acceptance of the successful proponents’ bids created a contract evidenced by the Standard Offer Agreement or equivalent or, at least, that there was evidence from which a jury could infer that there was the requisite contractual intention.

[ 17 ] The applicants challenge the preliminary inquiry judge’s conclusion that the fact that the party calling for the bid or tender may decide not to award any work, would not affect the nature of a bid. The applicants argue there is no contract and, therefore, no bid or tender in these circumstances because there was no obligation on the part of TC or PWGSC to call up or engage any services under these supply agreements. The successful bidders “won” the right to a Standing Offer Agreement from TC or a ‘Contract’ in regard to the PWGSC RFPs. The agreements were acknowledged to be a type of procurement mechanism which, as Crown counsel fairly conceded in argument, were heavily weighted toward the government. Of particular significance, under these agreements TC and PWGSC were under no obligation to engage the applicants to provide I.T. services by way of call-up, task authorization or otherwise. Government witnesses explained that the process was specifically designed to allow the government to avoid making any commitment to purchase these services unless they chose to do so from time to time. As the preliminary inquiry judge noted, the Standing Offer Agreements appear to be contractual in nature. The proponents sought to obtain these agreements because it gave them a preferred opportunity to be hired for I.T. projects as they arose. There was value and, thus, consideration in achieving this status. If TC or PWGSC chose to engage in the work within the scope of the RFPs, they were likely bound to offer such work to one or more of the successful proponents who received the Standing Offer Contract or equivalent, although this was not conceded by the applicants.

[ 18 ] I would observe as well that these agreements were designed to contractually limit the obligations of TC and PWGSC to provide work. I think it is untenable to argue that these agreements did not give rise to enforceable rights and obligations of both parties even if the rights were heavily balanced in favour of the government.

[ 19 ] The applicants rely on the evidence of several government witnesses (officials involved in this procurement process) who expressed the opinion that these supply arrangements were not contracts and that a contract, if any, would arise only when TC or PWGSC actually called up services by way of the issuance of ‘task authorizations’, and, even then, the successful proponents who held these supply agreements did not have to respond to the task authorizations, if they chose not to. If they chose to respond to the task authorizations they would normally then be required to compete for the work with the other holders of these supply agreements.

[ 20 ] I would observe that these officials were not lawyers and were not offered as expert witnesses, nor were they accepted as such by the court. Rather, they were testifying as to the operation of these procurement arrangements and the expectation of the parties. They were not authorized to give opinion evidence on the legal question of whether the supply agreements in question were contracts. Moreover, on my reading of their evidence, what they were saying was that these arrangements did not impose any obligation on the government to provide the holders of these supply agreements with any work. In other words, they were saying that the supply agreements were not to be viewed as contracts to supply work. While this evidence was no doubt of assistance in describing the workings of these supply agreements, it does not assist in answering the question of whether they were contracts in the usual sense of defining enforceable rights and obligations between the parties.

[ 21 ] Notwithstanding that the RFP resulted in the successful proponents being awarded the Standing Offer Agreements or the equivalent, does this procurement process involve the solicitation and receipt of bids and tenders as those terms are recognized in the jurisprudence? The applicants submit that the essential characteristics of a bid or tender, as identified in the jurisprudence, are missing in the procurement arrangements in which these applicants engaged. In particular, there is no “Contract B” in this process (the contract to provide the services) other than as a future contingency.

[ 22 ] The extensive commercial case law in this area seeks to distinguish between mere proposals (sometimes referred to as invitations to treat), which do not create contractual relations between the proponents and the entities requesting proposals, and solicitations, which do create contractual obligations with bidders such that a bidding contract or ‘Contract A’ comes into existence. Bids and tenders are products of a contractual arrangement and create rights and obligations between the parties. The appellate jurisprudence suggests that whether a bidding contract exists is a matter of contractual intention to be determined from a review of the terms of the RFPs and other relevant circumstances. The question that arises from the present case is whether the absence of a commitment to provide work on a specific project or undertaking precludes the existence of a bidding contract (Contract A) or whether this feature of the process is simply a relevant factor in determining if a contractual tender process was intended.

