city of windsor post construction audit report square east ......to: the audit committee and city...

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II of II

Office of the

Auditor General

City of Windsor

A Review of the Project Approval Process,

The Award of the Contracts and,

The Information Reported to City Council for

Decision Making Purposes

Post Construction Audit Report

On the 400 City Hall

Square East Building

Report II-B:

Furniture Tender

December 2009

Auditor General’s Office

To: The Audit Committee and City Council of the Corporation of the City of Windsor

Date: December 2009

I am pleased to present to you our report II-B of the 400 CHS Audit entitled, “A Review of the

Project Approval Process, The Award of the Contracts and The Information Reported to Council for

Decision Making Purposes.”

This audit report is presented to you in keeping with the mandate of the Auditor General’s Office,

“To support City Council and Municipal Administration in meeting their legislated responsibilities,

in improving the performance of the corporation in the programs and services it delivers and in

ensuring the accountability of local government to the taxpayers. The Auditor General’s Office will

bring an independent, objective, professional and value-added approach in evaluating the economy,

efficiency, effectiveness and equity of the results of the corporation’s programs and in evaluating the

appropriateness and adequacy of risk management procedures and management controls.”

Respectfully,

Angela Berry

Lead Auditor, Auditor General’s Office

City of Windsor

QUESTIONS?

The following staff of the Auditor General’s Office may be contacted by email to answer public questions on the

information within this audit report:

To contact the Auditor General’s Office, email us at: [email protected]

Auditor General’s Office Staff:

Angela Berry, Lead Auditor

Florence Lee St-Amour, Auditor – RFP Approval and Procurement Process

Hayley McCoy, Auditor – The 400 CHS Furniture Tender

mailto:[email protected]

TABLE OF CONTENTS

1.0 EXECUTIVE SUMMARY ............................................................................................................... 1

2.0 REPORT BACKGROUND............................................................................................................... 7

2.1 The 400 CHS Audit Part II – B, The Furniture Tender .......................................................... 7 2.2 Objectives, Scope and Methodology ...................................................................................... 8

3.0 THE 400 CHS FURNITURE TENDER ......................................................................................... 10

3.1 About The 400 CHS Furniture Tender 02-04 ....................................................................... 10

3.1.1 Background of Tender 02-04........................................................................................10

3.2 Audit Findings of the 400 CHS Furniture Tender: ............................................................... 12

3.3 Audit Discussion .................................................................................................................. 15

3.3.1 Confusion - Unclear Tender Documents.......................................................................15

3.3.2 The City's Choice To Award "Part C" of Tender 02-04 to Monarch............................17

3.3.3 Potential Savings the City for Awarding the City Portion "Part C" of Tender 02-04 to

an Alternative Bidder....................................................................................................19

Analysis of Submissions: Tender 02-04 - Part C ........................................................ 20

3.3.4 WPS / DND Timeline and Discussion..........................................................................21

4.0 APPENDIX A-II: THE LEGAL MEMORANDUM ..................................................................... 25

1.0 EXECUTIVE SUMMARY

This document is the Part II-B, report on the audit work and analysis commenced with the draft audit prepared by

the (former) City Auditor’s Office in April of 2007 entitled, “Draft: Post-Construction Audit Report on the 400

City Hall Square East Building”.

Miller Thomson has provided the executive summary for the furniture tender review.

City of Windsor AGO 1

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CITY OF WINDSOR

BID PROCESS FOR PANEL SYSTEM FURNITURE (TENDER 02-04)

EXECUTIVE SUMMARY

The following is an executive summary of a memorandum dated November 13th, 2009 and addressed to Angela Berry.

Issues

The issues to be addressed are the following:

• Did the City of Windsor (the “City”) follow its own procurement policy and also comply with then current procurement law?

• What can the City do to reduce procurement problems in the future?

• What is the risk of legal action against the City by one of the disgruntled bidders and what is the likely damage exposure should a disgruntled bidder succeed?

• What are the implications of making the issues respecting the Tender public?

Conclusions

Various terms in this section “conclusions” are defined later in this memo. For ease of reference:

• “Canada” means the Department of Human Resources and Skills Development, represented by Public Works Government Services Canada;

• Canada intended to purchase one of the types of furniture described in the Tender, being either Part A (stackable) or Part B (monolithic);

• The City intended to purchase the furniture described in the Tender as Part C;

• The bold faced names, with the exception of Artopex which is a furniture manufacturer, are the five bidders on the Tender;

• “WPS” means the Windsor Police Services/Department of National Defence/The Comprehensive Training Facility which is another building not initially involved in the Tender;

• The “bidding contract” is the contract, formed between the City and any bidder submitting a compliant bid, which defines the obligations of the City and each compliant bidder during the period in which bids are evaluated and an award of contract for furniture is made.


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Following closing of the Tender February 3rd, 2004, Canada decided to purchase the furniture described in Part A (rather than Part B). The City deferred a decision on Part C until May of 2005.

(i) Did The City Follow Its Own Procurement Policy And Also Comply With Current Procurement Law?

With respect to the award of Part A, the City complied generally with the procurement policy described in City of Windsor by-law No. 9-20001 (“by-law 9-2000”). However, the bid documents as issued had several omissions. As well, before the Tender closed, changes were made to the bid process which were not properly reflected in the amended bid documents.

