Frequently Asked Questions
On June 18th, 2024, the BC Construction Association issued an Industry Alert.
Its intention is to warn the public and contractors of unacceptable levels of risk following the explicit removal of “Contract A” by many public owners.
Following the release of this Industry Alert, BCCA hosted an informational webinar on the implications of the removal of “Contract A”. We share answers to some of the questions asked by participants with you here.
1. Why did BCCA issue the Industry Alert on the removal of “Contract A”?
BCCA issued the Industry Alert because construction association members and industry, those who actually do the work in the construction industry, cannot proceed on the assumption that it is ‘business as usual’, given the deliberate removal of ‘Contract A’ by certain public owners. The removal of “Contract A” is the most significant violation of public sector procurement processes that the construction industry has seen to date.
In Canadian contract law, “Contract A” ensures fairness, openness and transparency between the owner and each compliant bidder who responds to a procurement call. “Contract A” typically includes terms and conditions such as deadlines, evaluation criteria, privilege clauses and often the requirement for bid security. It serves to protect the legitimate expectations and interests of all parties.
The absence of “Contract A” undermines the integrity of the procurement process, and may result in:
- Lack of transparency;
- Bid shopping;
- Unequal treatment;
- Increased risk for bidders;
- Legal vulnerabilities;
- Reputational damage to the public sector owner.
2. Does this Industry Alert mean BCCA is opposed to the use of Requests for Proposals (RFPs)?
No. Requests for Proposals (RFPs) have their place in procurement methodologies. We see RFPs used for the procurement of construction management, design-build and Infrastructure BC-led major projects, for example. RFPs can be a procurement process that is fair, open, and transparent, but it takes experience and diligence. To achieve this, owners can use a fairness monitor and must always employ a “two-envelope” evaluation process. In this process, financial information is kept separate and unknown to evaluators until after they have completed their individual qualitative assessments and the group evaluation is finalized.
BCCA’s policies are opposed to the use of RFPs to procure projects delivered under a design-bid-build project delivery method. BCCA is opposed to the removal of “Contract A” from any public sector procurement document regardless of what it is titled. However, experience tells us the removal of “Contract A” happens most often with procurements titled Request for Proposals (RFP) and Negotiated Request for Proposals (NRFP).
For clarity, using an RFP does not necessarily mean that “Contract A” is removed. The Industry Alert was issued to warn about any type of procurement that explicitly removes “Contract A,” regardless of what that procurement is called.
The Courts have made clear that the title or name of a procurement document means significantly less than the terms and conditions written in the document (Tercon). As the saying goes, if it walks like a duck and quacks like a duck, it’s a duck. At BCCA, we like procurements that are ducks: clear and fair, and require all parties to adhere to the rules of that procurement document and bind themselves to their commitment and statements.
Further information on BCCA’s policies regarding the use of RFPs and procurement generally, please refer to our policies.
3. How is this any different from a strongly written privilege clause where the owners basically can do what they want anyway?
Even with privilege and discretionary clauses and with the establishment of “Contract A,” the owner generally has a duty to treat all bidders fairly and equally. This means they must review all qualifying bids and reject any that do not meet the stated requirements.
At least with privilege and discretionary clauses, the owner is being very clear about the rules and bidders can make an informed business decision whether to submit or not.
4. Aren’t public entities in BC and the rest of Canada moving this way to ensure the public gets quality and value for taxpayer dollars?
This is inaccurate.
The idea that removing fairness from procurement processes would ensure quality and value for taxpayers is misguided at best. Fairness and transparency are fundamental to maintaining the integrity of public procurement. When fairness is compromised, it can lead to a lack of competition, higher costs, resulting in lower quality outcomes.
In fact, in our review and conversations, we’ve seen that the largest and most sophisticated capital procuring entities in BC do not remove “Contract A.” Such actions undermine the principles of fair competition and transparency, which are essential to achieving the best value for taxpayer dollars. They understand the benefit to an owner, industry and taxpayers of a fair, competitive and binding procurement process. Therefore, it is essential to uphold fair procurement practices to ensure that public projects are executed efficiently and effectively, benefiting all stakeholders, including taxpayers.
For example, a review of Infrastructure BC-led procurements shows these documents do not remove “Contract A”. And, yet, Infrastructure BC assists and leads owners in the delivery of major projects such as the province’s new hospitals, bridges and Skytrain projects.
Further, since issuing the Industry Alert, we have heard from other jurisdictions who confirm that the removal of “Contract A” is not a commonly accepted practice across Canada.
5. I’m a taxpayer. Is this really such a big deal?
In the opinion of BCCA, the removal of “Contract A” is the most significant violation of public sector procurement processes that the construction industry has seen to date. Taxpayer-funded projects can and should be held to a higher standard.