[ 23 ] In Buttcon Ltd. v. Toronto Electric Commissioners (2003), 2003 , 65 O.R. (3d) 601, the issue was whether an RFP was intended to create a binding contract with the successful proponent or intended merely to issue a non-binding invitation to enter into negotiations. The Court reviewed the RFP document and noted many elements indicating it was simply a pre-qualification process. The Court noted it was in essence “a competency search”, which the applicants say is the situation in the present case. The Court stated, at para. 49:

On the whole of the evidence, I am satisfied that the RFP was exactly that – a request for proposals and nothing more. The prize at the end of the exercise was for the successful proponent, the opportunity to negotiate for a contract to build the services centre. There was no intention by the issuance of this document to create contractual relations, and Contract A did not arise on the facts here presented.

[ 24 ] In Mellco Developments Ltd. v. Portage La Prairie (City) , 2002 MBCA 125 , 166 Man.R. (2d) 285, at paras. 24 and 73 , the Manitoba Court of Appeal upheld a trial judgment which turned on the distinction between a formal tendering document and a request for proposal. The trial judge had noted that the RFP was not a call for a tender or bid because, as a request for proposal, it simply invited proposals that may or may not be pursued. In that case, the city which issued the RFP wanted to keep its options open by obtaining as many different concepts and proposals as possible. In upholding the trial decision, the Court of Appeal held at para. 73:

When these principles are applied to the facts before us, I have no difficulty in concluding that the RFP was not intended to create a binding contractual relationship between the city and the “winning bidder”. A simple examination of … the RFP … provides many examples of the city’s intention to negotiate rather than to enter into a binding agreement with the successful proponent.

[ 25 ] A case which supports the proposition that Standing Offers do not fall within the ambit of bids or tenders is Leeds Transit Sales Ltd. v. Ottawa , [2004] O.T.C. 840 (S.C.) , in which Métivier J. held that no contract was formed between parties in a Request for Standing Offer and that, because of the need for subsequent clarifications, the issuance of the RFP showed no intention to create contractual relations. In Leeds Transit , the issue was whether the procurement put out by the City of Ottawa was simply an RFP or was a tender process. The RFP contained a specific scoring system for technical merit, cost, service and delivery (similar to the TC’s RFP in the present case). The RFP clearly stated that the City was not obligated to enter into a contract with any proposer. As in the present case, the RFP in Leeds Transit contained the word “tender” but also referred to it being an RFP. The court noted that it was the intention of the parties that was determinative and, specifically, whether there was an intention by both parties to initiate relations by the submission of a proposal.

[ 26 ] The court framed the issue as being whether or not the RFP was only a non-binding invitation to enter into negotiations possibly resulting in a contract, in which case it would not be a call for bid or tender. The court in Leeds Transit concluded that the solicitation was not a tender and was a true RFP. Arguably similar to the present case, the City had only provided basic standards and had yet to make a final decision on design and other elements. The court also noted that the RFP provided that it did not commit the City to award a contract, which showed a clear intention on the part of the City not to be contractually bound as a result of the RFP process.

[ 27 ] I accept the applicants’ argument that the jurisprudence recognizes a distinction between mere pre-qualification or standing offers and RFPs on the one hand and bids or tenders on the other. The former do not normally result in a binding contract, rather they are simply proposals/invitations to treat. Bids and tenders, on the other hand, are binding contracts. In the present case, the preliminary inquiry judge has reasonably concluded that there is some evidence from which a trier of fact could reasonably infer that the process of obtaining a Standing Offer Agreement or the equivalent was contractual. I do not take the applicants to be challenging the finding of ‘some evidence’ except in so far as they maintain that the absence of any commitment to engage the applicants’ services precludes the arrangements being classified as contractual. As noted, if such services are to be called up by TC or PWGSC, only then is a further process engaged in which Task Authorizations are given to the three standing offer agreement holders who are then required to compete between themselves for the award of the contracts for the actual provision of I.T. services. Such a standing offer, even if potentially contractual, does not fit easily within the Contract A/Contract B analytical paradigm and may be difficult to characterize as a bid or tender based on the case law.