Based on the information which has been provided to us, the bid documents as issued and as later amended did not deal with and codify:

• The nature of the prequalification process which resulted in three of the bidders being invited to bid (Eagle, Inscape, Monarch);

• The limited terms and conditions under which the additional two bidders were invited to participate in the bid process (Mayhew Tayco);

• The role and authority of Canada in determining who would be awarded a contract;

• The intent of the City to purchase Part C from the successful bidder for either Part A or Part B, possibly based on the lowest aggregate price for such parts.

The City evaluated the bids received as though the bid documents did reflect the four issues mentioned above. In doing so, the City breached its implied obligation under the “bidding contract” to treat all bidders fairly and evenly. Further, the City breached the “bidding contract” with the bidder which submitted a compliant bid (Eagle) when it awarded the contract for Part A to a bidder - Monarch – which had submitted a non-compliant bid. Bidders which submit non-compliant bids do not have the “bidding contract” with the City.

With respect to the award of a contract for WPS, the City did not follow by-law 9-2000 and sole sourced the furniture purchase to the supplier awarded the contract for Part A, namely Monarch. There were no procurement law issues around this purchase because there was no procurement process devoted to the WPS. At the time the WPS purchase was made, the City believed that it would achieve savings by taking advantage of quantity pricing rather than taking such a small scope of supply back to the market.

With respect to the award of contract for Part C, the City did not follow by-law 9-2000, anticipating that prices for the scope of supply would be higher if it went back to the marketplace. Another driver in this decision was the assertion by Monarch that it had been promised an award of Part C and had begun performance of the work. There is no breach of

1 City of Windsor By-Law No. 9 – 2000, a by-law To Establish Purchasing and Materials Management Policies

and Procedures passed and effective January 4th, 2000.


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4039147.2

prevailing procurement law because, had there been a “bidding contract” with Monarch (or any other bidder), it had expired in the spring of 2004 when the bid irrevocability period expired.

Attached to this Executive Summary as Appendix A is a table listing the five bidders under the Tender, their price and our assessment as to whether they are compliant or not.

(ii) What Can The City Do To Reduce Procurement Problems In The Future?

We recommend that the City adopt template request for proposal and bid documents to ensure consistency in its processes (both with and without the “bidding contract”). We recommend that, if template documents are adopted, in-service seminars be convened to brief City purchasing staff on the use of these materials and their implications.

(iii) What Is The Risk Of Legal Action Against The City Of Windsor (The “City”) By One Of The Disgruntled Tender Bidders And What Is The Likely Damage Exposure Should A Disgruntled Bidder Succeed?

(a) Award of Contract for Part A

As a result of materials transmitted to us November 4, 2009, we believe that two of the five bids received were non-compliant (Monarch, Inscape). Two other bids may be non-compliant (Mayhew, Tayco), depending on the materiality of qualifications which both bids included. There is no evidence to suggest that the bid of Eagle is non-compliant.2

The Monarch bid was non-compliant because its monetary offer to the City was conditional upon the City awarding Monarch Part A or Part B plus Part C to secure the price discounts which Monarch claimed were imbedded in its bid.

It appears that Tayco, Eagle and Artopex (the last being the supplier to Mayhew and Eagle) all complained to the City about the process but have not subsequently commenced proceedings (so far as we are aware) to pursue perceived rights. The City has an arguable limitations defence should claims be asserted by any of these three parties. If Tayco were to make a claim against the City, Tayco would be obliged to prove that its bid was compliant in spite of the qualifications which it wrote on the Bid Form and on the specifications.

Inscape was the second lowest pre-qualified bidder to meet the furniture specifications of Canada. However, the Inscape bid is non-compliant because it failed to provide a price for meeting the requirements of Part B. If Inscape were to argue that Monarch – a non-compliant bidder – should not have been awarded the contract, the City has a defence that it cannot be liable for a breach of the “bidding contract” where the complainant does not have the “bidding contract” with the City. The City may also have a limitation defence against Inscape. It may not

2 We have been unable to determine whether the bids of Mayhew and Tayco are or are non-compliant. Without

the complete bid submissions of both entities supported by analysis from the consultant, we have insufficient information to make a judgment on whether the qualifications of each bidder are serious enough to render their bids non-compliant. As well, a review of the full bids submitted would reveal whether there are any other qualifications, mistakes or defects in the bids from those two parties.


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be worthwhile for Inscape to pursue a claim, given the amount at stake, the evidentiary burden, the cost of litigation and the shortcomings in its bid.

Mayhew was the low bidder for Part A and Part B. It made no complaints upon being rejected as a potential supplier although its manufacturer, Artopex, sent a letter to the City May 31st, 2005 concerning the Tender. We were provided with the first page of the Mayhew bid which includes a qualification around power locations on panels. Depending on the materiality of this qualification, the Mayhew bid may be non-compliant. If Mayhew is inclined to claim, it may determine that such a claim is not worthwhile given the amount at stake, the evidentiary burden, the cost of litigation and the possibility that it might not have the “bidding contract” with the City.

Even if the City had, and then breached, the “bidding contract” with both Inscape and Mayhew, only one of those bidders can recover substantial damages. And, that would be the bidder who can demonstrate that, but for the breach of the “bidding contract”, it would have received the award of Part A. A bidder which proves a breach of the “bidding contract” but cannot prove the breach prevented it from being awarded Part A recovers nominal damages. So, Mayhew (as well as Inscape) has to consider the size of its investment in time and legal costs against the possibility of recovery.