Many of us likely don’t remember what pursuing and bidding on public sector projects was like before Ron Engineering. This landmark decision by the Supreme Court of Canada is the cornerstone for fair, open and transparent procurement in Canada, providing a mechanism to protect both owners and bidders from unfair practices. Before Ron Engineering, procurement was the Wild West; bidders were subject to the misconduct of unscrupulous owners, and owners did not know where they stood legally with bidders. After 40 years of relative clarity in procurement rules, and a legal basis to ensure both owners and bidders followed the rules, it appears some public owners want to take us all back to the old days where they can’t be held to account for their wrongdoings.
Uncertainty is risk in our business and the absence of fairness and transparency is the ultimate risk. In the face of risk, the entire supply chain from trade and general contractors to suppliers will bid (or not bid) accordingly, taking into account the risk into their pricing. That drives up the price of infrastructure that our communities need.
It’s a frustrating time for an industry that is working hard to meet the housing and infrastructure needs of British Columbians.
To define procurement, BCCA looks to two resources, CCDC 10 – 2018 A Guide to Construction Project Delivery Methods and BC Government’s Core Policy & Procedures Manual (“CPPM”).
- CCDC 10 – 2018 A Guide to Construction Project Delivery Methods defines procurement as: “the contracting activities commencing with the first approach to the marketplace and all activities thereafter required to conclude the formation of contracts.”
- The BC Government’s CPPM defines procurement as: “the acquisition or intended acquisition, of goods, or services (including information management and information technology [IM/IT] goods or services) or construction by any means.”
6. I’m a trade contractor. Is this just a general contractor problem?
This is not just an issue for general contractors. When an owner removes “Contract A,” the bidding subcontractor is faced with the same risks described in the Industry Alert.
The removal of “Contract A” results in additional significant issues, for which there is currently little legal precedent to offer guidance.
For example, removing “Contract A” could mean:
- Submissions can be withdrawn at any time.
- Submissions can be 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.
7. What should I do if I see a procurement that explicitly removes “Contract A”?
BCCA recommends individual firms proceeds with extreme caution in the face of this unprecedented legal landscape resulting from the removal of “Contract A.”
First, contact BCCA and your regional construction association to signal a case of “Contract A” removal by using BCCA’s Public Sector Transparency Tip Line at https://bit.ly/BCCATipLine
We can contact the owner on your behalf so you can stay anonymous.
Other actions you can take are:
- Ask yourself if you want to pursue and bid on a project with an owner who starts a project by removing an obligation to act fairly and with integrity in its dealings with you.
- Read all the procurement documents carefully:
- Do not assume they are the same as previously used by that owner.
- Understand the intent and consequences of all the procurement and contract terms.
- Use the RFI process during procurement to question the intent of the owner’s procurement process.
- Consider qualifying your bid as long as you know the risks associated with doing so, and are prepared to accept the consequences.
- Consult an experienced construction lawyer.
- Consult your surety and broker.
8. If “Contract A” is removed and the procurement documents require a bid bond and/or consent of surety, is either enforceable?
This is exactly why the removal of “Contract A” results in significant issues, for which there is currently little legal precedent to offer guidance.
A bid bond in the procurement process ensures that the bidder is financially committed and capable of fulfilling the contract at the offered price, providing assurance to the owner that the bid is serious and credible. Bid bonds protect owners by guaranteeing compensation if the successful bidder fails to honour their bid. This promotes fair competition and reduces the risk of project delays and financial losses.
Bid Bonds are issued in reference to the tender documents, so if the owner specifies and accepts the Bid Bond they are implicitly acknowledging “Contract A” for compliant bids (whether they are labeled “proposals” or something else). In the context of Ron Engineering precedent, the surety industry will be interested in how the courts rule if a case is brought against an obligee contesting the existence of Contract A.
A Consent of Surety is a letter (of commitment), not a bond. It does not come into effect until the contract is signed. SAC advises sureties to be wary about issuing a consent of surety if “Contract A” is removed because, by definition, the contract terms aren’t known – so the surety would be committing to an open-ended (or at least undefined) obligation which they don’t like to do.
Alert your broker and contact BCCA.