[ 28 ] The principles in Ron Engineering have been restated and explained further in subsequent commercial cases by the Supreme Court of Canada. In Double N Earthmovers Ltd. v. Edmonton (City) 2007 SCC 3 , [2007] 1 S.C.R. 116, the Supreme Court summarized the relevant principles; at paras. 2 and 3:

[2] Where the parties intend to initiate contractual relations, a submission in response to a call for tenders can lead to the formation of Contract A. The call for tenders is the offer by the owner to consider the bids it receives and to enter into the contract to complete the project where a bid is accepted. A bidder accepts that offer by submitting a bid that complies with the requirements set out in the tender documents. The contractual rights and obligations of the parties to Contract A are governed by the express or implied terms of the tender documents.

[3] A bid also constitutes an offer to enter into Contract B. This is the contract to complete the project for which bids were sought. Where a bid is accepted, the terms of the tender and bid documents become the terms and conditions of Contract B.

As the court pointed out, whether Contract A arises or not depends upon whether the parties intend to initiate contractual relations by the call for and the submission of a tender. This intent is to be inferred from the terms and conditions of the tender call and other relevant circumstances.

[ 29 ] As the Supreme Court pointed out in Double N Earthmovers , “the call for tenders is the offer by the owner to consider the bids it received and to enter into the contract to complete the project where a bid is accepted”. The applicants argue that, as in the present case, when an owner only offers to allow the proponent onto a list of qualified or preferred suppliers, with no obligation to engage any services from the proponent, the submission of such a proposal cannot give rise to Contract A. In other words, the process cannot be characterized as a bid and tender when there is no Contract B (the contract for the actual work or services).

[ 30 ] In my opinion, the central question in the present application is whether the preliminary inquiry judge was precluded from finding that the evidence could support the existence of a tendering contract (Contract A) on the basis that there was no certainty of a Contract B (the actual call up or engagement of I.T. services) coming into existence. As noted, some cases have identified the lack of certainty of a Contract B coming into existence as an important reason why the tendering process was to be characterized as simply a proposal or invitation to treat. This lack of certainty may be a factor weighing in favour of the conclusion that the parties did not intend the tendering process to be contractual in nature. On the other hand, the appellate jurisprudence suggests that there can be a tendering contract (Contract A) even if there may be no Contract B to perform the work or services in question, with the result that one may have a bid or tender, i.e. a tendering contract (or a Contract A), in such circumstances.

[ 31 ] Double N Earthmovers confirms the basic principle that to constitute a call for bids and tenders, the solicitation process must be intended to result in a binding Contract A. The parties to Contract A may agree that Contract B might be negotiated in some measure as long as it is specified in the call for bids and tenders. If the negotiation is not successful, that is if Contract B is not created, the invitation to submit bids or tenders may remain a call for bids or tenders. Thus, while important, a call for bids and tenders does not require a guarantee that an ultimate contract (Contract B) will be awarded by the party calling for bids. I agree with the Crown’s submission that the rulings of the Supreme Court suggest that it is not the final result (Contract B) that determines if the parties are involved in contractual relations, rather, it is at the prior stage of the process that the intention of the parties to enter in Contract A should be examined. Where the parties intend to enter into Contract A, there is, for that reason, a call for bids or tenders.

[ 32 ] Further light is shed on this issue in the recent decision of the Supreme Court of Canada in Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) , 2010 SCC 4 , [2010] 1 S.C.R. 69. This case involved a pre-qualification process somewhat analogous to the present case. The Province of British Columbia issued a request for expressions of interest for the design and construction of a highway. Six teams responded with submissions including Tercon and Brentwood. A few months later, the province informed the six proponents that it now intended to design the highway itself and issued request for proposals for its construction. Under the terms of the RFP, only the six original proponents were eligible to submit a proposal. An issue in the case was whether the successful bidder had violated the eligibility criteria by involving a third party in its bid, which was the trial judge’s finding sustained on appeal.