Eagle is the only compliant bidder under the Tender. Eagle could claim that the City breached its “bidding contract” with Eagle when the City awarded Part A to Monarch – a non-compliant bidder. Eagle faces a limitation defence, given its 2004 complaints about the Tender. If Eagle overcomes the limitation defence, it will have to prove that – in spite of being the highest bidder – it would have been awarded Part A but for the City’s breach of the ´bidding contract”.

(b) Furniture Purchase for WPS and Award of Contract for Part C

In both transactions, by-law 9-2000 was considered and then bypassed. However, neither purchase transaction conferred any legal rights on any of the bidders. The two purchases are separate and apart from the Tender because the bids submitted pursuant to the Tender had expired.

(iv) What Are the Implications of Making the Issues Respecting the Tender Public?

The issue is one of risk management. The City will have to assess the likelihood that any of the bidders will take action against the City. If the assessment is that there is no serious chance of a bidder taking action (keeping in mind that only one bidder can recover substantial damages), then the report may be made public, from a purely legal perspective. If the City is concerned that one or more bidders will bring an action against the City, then the City may consider either redactions from the report or preserving the report as an in camera document.

The City should consider not making the report on the Tender public at all. Owner errors in running bid processes – stemming from a lack of understanding of the “bidding contract” – are very common. The difficulties with the Tender do not involve any form of outside interference with the process. Canada obtained the furniture it wanted from the lowest pre-qualified bidder (although not necessarily the lowest compliant pre-qualified bidder).


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APPENDIX A TO EXECUTIVE SUMMARY

CORPORATION OF THE CITY OF WINDSOR RE: BID PROCESS FOR PANEL SYSTEM FURNITURE (TENDER 02-04)

BIDDER PRE-QUALIFIED BY PWGSC

COMPLIANT NOTE 1

PRICE FOR PARTS

COMMENTS

Monarch

Awardee for Part A, Part C and WPS

Yes No A $334,292.11 B $192,456.78 C $5,527.75 $4,601.53

This bid is non-compliant because the price for Part A was conditional on the bidder receiving an award for Part C.

Inscape Yes No A $362,406.90 B No Bid C $6,168.17

This bid is non-compliant because it fails to provide a price for Part B.

Eagle Yes Yes A $403,397.28B $214,562.52C $5,369.26

No information is available which suggests this bid is non-compliant.

Mayhew No Uncertain A $217,853.90B $200,538.20C $3,703.41

This bid is conditional on assumptions written on the Bid Form, Page 1. This bid will be non-compliant if the assumptions represent a material alteration to what was called for under the Tender.

Tayco No Uncertain A $232,062.67B $210,800.90C $4,226.04

This bid is conditional on notes written on the Bid Form and amendments made to the specifications. This bid will be non-compliant if the conditions written onto it represent a material alteration to what was called for under the Tender.

Note 1: Assessment of compliance based on limited information. Complete copies of the bids as submitted are not available for review.


2.0 REPORT BACKGROUND

2.1 The 400 CHS Audit Part II – B, The Furniture Tender

This is the final

part; to the Phase II

report on the 400

CHS Building.

This document is the Part II-B, report on the audit work and analysis commenced with

the draft audit prepared by the (former) City Auditor’s Office in April of 2007 entitled,

“Draft: Post-Construction Audit Report on the 400 City Hall Square East Building”.

This Part II-B report concludes the 400 CHS audit, now comprised of three separate

reports, which include two legal memorandums prepared by Miller Thomson LLP.

1. Post Construction Audit Report on the 400 City Hall Square East Building.

Released February 2009.

2. Report II-A: A Review of the Project Approval Process, The Award of the

Contracts and The Information Reported to Council for Decision Making

Purposes. Released December 2009

- Contains Appendix A, Part I: Legal Review of RFP and Contracting

Practices Used by the City of Windsor in Designing and Constructing

the 400 Building

3. Report II-B: The 400 CHS Furniture Tender. Released December 2009

- Contains Appendix A, Part II: Bid Process for Panel System Furniture

(Tender 02-04)

Copies of the public session audit reports can be obtained by contacting 311 or by

accessing the following internet web link:

- http://www.Citywindsor.ca/DisplayAttach.asp?AttachID=13246


http://www.citywindsor.ca/DisplayAttach.asp?AttachID=13246

2.2 Objectives, Scope and Methodology

What were the

objectives of the

Furniture Tender

review?

The audit objectives of the 400 CHS Furniture Tender were to review (1) the extent of

compliance with the applicable laws (the City’s Purchasing By-Law, the Municipal Act,

2001 and the Common Law) in awarding the contracts; and (2) the quality of the

information reported to Council for its decision-making purposes.

What was the scope

limitation?

The 400 CHS Tender has been significantly hampered by the unavailability of most of

the key documents, for example, the essential documentation of the furniture tender

evaluation and perhaps even the Tender package as issued. Accordingly, the findings,

opinions and recommendations expressed in this report and the attached legal

memorandum are based upon, and limited by, the facts and documents which were

available for review.

Administration tried, but was unable to rectify this scope limitation. Due to the passage

of time, Administration was unable to locate the documents required to overcome the

limitation.

The AGO would like to extend thanks to the external consultant that worked with the

City on the furniture tender, J.P. Thomson Associates Ltd, for its assistance in closing

the gap of information by providing access to additional tender documentation, which

was not available through the City.

How did we do the

review?

