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Tenders - Duty to treat all bidders fairly |
In any contract process the authority calling the tenders has a duty to treat all bidders fairly and in good faith. |
In one recent case a municipality cancelled a tender after three contractors who bid on the project all tendered a price which far exceeded the estimate and project budget. |
Despite cancelling, the council entered into negotiations with the lowest priced tenderer in an attempt to negotiate an acceptable price. However, no significant acceptable cost savings could be negotiated. |
Almost 12 months after the original call for tenders, the municipality issued another for the project, with substantially the same plans and specifications as before. |
Four tenders were received, three from contractors which had participated in the original tender process. The lowest priced tenderer from this new round of bids - not one of the original tenderers - was awarded the contract. |
The courts found that, whether it had intended to or not, the municipality had engaged in 'bid shopping'. Its tendering protocol, consisting of a written policy and a well established practice, required that it work with low bidders in a situation where bids exceeded the original estimate. |
The original lowest priced tenderer was awarded loss of profit. |