The above was written with the assistance of the Surety Association of Canada
9. As an owner, if we don’t remove "Contract A," we will be forced to award the project. What if we are over-budget?
This is misinformation at best, and fearmongering at worst. “Contract A” does not automatically create an obligation for an owner to enter into a construction contract with any bidder. No owner is forced to proceed with a project simply because it received compliant bids in response to a tender call. Courts across Canada have been crystal clear in upholding an owner’s right to make its own business decisions. A wide variety of options are available to owners when bids come in over-budget or are otherwise not acceptable, anchored by discretionary and privilege clauses, such as “the owner may cancel this procurement process at any time without awarding a contract”. Further, the terms and conditions within the procurement can detail the process for over-budget situations. CCDC 23-2018 A Guide To Calling Bids and Awarding Contracts outlines a robust, industry accepted process.
10. It seems that prices get shopped all the time as it is. Is there anything that can be done about this when “Contract A” is in place? Much of the time it seems that it would be impossible to prove as well.
BCCA is opposed to bid shopping in all its forms. Bid shopping, in all its forms by any party, undermines the sustainability of construction businesses and erodes the ethical foundation of our industry, which is built on trust and long-term relationships. Engaging in bid shopping practices creates an environment of uncertainty and distrust, which can lead to increased costs, a painful construction process, and a fragmented industry. It is crucial that all stakeholders in the construction sector adhere to fair and transparent procurement practices, in order to preserve the integrity and viability of the industry as a whole.
British Columbia courts have relied on the existence of “Contract A” to condemn bid shopping in a public procurement setting, ruling it has no place in true tendering situation. Without a “Contract A”, those whose bid gets shopped probably have no legal basis on which to complain.
If, as a subcontractor, supplier or general contractor you suspect bid shopping or other unethical behaviour, you need to decide if you want to bid on future projects with an entity known for engaging in bid shopping practices or to bid strategically, considering the risks involved. Subcontractors can also use the Request for Information (RFI) process to ask the owner to mandate the naming of specific subcontractors on the GC bid form. This requirement can enhance transparency and discourage bid shopping, ensuring that all parties are held accountable to fair bidding practices. When a general contractor names a subcontractor, a “Contract A” can arise between it and its compliant subcontractor, subject to the same conditions as the tender documents. And of course, you should also speak with an experienced construction lawyer to understand and determine legal remedies.
Another key tool to combat bid shopping is the use of bid depository. BidCentral Online Bidding for Subcontractors (“BOBS”) is BC’s bid depository program. BOBS is administered by BCCA.
If you are bidding on a design-bid-build project and you want BOBS as part of it, contact BCCA. We can review the project requirements and approach the owner to incorporate BOBS into the tender documents.
11. Non-“Contract A” methods have been used in Canada for decades, and other countries operate extensively outside of “Contract A”, setting numerous precedents. “Contract A” is not a legal requirement in Canada. It appears that the construction industry in BC is notably opposed to non-“Contract A” methods. What is the rationale behind this stance?
This is inaccurate at best.
Canada is unique when compared to some other countries in that we do not have extensive statutory laws and regulations mandating the rules for public sector procurement. The US and the UK are examples of countries that do have such laws put in place by various levels of government to ensure procurement is done fairly for all involved. As such, it is not appropriate or correct to compare Canada to these other jurisdictions.
Our rationale is simple: Without “Contract A”, general contractors and subcontractors have no practical legal recourse for being treated unfairly and should not assume that they will be treated fairly. By removing “Contract A”, public sector owners do not have to follow their own procurement documents, a hallmark of “Contract A” and Ron Engineering.
This puts a big responsibility on owners involved in “Contract A” to be very careful in their actions and follow their own stated procurement requirements, but also binds bidders to enter into the construction contract (“Contract B”) if they are selected in accordance with the procurement documents.
Refer to the Industry Alert for further information on BCCA’s position.
12. Doesn’t “Contract A” allow public owners to assess a contractor’s input and deal with any design changes that may be required before the contract award to ensure they receive the best value?
Not only is this inaccurate, it is contrary to actions and processes that could truly deliver the innovation and solutions these owners seek. It’s also not best practice from a project delivery standpoint. There are much better means by which to involve a contractor, including trade contractors, early in the design process.
Using one of the Construction Management delivery methods is one such solution, ensuring input into design and possibly control over a project’s cost and schedule from the outset. All these delivery methods can be procured with integrity, fairness and transparency, without removing “Contract A” obligations. Further, trade tendering is done in an open book process, giving owners even more insight into the project’s costs.
BCCA is supportive of delivery procurement methods and contracts that leverage the input and expertise of the construction team members including trade contractors, during pre-construction.
13. Can you provide list of public sector owners who have started removing “Contract A”?
A list of public sector owners whose documents have been identified as having removed “Contract A” is available on the BCCA website.
This list is not comprehensive. We will continue to add to it as new cases are uncovered. If you wish to bring cases to the attention of the BCCA, please contact us through our tip line at https://bit.ly/BCCATipLine.