The discussion on this matter is outlined in detail, in Report II-A. To summarize, the

audit was a collaboration of Audit staff completing the fieldwork, analysis, review and

reporting, Miller Thomson providing legal interpretation of evidence and legal advice,

and KPMG Forensic (engaged by Miller Thomson) providing fact-gathering and review

to support the legal opinions as well as oversight of some of the audit work of the staff of

the City’s Auditor General’s Office.

What were the

principal steps in

the audit?

The principal steps undertaken in performing the 400 CHS audit are outlined in detail, in

Report II-A. To summarize, the steps were to review and analyze the following data

from the 400 CHS project:

- In-camera and open session reports to Council and minutes of its meetings.

- Project files, paper and electronic, that were maintained by Corporate Projects.

- Project Steering Committee meeting minutes and reports.

- Relevant emails, faxes, notes, etc. from administrative staff.

The furniture tender

legal review.

The AGO review of the 400 CHS furniture tender resulted in a number of legal questions

in the field of procurement law, which is an area of specialized legal expertise that falls

outside the scope of expertise of the Auditor General’s Office. The Auditor General’s

Office asked Miller Thomson LLP to review the practices used by the City in the

procurement of the furniture fit-up of 400 City Hall Square.


The area of procurement law is a very specialized area of law and therefore, William M.

Pigott, Partner of Miller Thomson LLP with recognized expertise in this area of law,

through Andrew J. Roman, Partner of Miller Thomson LLP, was asked to review the

report of the AGO, along with supporting documentation and to provide legal advice on

the identified tender issues of the audit file.

As was the case for Report II-A (the RFP), the legal issues of the 400 CHS furniture

tender were complex. The legal review of the audit file resulted in value-added

conclusions and recommendations for the improvement of efficiency and fairness in the

City’s procurement activity. The adoption of these recommendations would also reduce

of risk through changes to the City’s Purchasing By-Law, procurement processes and

procurement policy for RFPs and Tenders.

Legal opinions provided to the City’s decision makers and governance members should

not be filtered; there is a risk in editing the form and content of the legal advice that its

meaning would be altered and its value diminished. To avoid this risk, and to minimize

the duplication of effort on this audit, the legal memorandum submitted to the Auditor

General’s Office has been attached, unaltered. The comprehensive legal memorandum

forms a substantial portion of this furniture tender report, which is accompanied by a

report of support and background prepared by the Auditor General’s Office.


3.0 THE 400 CHS FURNITURE TENDER

3.1 About The 400 CHS Furniture Tender 02-04

What is a Tender?

The City used a “Tender” procurement process to select the supplier of the main office

furniture for the 400 City Hall Square East building. The City’s Purchasing By-Law

defines a Tender as:

“A Tender is an offer received from a supplier of goods and / or services in

response to an advertisement requesting sealed Tenders.”

Background to

understanding the

furniture Tender.

3.1.1 Background of Tender 02-04

- The City of Windsor entered into a lease agreement with Public Works Government

Services Canada (PWGSC) in accordance with Council Resolution M41/2003 dated

March 4, 2003. Under this lease, PWGSC would occupy a significant share of the

space in the 400 building. The lease includes a number of attachments to it, forming

part of it, and these attachments are called schedules.

- Schedule E of the lease agreement with PWGSC, signed on or about July 24, 2003,

provides for the City to supply management and construction services to PWGSC

for cost plus a management fee. As part of these services, the City was to conduct

the process of purchasing the furniture that PWGSC needed in its part of the space.

Following the normal practice, the City did this by means of a tendering process, the

particular tender being numbered 02-04.

- The City’s Purchasing department did not manage Tender 02-04. The City hired a

consultant to write the furniture specifications and to oversee the administration of

the Tender. The consultant drafted Tender 02-04, all specifications, instructions and

bid forms, and supplied copies to the tenderers on behalf of the City.

- Miller Thomson LLP has advised that there is nothing unlawful or extraordinary

about a municipality using outside consultants, such as experienced architectural

firms, for the procurement of specialized items such as specific kinds of furniture.

However, the work of these consultants is normally very closely coordinated with

the municipality's purchasing department. Due to insufficient levels of staffing in

the City’s purchasing department at the time, that close coordination did not occur in

this case.


Tender 02-04

started as 1, and

resulted in 3

separate purchases.

Part A - PWGSC

Part C – City of

Windsor

The City

piggybacked WPS

furniture purchase

on Tender 02-04.

3.1.1 a) Tender 02-04 Split into Three Separate Furniture Purchases

Tender 02-04 resulted in three separate purchasing activities for office furniture for three

different entities.

1. PWGSC

2. City of Windsor

3. Windsor Police Services / Department of National Defence (“WPS”)

1. PWGSC – Tender 02-04 Part A &B

– Tender 02-04 started out as 1 part – for the PWGSC Panel System Furniture.

Part A was for stackable furniture, Part B for non-stackable (monolithic)

furniture panels. PWGSC wanted a choice between stackable or monolithic

panels for purchase.1

– On January 16, 2004, Tender 02-04 was issued for the PWGSC Panel

System Furniture, with a closing date of February 3, 2004. Only parts A and

B were tendered at this time, on behalf of PWGSC.

– The procurement choice of PWGSC was to purchase Part A or Part B

2. City of Windsor – Tender 02-04 Part C

– On Friday, January 23, 2004, Addendum No. 1 to Tender 02-04 was issued

adding Part C, for the City’s own furniture requirements, to the Tender.

– The Part C addendum detailed 8 x 8 workstations required for the City

departments that were to occupy the 400 CHS. A new bid form was

provided to the proponents and the closing date remained February 3, 2004.

