electronic tendering duncan w. glaholt glaholt llp

Electronic TenderingElectronic Tendering

Duncan W. GlaholtDuncan W. Glaholt

Glaholt LLPGlaholt LLP

What is Electronic Tendering?What is Electronic Tendering?

Two versions exist today:Two versions exist today:

(a) Internet based system that displays a (a) Internet based system that displays a description of the commodity being description of the commodity being procured.procured.

(b) Same as (a), plus option to download (b) Same as (a), plus option to download and pay for tender documents.and pay for tender documents.

Future (?)Future (?)

(a) (a) Internet based system that displays a Internet based system that displays a description of the commodity being description of the commodity being

procured, plus option to download and procured, plus option to download and pay for tender documentspay for tender documents

(b) (b) Submission of tender in purely Submission of tender in purely electronic format, without any paper electronic format, without any paper being produced.being produced.

Why Should I Care?Why Should I Care?

Suppliers bid on more than $5 billion Suppliers bid on more than $5 billion annually in government contracts and $12 annually in government contracts and $12 billion in total through MERX.billion in total through MERX.

MERX ? MERX ?

MERX is Canada’s official, public sector MERX is Canada’s official, public sector electronic tendering service.electronic tendering service.

Owned and operated by Bank of Montreal, Owned and operated by Bank of Montreal, under contract with the Federal under contract with the Federal GovernmentGovernment

www.merx.bmo.comwww.merx.bmo.com

Also:Also:

Aside from the federal government, most Aside from the federal government, most provincial and federal agencies and provincial and federal agencies and departments are required to post jobs over departments are required to post jobs over $25,000 on MERX. Hundreds of hospitals, $25,000 on MERX. Hundreds of hospitals, school boards, cities, towns etc. post their school boards, cities, towns etc. post their opportunities here.opportunities here.

What Do I Do?What Do I Do?

Register with MERXRegister with MERX

Perform searches for opportunitiesPerform searches for opportunities

Searches can be restricted to area of Searches can be restricted to area of interest (i.e. “construction in Ontario”, interest (i.e. “construction in Ontario”, “plumbing in Toronto” etc.)“plumbing in Toronto” etc.)

Order documents online (for download or Order documents online (for download or delivery)delivery)

Follow instructions in tender documentsFollow instructions in tender documents

What else does MERX do?What else does MERX do?

Opportunity Matching:Opportunity Matching:

Notifies subscriber of any new postings in Notifies subscriber of any new postings in subscriber’s area of interestsubscriber’s area of interest


Identifying potential partnerships:Identifying potential partnerships:

Document request list provides list of all Document request list provides list of all companies that ordered documentscompanies that ordered documents


Awards Database:Awards Database:

Shows which company won a contract and Shows which company won a contract and for what pricefor what price


Online Amendments:Online Amendments:

Automatically sends out amendments Automatically sends out amendments released by buyer released by buyer

Is MERX the Only System Out Is MERX the Only System Out There?There?

No.No.

There are provincial systems & private There are provincial systems & private systemssystems

British ColumbiaBritish Columbia

BC BidBC Bid

www.bcbid.gov.bc.cawww.bcbid.gov.bc.ca

Nova ScotiaNova Scotia

N.S. Public Tenders Notice ServiceN.S. Public Tenders Notice Service

www.gov.ns.ca/finance/tour/www.gov.ns.ca/finance/tour/

New BrunswickNew Brunswick

N.B. Opportunities NetworkN.B. Opportunities Network

www.gnb.ca/0099/tenders/index-e.aspwww.gnb.ca/0099/tenders/index-e.asp

Newfoundland & LabradorNewfoundland & Labrador

Nfld. & Labrador Procurement ServicesNfld. & Labrador Procurement Services

www.gov.nf.ca/tenders/www.gov.nf.ca/tenders/

OthersOthers

BIDS – Atlantic Canada’s Bidding ServiceBIDS – Atlantic Canada’s Bidding Servicewww.bids.cawww.bids.ca

PODS – Procurement Opportunities and PODS – Procurement Opportunities and Delivery System Delivery System www.pods.netwww.pods.net

OthersOthers

For more links, seeFor more links, see

www.summitconnects.comwww.summitconnects.com, online , online procurement linksprocurement links

So What’s the Difference?So What’s the Difference?

As it works right now, the only difference As it works right now, the only difference between traditional tendering and between traditional tendering and electronic tendering is that the jobs are electronic tendering is that the jobs are posted online and the tender documents posted online and the tender documents may be downloaded online.may be downloaded online.

The submission of bids is usually still in The submission of bids is usually still in the traditional format, maybe accompanied the traditional format, maybe accompanied by a copy on disk.by a copy on disk.

The Legal FrameworkThe Legal Framework

Two Statutes:Two Statutes:

Provincial:Provincial:

Electronic Commerce ActElectronic Commerce Act, 2000, S.O. , 2000, S.O. 2000, c. 172000, c. 17

Federal:Federal:

Personal Information Protection and Personal Information Protection and Electronic Documents ActElectronic Documents Act, S.C. 2000, c. 5, S.C. 2000, c. 5

Electronic Commerce ActElectronic Commerce Act

You don’t have to accept electronic You don’t have to accept electronic information if you consent to do so.information if you consent to do so.

