The Cheshire Cat in Lewis Carroll’s “Alice in Wonderland” was famed for its mischievous grin, which lingered even after the body was gone. Perhaps Carroll was, anachronistically, inspired by that procurement law concept in Canada known as “Contract A” whose reason for being has long since vanished, but whose mischievous, if fading, form still exists in our public procurement law and practice.
For those unfamiliar, Contract A emerged as a legal doctrine in Canadian procurement law via the seminal 1981 Supreme Court of Canada case The Queen (Ont.) v. Ron Engineering (“Ron Engineering”). The court held that all bidders who responded to a tender call with a compliant bid were deemed to have entered a type of contract that governed the procurement process, so-called “Contract A”, with the owner. Crucially, only compliant bids formed Contract A, and just as crucially, the contract for the actual performance of the scope of work, “Contract B”, had to automatically flow from Contract A. In fact one of the ‘implied’ terms of Contract A was that Contract B had to be “awarded as tendered” without any negotiation.
In the years following Ron Engineering the courts further defined the contours of Contract A, pock-marking it with a few discretionary escape valves. “Contract A” always was, and is, essentially a procedural and administrative framework to govern procedural rights and obligations of bidders and the owner during a procurement process. Curiously, the courts chose to shoe-horn this procedural and administrative process into a framework of contract law.
Most developed countries, including the USA, never went this way, so unwitting owners cannot even stumble into such a regime. Instead, they treat procurement, not as a contract, but as an administrative and procedural process framed by specific statutes. Administrative and quasi-judicial decisions by public procurement officers are subject to judicial review. Under judicial review, a range of administrative and equitable remedies are available, with courts granting decision makers a reasonable degree of deference.
By contrast, Canada's curious Contract A/B paradigm frames the matter in contractual terms: “did the owner breach its Contract A obligations by improperly awarding Contract B, or in any way modifying Contract B?” As a starting point, unless the terms of Contract A stipulate otherwise, just like any contractual dispute, there is no deference granted to either party, including the owner, and if the owner is found to be in breach of its procedural contract with any of the bidders, those bidders are entitled to pursue contractual remedies including lost-profit damages. That bears repeating; under the Contract A/B framework, unsuccessful bidders may be awarded their entire anticipated profit margin while doing no work for the owner.
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