Electronic Tendering

1. Electronic Tendering Duncan W. Glaholt Glaholt LLP

2. What is Electronic Tendering? • Two versions exist today: • (a) Internet based system that displays a description of the commodity being procured. • (b) Same as (a), plus option to download and pay for tender documents.

3. Future (?) (a) Internet based system that displays a description of the commodity being procured, plus option to download and pay for tender documents (b) Submission of tender in purely electronic format, without any paper being produced.

4. Why Should I Care? • Suppliers bid on more than $5 billion annually in government contracts and $12 billion in total through MERX.

5. MERX ? • MERX is Canada’s official, public sector electronic tendering service. • Owned and operated by Bank of Montreal, under contract with the Federal Government • www.merx.bmo.com

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

7. What Do I Do? • Register with MERX • Perform searches for opportunities • Searches can be restricted to area of interest (i.e. “construction in Ontario”, “plumbing in Toronto” etc.) • Order documents online (for download or delivery) • Follow instructions in tender documents

8. What else does MERX do? Opportunity Matching: Notifies subscriber of any new postings in subscriber’s area of interest

9. What else does MERX do? Identifying potential partnerships: Document request list provides list of all companies that ordered documents

10. What else does MERX do? Awards Database: Shows which company won a contract and for what price

11. What else does MERX do? Online Amendments: Automatically sends out amendments released by buyer

12. Is MERX the Only System Out There? • No. • There are provincial systems & private systems

13. British Columbia • BC Bid • www.bcbid.gov.bc.ca

14. Nova Scotia • N.S. Public Tenders Notice Service • www.gov.ns.ca/finance/tour/

15. New Brunswick • N.B. Opportunities Network • www.gnb.ca/0099/tenders/index-e.asp

16. Newfoundland & Labrador • Nfld. & Labrador Procurement Services • www.gov.nf.ca/tenders/

17. Others • BIDS – Atlantic Canada’s Bidding Service www.bids.ca • PODS – Procurement Opportunities and Delivery System www.pods.net

18. Others • For more links, see • www.summitconnects.com, online procurement links

19. So What’s the Difference? • As it works right now, the only difference between traditional tendering and electronic tendering is that the jobs are posted online and the tender documents may be downloaded online. • The submission of bids is usually still in the traditional format, maybe accompanied by a copy on disk.

20. The Legal Framework

21. Two Statutes: • Provincial: • Electronic Commerce Act, 2000, S.O. 2000, c. 17 • Federal: • Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5

22. Electronic Commerce Act • You don’t have to accept electronic information if you consent to do so. • But: Consent may be inferred. • (s. 3)

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

24. Electronic Commerce Act 19(1) An offer, the acceptance of an offer or any other matter that is material to the formation or operation of a contract may be expressed, (a) by means of electronic information or an electronic document; or (b) by an act that is intended to result in electronic communication, such as, (i) touching or clicking on an appropriate icon or other place on a computer screen, or (ii) speaking.     (2) Subsection (1) applies unless the parties agree otherwise.

25. Electronic Commerce Act 21. An electronic transaction between an individual and another person's electronic agent is not enforceable by the other person if, (a) the individual makes a material error in electronic information or an electronic document used in the transaction; (b) the electronic agent does not give the individual an opportunity to prevent or correct the error; (c) on becoming aware of the error, the individual promptly notifies the other person; and (d) in a case where consideration is received as a result of the error, the individual, (i) returns or destroys the consideration in accordance with the other person's instructions or, if there are no instructions, deals with the consideration in a reasonable manner, and (ii) does not benefit materially by receiving the consideration.

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

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

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

29. Electronic Commerce Act • Places of sending and receipt • (4) Electronic information or an electronic document is deemed to be sent from the sender's place of business and received at the addressee's place of business.

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

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

32. Personal Information Protection and Electronic Documents Act • Part I: Personal Information Protection • Part II: Electronic Documents

33. Personal Information Protection and Electronic Documents Act • Highlights: • Federal forms and documents may be filed electronically • Requirement that document be in writing may be satisfied by electronic document • Requirement that document be in its original form may be satisfied by electronic document • Requirement for signature may be satisfied by electronic signature

34. Potential Problems With Pure Electronic Tendering • Security: • Threat of others accessing information sent through the internet • Threat of others altering information sent through the internet

35. Potential Problems With Pure Electronic Tendering • Computer issues: • Software (compatibility; updates; anti-virus; encryption) • Internet (server; size; speed)

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

37. Case Law • Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services) (2000), 260 N.R. 367 (F.C.A.) • Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services) (2001), 202 D.L.R. (4th) 610 (F.C.A.)

38. Facts • Public Works gets requisition from National Defence for work done on naval vessels • Public Works posts letter of interest on its electronic tendering website • Three bidders emerge, one of them Siemens • Siemens is awarded contract

39. Facts (continued) • Two other bidders complain that Siemens failed to include experience in bid documents and that bid was non-compliant • Public Works gathered necessary information from other sources • Two other bidders argue that Public Works “repaired” defective bid

40. Decision • Request for Proposals entitled Public Works to verify all statements relating to work experience • This necessarily included a right to go outside the boundaries of the bid to gather information • Bid was responsive

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

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

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

44. Note: • The Court applied these criteria without any specific reference to the fact that an electronic tendering system had been used. • There seems to be no reason why the criteria developed for traditional tendering situations should not be applied merely because such a system was used.