Getting e-tendering right

From the April 2023 print edition

In its May 2022 determination in Gregory Kerr Ltd. v. Canada (Department of Public Works and Government Services), the Canadian International Trade Tribunal rejected the complaint of a disqualified low bidder after finding that the bidder failed to submit a valid electronic bid bond. The dispute dealt with an invitation to tender issued by the Department of Public Works and Government Services on behalf of the Department of Fisheries and Oceans for repairs to a wharf structure located in Sambro, Nova Scotia.

Paul Emanuelli is the general counsel of The Procurement Office and can be reached at [email protected].

The government rejected the low bid after it was unable to verify that bidder’s electronic bid bond. The low bidder challenged that rejection, asserting that it had submitted a valid bond. However, the government confirmed that it was unable to verify the validity of the bid bond since the digital links contained in the electronic document did not work. Further, the government’s subsequent attempts to verify the bond on the bonding company’s website returned a “non-verified” result. As the tribunal noted, the bidder was not allowed to resubmit its bid bond in a valid format after the bid deadline since that would have amounted to improper bid repair. The bonding company’s post-deadline confirmation of the bid bond’s validity was rejected by the government for the same reason.

Technical issues
While the complainant claimed that the technical issues surrounding the bid bond’s validity were caused by the government’s electronic tendering system, the tribunal noted that none of the other bidders had any issues with the submission of their electronic bid bonds into the government’s tendering system. The tribunal concluded that the problem arose when the complainant, contrary to instructions provided by Trisura, its bonding company, merged the original electronic bid bond with its other bid documents and then submitted a single combined electronic file into the government’s tendering system. As the tribunal concluded, this had the effect of stripping away the electronic links in the original bid bond and rendering the bid bond non-verifiable: “On the basis of the record, the tribunal is left to conclude that the exercise of “dragging and dropping” the bond “into” other bid documents served to combine the bond with other PDF documents, which Trisura explicitly cautioned would void the bond. In “dragging and dropping”, it is likely that the software on the computer used by GKL created a copy of the bond without replicating the embedded digital certificates. The composite file containing this copy was sent to PWGSC, while the original bond, as received from Trisura, was retained by GKL’s computer.”

The tribunal also rejected the complainant’s assertions that the government’s invitation to tender (ITT) contained ambiguous instructions regarding the submission of electronic bid bonds, finding that the ITT instructions were clear and that any confusion on the part of the bidder could be attributed to the technical instructions provided by its own bonding company, rather than on the government’s bid submission instructions: “In summary, although GKL had obtained a verifiable bond from Trisura, that bond was not transmitted, in either original or verifiable form, to PWGSC. This is not attributable to any ambiguity in the language used by the ITT. To the extent that there was any confusion or ambiguity concerning the process of bond verification, it may have arisen from the instructions or process provided by Trisura, but the Tribunal makes no finding in this regard. The sole issue before the Tribunal is whether the tender document contains a latent ambiguity. It does not.”

Strict rules
As this case illustrates, the failure to submit a valid bid bond can prove fatal to bid compliance. Case law imposes strict rules on the acceptance of bid bonds and requires that those bonds be submitted in a valid form since defects cannot be cured after the bid submission deadline. As purchasing institutions expand their use of electronic tendering systems to allow for the acceptance of electronic bid bonds, they should ensure that their bid submission instructions clearly state that electronic bid bonds need to be submitted in a verifiable format.
Electronic bid bonds that are missing the digital links necessary to authenticate their validity do not meet the legal standards needed to ensure the compliance of a bid. For their part, when submitting electronic bid bonds, bidders should ensure that they carefully follow the technical instructions provided by their bonding company to ensure that the verifiability of their digital bond is not compromised before it is submitted into the purchasing institution’s electronic tendering system. SP