[ 33 ] Justice Cromwell explained, at paras. 17, 19-21, the appropriate analysis to be followed with respect to the Contract A/Contract B framework:

[17] Submitting a compliant bid in response to a tender call may give rise to a contract – called Contract A – between the bidder and the owner, the express terms of which are found in the tender documents. The contract may also have implied terms according to the principles set out in Canadian Pacific Hotels Ltd. v. Bank of Montreal , 1987 , [1987] 1 S.C.R. 711; see also M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd. , 1999 , [1999] 1 S.C.R. 619, and Martel Building Ltd. v. Canada , 2000 SCC 60 , [2000] 2 S.C.R. 860. The key word, however, is “may”. The Contract A/Contract B framework is one that arises, if at all, from the dealings between the parties. It is not an artificial construct imposed by the courts, but a description of the legal consequences of the parties’ actual dealings. The Court emphasized in M.J.B. that whether Contract A arises and if it does, what its terms are, depend on the express and implied terms and conditions of the tender call in each case. As Iacobucci J. put it, at para. 19:

What is important ... is that the submission of a tender in response to an invitation to tender may give rise to contractual obligations, quite apart from the obligations associated with the construction contract to be entered into upon the acceptance of a tender, depending upon whether the parties intend to initiate contractual relations by the submission of a bid . If such a contract arises, its terms are governed by the terms and conditions of the tender call [Emphasis added.]

[19] The trial judge did not mechanically impose the Contract A/Contract B framework, but considered whether Contract A arose in light of her detailed analysis of the dealings between the parties. That was the right approach. She reviewed in detail the provisions of the RFP which supported her conclusion that there was an intent to create contractual relations upon submission of a complaint bid. She noted, for example, that bids were to be irrevocable for 60 days and that security of $50,000 had to be paid by all proponents and was to be increased to $200,000 by the successful proponent. Any revisions to proposals prior to the closing date had to be in writing, properly executed and received before the closing time. The RFP also set out detailed evaluation criteria and specified that they were to be the only criteria to be used to evaluate proposals. A specific form of alliance agreement was attached. There were detailed provisions about pricing that were fixed and non-negotiable. A proponent was required to accept this form of contract substantially, and security was lost if an agreement was not executed. The Ministry reserved a right to cancel the RFP under s. 2.9 but in such event was obliged to reimburse proponents for costs incurred in preparing their bids up to $15,000 each. Proponents had to submit a signed proposal form, which established that they offered to execute an agreement substantially in the form included in the RFP package. Further, they acknowledged that the security could be forfeited if they were selected as the preferred proponent and failed to enter into good faith discussions with the Ministry to reach an agreement and sign the alliance agreement.

[20] In summary, as the trial judge found, the RFP set out a specifically defined project, invited proposals from a closed and specific list of eligible proponents, and contemplated that proposals would be evaluated according to specific criteria. Negotiation of the alliance construction contract was required, but the negotiation was constrained and did not go to the fundamental details of either the procurement process or the ultimate contract.

[21] There is, therefore, no basis to interfere with the judge’s finding that there was an intent to create contractual obligations upon submission of a compliant bid. I add, however, that the tender call in this case did not give rise to the classic Contract A/Contract B framework in which the bidder submits an irrevocable bid and undertakes to enter into Contract B on those terms if it is accepted. The alliance model process which was used here was more complicated than that and involved good faith negotiations for a Contract B in the form set out in the tender documents. But in my view, this should not distract us from the main question here. We do not have to spell out all of the terms of Contract A, let alone of Contract B, so as to define all of the duties and obligations of both the bidders and the Province. The question here is much narrower: did contractual obligations arise as a result of Tercon’s compliant bid and, if so, was it a term of that contract that the Province would only entertain bids from eligible bidders? The trial judge found offer, acceptance and consideration in the invitation to tender and Tercon’s bid. There is no basis, in my respectful view, to challenge that finding even if it were open to the Province to try to do so at this late stage of the litigation.