The only change to the Tender was the addition of Part C.

3. WPS Office Furniture Purchase

– Administration submitted a report dated April 20, 2004, to City Council

regarding the supply of furniture for the Police portion of the new Windsor

Police Service (WPS) / Department of National Defence (DND)

Comprehensive Training Facility.

Monolithic cubicle systems are comprised of solid panels that are of a certain width and height. Monolithic is usually the

most affordable of the types of office partition systems but are generally not as flexible, with the least accommodation for

data and power. Stackable system features sections of partition that can be added on top of other sections, increasing the

height of the partition. This flexibility of changing the height of panels without dismantling entire sections of cubicles can

make for less maintenance cost and less product cost when adding or reconfiguring areas within an office.


– The April 20, 2004 report to Council states: “The recent fit-up tender for

the Income Security Building (ISB) presented a second option. This option

would provide WPS with an exceptional price due to the large volume of

furniture required for the ISB.”

Tender 02-04 bid

price results.

Parts A, B & C

3.1.1 b) Results of Tender 02-04

On February 3, 2004, Tender 02-04 closed with 2 parts. (1) A & B: PWGSC furniture

requirements and, (2) C: The City of Windsor furniture requirements, with the following

price results:

Chart A: Tender 02-04 Results

PWGSC City

Vendor Part A (Total Cost)

Stackable

Part B (Total Cost)

Monolithic

Part C (Per Unit)

Workstations

Eagle Office $403,397.28 $214,562.52 $5,369.26

Inscape Ltd. $362,406.90 No Bid $6,168.17

Mayhew &

Associates $217,853.88 $200,538.20 $3,703.41

Monarch

Basics $334,292.11 $192,456.38

$5,527.75

$4,601.53*

Tayco

Panelink Ltd. $232,062.67 $210,800.70 $4,226.04

* Non-compliant. Monarch quoted an alternate workstation with power available on one side panel, the

City’s specifications required power on two.

3.2 Audit Findings of the 400 CHS Furniture Tender:

Finding 1.

Breach of Implied Obligation under the “Bidding Contract”

With respect to the award of Part A, the City complied generally with the procurement

policy described in City of Windsor by-law No. 9-2000 (“by-law 9-2000”). However,

the bid documents as issued had several omissions. As well, before the Tender closed,

changes were made to the bid process, which were not properly reflected in amended bid

documents.


The City evaluated the bids received as though the bid documents did reflect the several

omissions. In doing so, the City breached its implied obligation under the “bidding

contract” to treat all bidders fairly and evenly. Further, the City breached the “bidding

contract” with the bidder which submitted a compliant bid (Eagle) when it awarded the

contract for Part A to a bidder – Monarch – which had submitted a non-compliant bid.

Bidders which submit non-compliant bids do not have the “bidding contract” with the

City. Non-compliant bids should be disregarded, not accepted.

Finding 2.

Part C of the Furniture Tender – Not Conducted in Compliance to the Purchasing

By-Law

With respect to the award of the contract for Part C, the City did not follow by-law 9-

2000. This was for two reasons. First, the City anticipated that prices for these goods

would now be higher if the City issued a new tender request. Second, due to the actions

of the City, there was now a supportable assertion by Monarch that it had been promised

an award of Part C, and based on that promise, had begun performance of the contract

work.

Although the award of the tender was not in compliance with the City’s By-Law, there

was no breach of procurement law. That is because, had there been a “bidding contract”

with Monarch (or any other bidder), it would have expired in the Spring of 2004 when

the bid irrevocability period expired.

Finding 3.

Project Planning Deficiency – Failing to Define the Furniture Needs for the City

The City did not scope out / develop specifications for building Fit-Ups for the part of

the space being occupied by the City or for its own office furniture needs. Because of

poor planning for the City’s furniture needs, the City informally adopted the PWGSC

specifications for the City’s furniture requirements.

Part C of the furniture tender was awarded to Monarch, even though it did not submit the

lowest Part C bid.

Administration reported to Council, (in-camera report dated May 30, 2005), that the City

could have saved $47,547 had the City chosen an alternate bidder for Part C of the

Tender. However, that conclusion was based on the incorrect assumption that the City’s

choices for its own purchase were limited to those bidders that met the specifications of

PWGSC for Part A of the tender. However, the City was not bound by the PWGSC

specifications, given the City’s instructions and requirements outlined in the tender

package. In addition, the City had the option to re-tender.


Therefore, it can be said that the potential savings to the City could have been much

higher than the $45,547 reported to Council. Given the scope limitation of this audit, the

AGO can only speculate that the potential savings could be somewhere between $47,547

and $179,211. Unclear tender documents, the insufficient assignment of City resources

to manage the City’s interests, and the City’s actions which led Monarch to begin

performance of the contract were additional factors that contributed to this potential for

overspending.

Finding 4.

“WPS”, Windsor Police Services/Department of National Defence Comprehensive

Training Facility Furniture Purchase

The City did not follow By-Law 9-2000 for the award of a contract for the WPS

furniture. It sole sourced the furniture purchase to the supplier awarded the contract for

Part A of Tender 02-04. There were no procurement law issues around this purchase

because there was no procurement process used for the WPS. At the time the WPS

purchase was made, the City believed that it would achieve savings by taking advantage

of quantity pricing rather than taking such a small purchase back to the market.

The City encountered a timing crisis concerning furniture for the PWGSC and another

major project of the WPS that was going on at the same time as the 400 CHS project.