But: Consent may be inferred.But: Consent may be inferred.

(s. 3)(s. 3)


Legal requirement that a person provide Legal requirement that a person provide information or a document in writing is information or a document in writing is satisfied if provided in electronic form if the satisfied if provided in electronic form if the information or document isinformation or document is(a) accessible by the other person so as to (a) accessible by the other person so as to be usable for subsequent reference; andbe usable for subsequent reference; and(b) capable of being retained by the other (b) capable of being retained by the other personperson(s. 7)(s. 7)


19(1) An offer, the acceptance of an offer or any other 19(1) An offer, the acceptance of an offer or any other matter that is material to the formation or operation of a matter that is material to the formation or operation of a contract may be expressed, contract may be expressed,

(a) by means of electronic information or an (a) by means of electronic information or an electronic document; orelectronic document; or

(b) by an act that is intended to result in (b) by an act that is intended to result in electronic electronic communication, such as,communication, such as,

(i) touching or clicking on an appropriate (i) touching or clicking on an appropriate icon icon or other place on a computer screen, oror other place on a computer screen, or

(ii) speaking. (ii) speaking. (2) Subsection (1) applies unless the parties agree (2) Subsection (1) applies unless the parties agree

otherwise. otherwise.

Electronic Commerce ActElectronic Commerce Act21. 21. An electronic transactionAn electronic transaction between an individual and between an individual and another person's electronic agent another person's electronic agent is not enforceableis not enforceable by by the other person the other person ifif, , (a)(a) the individual makes a material errorthe individual makes a material error in electronic in electronic

information or an electronic document used in the information or an electronic document used in the transaction;transaction;

(b) (b) the electronic agent does not give the individual an the electronic agent does not give the individual an opportunity to prevent or correct the error;opportunity to prevent or correct the error;

(c) (c) on becoming aware of the error, the individual on becoming aware of the error, the individual promptly notifies the other personpromptly notifies the other person; and; and(d) (d) in a case where consideration is received as a in a case where consideration is received as a result result of the error, the individual,of the error, the individual,

(i) returns or destroys the consideration in (i) returns or destroys the consideration in accordance with the other person's instructions or, if accordance with the other person's instructions or, if there are no instructions, deals with the consideration there are no instructions, deals with the consideration in in a reasonable manner, anda reasonable manner, and

(ii) does not benefit materially by receiving the (ii) does not benefit materially by receiving the consideration.consideration.

Potential Problem:Potential Problem:

Section 21 is in direct contrast to the law Section 21 is in direct contrast to the law as stated in as stated in Ron EngineeringRon Engineering, where a , where a contractor was held to be bound to a contractor was held to be bound to a contract even when the owner was made contract even when the owner was made aware of a mistake in the contract.aware of a mistake in the contract.


Time of sending of electronic informationTime of sending of electronic information or documentor document 22. (1) Electronic information or an 22. (1) Electronic information or an electronic document is sent when it enters electronic document is sent when it enters an information system outside the an information system outside the sender's control or, if the sender and the sender's control or, if the sender and the addressee use the same information addressee use the same information system, when it becomes capable of being system, when it becomes capable of being retrieved and processed by the addressee. retrieved and processed by the addressee.


(3) Electronic information or an electronic document is (3) Electronic information or an electronic document is presumed to be received by the addressee, presumed to be received by the addressee, (a) if the addressee has designated or uses an (a) if the addressee has designated or uses an information system for the purpose of receiving information system for the purpose of receiving information or documents of the type sent, when it enters information or documents of the type sent, when it enters that information system and becomes capable of being that information system and becomes capable of being retrieved and processed by the addressee; orretrieved and processed by the addressee; or(b) if the addressee has not designated or does not use (b) if the addressee has not designated or does not use an information system for the purpose of receiving an information system for the purpose of receiving information or documents of the type sent, when the information or documents of the type sent, when the addressee becomes aware of the information or addressee becomes aware of the information or document in the addressee's information system and it document in the addressee's information system and it becomes capable of being retrieved and processed by becomes capable of being retrieved and processed by the addressee.the addressee.


Places of sending and receiptPlaces of sending and receipt

(4) Electronic information or an electronic (4) Electronic information or an electronic document is deemed to be sent from the document is deemed to be sent from the sender's place of business and received at sender's place of business and received at the addressee's place of business. the addressee's place of business.


Place of businessPlace of business

(6) If the sender or the addressee has more than (6) If the sender or the addressee has more than one place of business, the place of business for one place of business, the place of business for the purposes of subsection (4) is the one with the purposes of subsection (4) is the one with the closest relationship to the underlying the closest relationship to the underlying transaction to which the electronic information or transaction to which the electronic information or document relates or, if there is no underlying document relates or, if there is no underlying transaction, the person's principal place of transaction, the person's principal place of business. business.


