By Alex Young HBA, JD, Gardiner Miller Arnold LLP
Tendering
Procurement, Proposals and other Possibilities Condo Corporations Have Many Alternatives at Their Disposal for Procuring Contractor Services, Each With its Own Latent Legal Implications
Tendering In the Fall 2016 Condovoice article entitled “Remembering Tendering!”, author Warren Ragoonanan provides an excellent summary of the law of tendering and how it applies to corporations who want to procure contractor services. The following are some of the salient points: • Tendering, or procurement as it is also called, is a competitive bidding process which creates two contracts – Contract A and Contract B. • Contract A is an agreement between the condo corporation and the contractor submitting a bid. The terms of Contract A are in the Instruction to Bidder found in the Invitation to Bid prepared by the condo corporation. The condo corporation promises to set up the bidding process and consider bids. In exchange, each contractor agrees to accept the tendering process terms and to submit a bid that conforms to the requirements in the Instructions to Bidders. • Contract B is the actual contract be-
tween the condo corporation and the contractor selected at the end of the bidding process. Contract B contains the work specifications – the price, the payment terms, the work timeline and all other items normally found in a service contract. • The law of tendering uses contractual liability to hold both condo corporations and contractors accountable to one another. The condo corporation has the onus of setting up a fair and equal tendering process, and the contractor has the onus of reviewing the tendering instructions and submitting compliant bids. Request for Proposals Although formal tendering is commonly used by condo corporations, it is not the only weapon in a condo corporation’s arsenal. If a condo corporation wants submissions from contractors but does not wish to create Contract A, it can issue a Request for Proposals (an “RFP”) (there are also hybrid procurement processes, but that is beyond the scope of this article). Unlike a
call for tenders, an RFP does not create a contractual obligation between the condo corporation and contractors – it is simply an offer to negotiate. In an RFP, the condo corporation asks contractors for expressions of interest and sets out its intention to consider those expressions of interest and negotiate with one or more contractors. Tendering vs. Request for Proposals In deciding between a call for tenders and an RFP, a condo corporation must carefully consider its goals and constraints. For example, if a condo is strapped for time on a project, a binding tender with a fixed deadline for submissions may be a more favourable option. The tables on the following page list the pros and cons that will help a condo corporation make its decision. Distinguishing Factors If a condo corporation chooses to engage in an RFP, it must be careful that it does not inadvertently create a call for tenders. Calling a process an “RFP” does not necessarily make it so; the terms and conditions CONDOVOICE FALL 2017
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