After the PWGSC portion of Tender 02-04 had closed (Part A & B), the Administration

sought Council’s approval to dispense with the requirement in the Purchasing By-Law to

issue a new tender for the significant WPS contract. Approval was obtained to

piggyback the WPS contract onto the portion of Tender 02-04 (Part C) for the City’s

own workstations, thereby avoiding tendering the WPS purchase.

Administration does not appear to have known, when it sought approval for this

piggybacking bypass, that Part C of Tender 02-04 had not yet been approved by Council.

Thus, Council approved piggybacking a new contract onto another contract that it had

not yet approved. Council was not advised that the Purchasing By-Law did not permit

piggybacking the WPS contract onto an unapproved contract. The confusion is

understandable, as there was no one on the City’s purchasing department working on the

tender, and indeed, no other City staff working on it.2 The risk of recurrence of this

situation has been addressed through additional controls in the new Purchasing By-Law

400-2004, and through additional staff within the City’s Purchasing department.

2 We have been advised by current Administration that at that time, all of the purchasing activity for the entire

City of Windsor was being conducted by only two persons.


3.3 Audit Discussion

How and why this

happened?

3.3.1 Confusion – Unclear Tender Documents

1. Issues in Scoping, Planning and Management of City Requirements

a) The City did not scope out / develop specifications for building Fit-Ups for the part

of the space being occupied by the City or for its own office furniture needs. The

result was a negative budget variance of $1,792,955 or 47% over budget on this

item.3

b) The City’s Purchasing department was not involved in the furniture fit-up Tender.

The entire Tender process was outsourced to a consultant. While this is not an

abnormal practice, the way it was done is irregular, in that there is no contract or

engagement letter on file at the City that outlines what the consultant was paid to

deliver on behalf of the City. This limitation affected the Audit review.

c) This scenario is remarkably similar to the project planning issues identified in the

February 2009 Audit Report I of the 400 CHS project. The City did not

appropriately plan for its furniture needs and specifications did not ensure its

furniture requirements were clearly stated in the Tender document and did not

assign appropriate City staff resources to oversee and protect the interests of the

City.

d) Of certain importance, current Administration has advised the AGO that in 2002,

the City’s Purchasing department consisted of two individuals who had

responsibility over the purchasing activity of the entire City. The staffing

condition of the Purchasing department was addressed by Council and

Administration, following the results and recommendations outlined in a 2003

PriceWaterhouseCoopers report prepared for the City of Windsor entitled, Control

and Procedures Review of the Financial Services Function of the Corporate

Services Department.

2. The Tender Document Issued by the City was Unclear and Caused Confusion

There were many contradictory statements within the Tender Bid Package issued

by the City that caused confusion among both bidders and those evaluating the bids

with regards to how the City would award the parts of Tender 02-04. In reference

to Tender 02-04 January 16, 2004, Part A, B and C, page 1 states:

- “It is the understanding that the owners are not obligated to purchase the

items in the Panel System Furniture Bid in its entirety.”

3 As reported in Report I, Management of The 400 CHS, Construction Contract, released February 2009. (See p. 4)


- Whereas page 8, section 1.08 Part A states: “It is the intent from the owner to

purchase from one supplier only.”

- And, page 8, section 1.08 part C states: “Owner reserves the right to accept

any Tender/bid, in whole, or a portion thereof.”

3. City Administration Did Not Have a Clear Understanding of the City’s Desired

Direction for Awarding the Tender

Project documentation shows that Administration did not have a clear

understanding of the direction the City would take in awarding the Tender.

Internal transparency and understanding of the furniture fit-up was weak, even

among those City staff who worked closely on the building project.

Although the City was internally confused regarding the direction of the award of

the Tender, project documentation shows that in the planning stage of the project’s

furniture fit-up requirements, the City planned to award the entire Tender (Part A

and Part C) to one supplier.

a) August 21, 2001: There was an operational meeting with HRDC and the City of

Windsor (attended by members of Social Services, Corporate Services and Legal).

The minutes of this meeting state:

- “It was agreed that common workstations should be purchased for all staff.”

b) December 4, 2002: A project team meeting held on this date was attended by

Social Services, Public Works, Legal Corporate Services and Building & Planning.

The minutes of the meeting state that for the City’s furniture needs:

- “We are doing federal specs.”

c) November 26, 2003: A meeting was held on this date, with PWGSC, the City’s

project team, the project consultant and the fit-up consultant. The following day,

an internally generated email summarizing the meeting topics and decisions was

sent to City staff (to representatives of Social Services, Public Works, Corporate

Services, Purchasing and Corporate Projects), the project consultant, the fit-up

consultant and PWGSC. The email outlined the following:

- “…it is understood by all parties at the meeting that the City of Windsor and

the HRDC will use a common supplier.” “The goal…to create a common

theme throughout the building.”

d) April 28, 2005: An internal memo on the subject of Part C of Tender 02-04

discussed a number of issues. The April 28, 2005 memo shows the City was in


disagreement with the direction the consultant took in awarding the Tender.

- “Although it was always understood by Purchasing and Corporate Projects

that Parts A and C of the Tender would be awarded separately, the consultant

intended that the Tender be awarded to the best combined price and had

communicated this to Monarch.”

- This internal memo of Administration was inconsistent with the goal of a

common supplier established in earlier meetings and correspondence.

- From the AGO’s perspective, the consultant’s actions in awarding the Tender

appear to be consistent with the City’s requirements recorded in project

documentation, and communicated by City staff, in his presence, throughout

the planning phase of the furniture Tender.