Habitual residenceHabitual residence

(7) If the sender or the addressee does not (7) If the sender or the addressee does not have a place of business, the person's have a place of business, the person's place of habitual residence is deemed to place of habitual residence is deemed to be the place of business for the purposes be the place of business for the purposes of subsection (4). of subsection (4).

Personal Information Protection Personal Information Protection and Electronic Documents Actand Electronic Documents Act

Part I: Personal Information ProtectionPart I: Personal Information Protection

Part II: Electronic DocumentsPart II: Electronic Documents

Personal Information Protection Personal Information Protection and Electronic Documents Actand Electronic Documents Act

Highlights:Highlights:

Federal forms and documents may be filed Federal forms and documents may be filed electronicallyelectronically

Requirement that document be in writing may be Requirement that document be in writing may be satisfied by electronic documentsatisfied by electronic document

Requirement that document be in its original Requirement that document be in its original form may be satisfied by electronic documentform may be satisfied by electronic document

Requirement for signature may be satisfied by Requirement for signature may be satisfied by electronic signatureelectronic signature

Potential Problems With Pure Potential Problems With Pure Electronic TenderingElectronic Tendering

Security:Security:

Threat of others accessing information Threat of others accessing information sent through the internetsent through the internet

Threat of others altering information sent Threat of others altering information sent through the internet through the internet

Potential Problems With Pure Potential Problems With Pure Electronic TenderingElectronic Tendering

Computer issues:Computer issues:

Software (compatibility; updates; anti-Software (compatibility; updates; anti-virus; encryption)virus; encryption)

Internet (server; size; speed)Internet (server; size; speed)

As Yet Unanswered QuestionsAs Yet Unanswered Questions

When has a purely electronic tender been sent When has a purely electronic tender been sent and received? (see s. 22 of the and received? (see s. 22 of the Electronic Electronic Commerce ActCommerce Act))How does one make sure that it has been How does one make sure that it has been received in the same form it was sent?received in the same form it was sent?How does a purely electronic tender remain How does a purely electronic tender remain “sealed”?“sealed”?(see S.N. Bunston, “Electronic Tendering: (see S.N. Bunston, “Electronic Tendering: Potential Risks and How to Avoid Them”, Potential Risks and How to Avoid Them”, Toronto, Canadian Institute, 2002)Toronto, Canadian Institute, 2002)

Case LawCase Law

Siemens Westinghouse Inc. v. Canada Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government (Minister of Public Works and Government Services)Services)(2000), 260 N.R. 367 (F.C.A.)(2000), 260 N.R. 367 (F.C.A.)

Siemens Westinghouse Inc. v. Canada Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government (Minister of Public Works and Government Services)Services)(2001), 202 D.L.R. (4(2001), 202 D.L.R. (4thth) 610 (F.C.A.)) 610 (F.C.A.)

FactsFacts

Public Works gets requisition from Public Works gets requisition from National Defence for work done on naval National Defence for work done on naval vesselsvessels

Public Works posts letter of interest on its Public Works posts letter of interest on its electronic tendering websiteelectronic tendering website

Three bidders emerge, one of them Three bidders emerge, one of them SiemensSiemens

Siemens is awarded contractSiemens is awarded contract

Facts (continued)Facts (continued)

Two other bidders complain that Siemens Two other bidders complain that Siemens failed to include experience in bid failed to include experience in bid documents and that bid was non-documents and that bid was non-compliantcompliant

Public Works gathered necessary Public Works gathered necessary information from other sourcesinformation from other sources

Two other bidders argue that Public Works Two other bidders argue that Public Works “repaired” defective bid“repaired” defective bid

DecisionDecision

Request for Proposals entitled Public Request for Proposals entitled Public Works to verify all statements relating to Works to verify all statements relating to work experiencework experience

This necessarily included a right to go This necessarily included a right to go outside the boundaries of the bid to gather outside the boundaries of the bid to gather informationinformation

Bid was responsiveBid was responsive

CriteriaCriteria

““Ensuring compliance by potential bidders Ensuring compliance by potential bidders with all mandatory requirements of with all mandatory requirements of solicitation documents is one of the solicitation documents is one of the cornerstones of the integrity of the cornerstones of the integrity of the tendering system.”tendering system.”

CriteriaCriteria

““Procuring entities must evaluate a Procuring entities must evaluate a bidder’s conformance with mandatory bidder’s conformance with mandatory requirements thoroughly and strictly.”requirements thoroughly and strictly.”

CriteriaCriteria

““[The requirements should be] interpreted [The requirements should be] interpreted as a whole with consideration of the as a whole with consideration of the overall purpose and objectives of the overall purpose and objectives of the Request for Proposal.”Request for Proposal.”

Note:Note:

The Court applied these criteria without The Court applied these criteria without any specific reference to the fact that an any specific reference to the fact that an electronic tendering system had been electronic tendering system had been used.used.

There seems to be no reason why the There seems to be no reason why the criteria developed for traditional tendering criteria developed for traditional tendering situations should not be applied merely situations should not be applied merely because such a system was used.because such a system was used.