[ 34 ] It can be seen from the court’s reasons in Tercon that there can be a bidding contract (Contract A) even when Contract B is to be the potential product of a subsequent negotiating process. On the other hand, as the court noted, the subsequent negotiation of the alliance construction contract (Contract B) pertained to a specifically defined project and “...was constrained and did not go to the fundamental details of either the procurement process or the ultimate contract”.

[ 35 ] In my opinion, the court’s reasons in Tercon suggest that in order for a bidding contract (Contract A) to exist, the parties must be found to have intended to enter into contractual relations with respect to the proposal. Only then will the proposal constitute a bid or tender. On the other hand, such an intention will likely not be inferred when there is no specific project and no likelihood that work will be awarded to any of the successful proponents. In the court’s words, “the fundamental details... of the ultimate contract” must be known.

[ 36 ] In the present case, the Crown’s witnesses explained that the procurement process in issue was designed to create a list of pre-approved suppliers of I.T. services (3 in most RFPs, 2 in another) who could be issued with task authorizations (or the equivalent) if and when TC or PWGSC decided they required such services. And, as noted, this would trigger a secondary bidding process among the approved suppliers. A fundamental aspect of this procurement process was that TC and PWGSC were undertaking no obligation to utilize any services from the approved suppliers. The lack of any Contract B was specifically contemplated and can be said to be the principal rationale on the government’s part for the procurement process being structured as it was.

[ 37 ] The preliminary inquiry judge was of the opinion that there was some evidence of a bidding contract, and, therefore, the applicants’ proposals could be viewed by the trier of fact as a bid or tender. She recognized that the question was ultimately one of contractual intention appropriately left to the trier of fact at trial. It was suggested in argument that a reasonable doubt at trial as to whether these proposals were bids or tenders seems inevitable and involves difficult, primarily legal analysis, which is ill suited for a jury. These are not relevant considerations as they relate to the test for committal for trial.

[ 38 ] I am of the opinion that the preliminary inquiry judge was correct in her finding that the many contractual indicia, which she described, are sufficient to potentially characterize this procurement process as creating a bidding contract.

[ 39 ] The applicants’ position is that, in circumstances where the fundamental nature or goal of the procurement process is merely to create a list of potential qualified suppliers with no specific or clearly identified project nor commitment to engage any services at all, any proposals to obtain such work are simply proposals and not contractual bids or tenders. They argue with some force that, without the likelihood of a Contract B as discussed in the jurisprudence, there is no Contract A and any proposals furnished in a procurement process structured in that manner are not bids or tenders within s. 47(2) of the Competition Act . I respectfully disagree with this submission. The controlling appellate jurisprudence requires the court to make a finding as to whether the parties intended a contract in the sense of creating binding rights and obligations with respect to the procurement process. Such an intention is to be inferred from the terms of the RFP and all other relevant circumstances. A term permitting the party issuing the RFP to retain the discretion not to proceed to call up work or services is but one aspect of the analysis. The preliminary inquiry judge reasonably concluded that there was some evidence to go to the jury on whether this procurement process was contractual and, therefore, whether the RFP was a request for bids or tenders.

[ 40 ] Accordingly, this application is dismissed.

“Hackland R.S.J.”

Mr. Justice Charles T. Hackland

Released: July 18, 2012

COURT FILE NO.: 09-300-68

DATE: 20120718

ONTARIO SUPERIOR COURT OF JUSTICE
HER MAJESTY THE QUEEN – and – BARRY DOWDALL, MARINA DURWARD (A.K.A. MANCINI), PERRY HENNINGSEN, SUSAN LAYCOCK (A.K.A. McGREGOR, WENDIE LOUDON, PHILIP McDONALD, KEVIN O’ROURKE, DONALD POWELL, DAVID GELINEAU, THOMAS TOWNSEND, RONALD WALKER, DAVID WATTS, BRAINHUNTER INC., THE DEVON GROUP LTD., DONNA CONA INC., NORTAK SOFTWARE LTD., TIPACIMOWIN TECHNOLOGY INC., SPEARHEAD MANAGEMENT CANADA LTD., TPG TECHNOLOGY CONSULTING LTD.

REASONS FOR DECISION

HACKLAND R.S.J.

RELEASED: July 18, 2012