An example of a

match of employee

integrity and good

Council governance.

3.3.2 The City’s Choice To Award “Part C” of Tender 02-04 to Monarch

a) May 30, 2005: Over a year after Part A of Tender 02-04 was awarded to Monarch,

the City’s Purchasing department stepped in to complete the process – to deal with

Part C, the City’s furniture needs.

b) On May 30, 2005 the City’s Purchasing Manager4, along with the Corporate

Projects Manager, attended an in-camera meeting of Council to explain the issues

to date, the errors made by the City and to recommend future action to deal with

the City’s furniture needs.

c) Even through the Purchasing Manager of May 30, 2005 had not been employed in

the position of Purchasing Manager during the tender, and had not been involved

in the project tender at all, the individual attended Council and accepted the

accountability assigned by Council for the significant errors made on the furniture

tender. The AGO commends the high level of responsibility displayed by that

Purchasing Manager (who is now the City Clerk) and Council, which exercised

good municipal governance.

4 We have been advised that the City’s Purchasing Manager in attendance at the in-camera Council meeting to address the

project Tender 02-04 issues was not involved in the 400 CHS furniture Tender and was not employed in the capacity of

Purchasing Manager during the Tender process. Just stepping in to address the Purchasing needs of the City, the information

brought forward to Council was provided to the Purchasing Manager by those who had been involved in the Tender 02-04

process.

Perhaps due to the significant level of confusion among Administration throughout this project, and certainly due to the many

errors that took place (some unknown to Administration at that time), the Purchasing Manager that addressed the issues at

Council was provided with some information that was not accurate or factual. However, having no history on the project,

what the Purchasing Manager reported to Council was based on this incorrect information.


d) Monarch was not the lowest bidder for Part C of Tender 02-04. However,

Purchasing made the recommendation to award Tender 02-04 to Monarch for

justifiable business reasons, including, but not limited to:

- “Although there is an argument that re-Tendering would be the best resolve

for this matter, given that the City now knows exactly what furniture

components it needs, there are two factors which weigh against this option –

the first being the increase in the price of steel and the second being timing.”

- “Monarch included a cover letter with their Tender submission stating that all

prices were contingent on being awarded the entire Tender. … The Acting

Supervisor of Purchasing was not aware of this letter until April 22, 2005.”

- “Monarch may have a valid claim, on a quantum merit basis, for design work

performed for the City in the amount of $70,000 …” “If we do not make the

award to Monarch, based on the above points, it would have a good case

against the City for lost profit on the City portion of the order …” 5

- “On Friday, May 20, 2005 …a further option was discussed. That option was

to award the Tender for all City tenant furniture …to Eagle, to award the

furniture for Information Technology to Monarch…and to negotiate an

additional settlement with Monarch to compensate it for the design services it

has provided gratis to the City.”

- “With the permission of the Chair of the Steering Committee, Administration

met with …Monarch…to discuss this option. …During these discussions it

became clear…that Monarch had clearly been told by City representatives that

it had been awarded Part C of the contract.” (Monarch had, acting on

reasonable expectations, incurred other expenses & developed plans in

preparation for the contract)

- “The low bidder on Part C alone, Eagle Office Furniture, does not have a

strong case against the City if it is not awarded the contract as it was not the

low bidder on Parts A & C as a combined package based on the fact that it

was always the intent of the writer of the specifications that the parts be

awarded together.”

- Administration recommended: “That Tender No. 02-04 Part C from Monarch

Basics, (“Monarch”), for workstations/furniture for the 400 City Hall Square

East building project BE ACCEPTED at a total cost not to exceed $5,527.75

per workstation plus GST…”

5 The anticipated lost profit was not quantified.


3.3.3 Potential Savings the City for Awarding the City Portion “Part C” of

Tender 02-04 to an Alternate Bidder

To estimate the potential savings to the City through the selection of a vendor alternate

to “Monarch”, we have considered the following factors:

a) In the May 30, 2005 in-camera report, the Administration limited financial

comparison to the bids received from Eagle, Monarch and Inscape. The report

stated a cost savings of $47,547 would have been achieved – If Eagle had been

chosen over Monarch.

b) The May 30, 2005 in-camera report stated that for Part C of the Tender, the

Mayhew & Associates bid and the Tayco bid were not considered due to the claim

that the bids did not comply to the federal government’s approved requirements.

However, the Tender package issued to the Proponents included separate

specifications for the City and the Federal government.

c) The May 30, 2005 in-camera report stated that Information Technology (IT)

required additional panels to complete their workstations. If Monarch had not been

chosen, 50 additional workstations would have had to be purchased for IT. (The

in-camera report did not quantify the cost of purchasing additional panels for IT).

d) The Analysis of Submissions was created to display the cost comparison of Part C

of Tender 02-04 for the City’s office furniture needs with the following

considerations.

- 300 workstations were used for quantity in the May 30, 2005 report’s cost

calculation, that quantity has been used in the analysis of submissions.

- The cost of an additional 50 workstations for IT was added to the comparison

for consideration. The Monarch product line was compatible, which allowed

the City to maintain existing equipment and purchase 50 fewer units.

- We have considered all Tenders, except for the clearly non-compliant Mayhew

& Associates, as possible viable proponents in the cost comparison. This is

because the City was not limited to purchasing federal, pre-qualified product

lines and we have not found documentation to dispute the compliance of any

other proponent for Part C of the Tender.


Analysis of Submissions: Tender 02-04 - Part C

A B C D E F

Vendor Tender

Part C

Per 300

Quantity

Difference

From

Monarch

Per 350

Quantity

Difference

From

Monarch

Eagle

Office $5,369.26 $1,610,778.00 ($47,547.00) $1,879,241.00 $220,916.00

Inscape

Ltd. $6,168.17 $1,850,451.00 $192,126.00 $2,158,859.50 $500,534.50

Mayhew &

Associates $3,703.41 $1,111,023.00 ($547,302.00) $1,296,193.50 ($362,131.50)

Monarch

Basics

$5,527.75 $1,658,325.00 Awarded $1,658,325.00**

Awarded

$4,601.53*

Non-

Compliant

Non-

Compliant

Tayco

Panelink

Ltd. $4,226.04 $1,267,812.00 ($390,513.00) $1,479,114.00 ($179,211.00)

*Alternate workstation – one power source panel option was not compliant with the Tender

specifications which called for a 2 power source panel option.

** Monarch’s price does not change with quantity. The City was able to maintain 50 units of

furniture, as it was compatible with the Monarch product line.

e) Findings of the Analysis of Submissions

Column B: Displays the unit price of each of the Proponent’s submissions.

Mayhew & Associates is shown as the lowest bid.

Column C: Displays the value of the anticipated purchase of 300 units.

Column D: The calculated cost savings had the City awarded the Tender to a

proponent other than Monarch:

$47,547 if Eagle was chosen, as was reported to Council on May 30,

2005.

There is no cost savings through the award to Mayhew & Associates,

as the proposal submitted appears to have been non-compliant, based

on information provided by Administration.

Column E: Displays the value of the anticipated purchase if 300 + 50 new

workstations for IT were purchased.

Column F: Indicates a cost savings of $179,211 would have been achieved by the

selection of the lowest bid, with the additional cost of all new furniture for IT.


How and why did

this happen?

Sept. 12, 03:

PWGSC

communicated a

deadline for the

furniture fit-up

expenditure

– Mar. 31, 04.

3.3.4 WPS / DND Timeline and Discussion:

a) As early as September 12, 2003, the City was aware of a PWGSC budget

expenditure and timing constraint that would affect the project fit-ups. PWGSC

advised the City, in an email, that PWGSC had received direction to purchase

furniture screens by March 31, 2004. PWGSC was to ensure purchase and

possession of the furniture screens occurred by that date, or PWGSC would be at

risk of forfeiting the funding.

b) An internal City email outlines that during a November 26, 2003 meeting with

the City’s project team (including consultants) and PWGSC, it was agreed that:

- Tender 02-04 would be issued on December 16, 2003 with a closing date of

January 7, 2004; and

- The PWGSC screens would be purchased by the week of January 12, 2004 to

ensure a delivery date on or before March 26, 2004.

c) The City did not issue the Tender until January 16, 2004. Tender 02-04 was

issued for the PWGSC Panel System Furniture (Part A & B) with a closing date

of February 3, 2004, almost a month late.6

Feb. 2, 04:

Administration

communicated a

timing crisis to

Council – they

would need to act

fast, or the City

would forfeit a

management fee

valued at

approximately

$10,000.

d) On February 2, 2004, the day before Tender 02-04 closed, Administration

reported (Council report 10006):

- “PWGSC had advised Administration that the funding for expenditures within

their fit up program is extremely time sensitive and subject to being lost if not

expended within any given federal government fiscal year end of March 31.

Further they have indicated that the expenditure for the screens to be used by

HRDC must be made prior to March 31, 2004. On that basis PWGSC has

requested that the City purchase the screens on their behalf prior to that date, or

they will purchase the screens directly in which case the City would forfeit the

related management fee.”

- The Council report was not clear in disclosing the fact that Administration had

been advised of the urgent action PWGSC would have to take, unless the City

itself moved quickly, on September 12, 2003.

6 We were unable to find documentation to explain the change in date the Tender was issued.


e) Report 10006 went on to state:

- “The City’s Purchasing Bylaw (#9-2000) requires all Tenders or contracts that

exceed one hundred thousand dollars to report to council after the Tender is

closed. Administration has determined that the traditional timelines associated

with the Tendering process and obtaining Council approval for award of Tender

will not allow us to meet the requested deadline for PWGSC.”

- The report recommended that: “Administration BE AUTHORIZED to award

Tenders to the lowest bidder that meets the specifications.” And

“Administration BE DIRECTED to report the results and award of Tenders to

Council for information.”

Feb. 23, 04

City portion (Part

C) – not yet

awarded.

f) On February 23, 2004 the PWGSC portion of the Tender (Part A & B) was

awarded. Administration reported:

- “Based on the above, the Tender was awarded on February 4, 2004 to Monarch

Office Supply as the lowest bidder meeting all specifications.”

Apr. 26, 04

Administration

recommended

“piggybacking” the

DND furniture

purchase – onto

Tender 02-04.

Council was not

advised, we believe

because it was

unknown, that Part

C of Tender 02-04

had not yet been

awarded.

g) Administration attended an April 26, 2004 Council meeting (report number

10292) to present information to Council regarding furniture purchases for the

Windsor Police Service /Department of National Defence Comprehensive

Training Facility.

- Council report 10292, approved by senior Administration of the City and

Windsor Police Services, discussed that the DND training facility was in need of

furniture.

- Administration advised that considering the price and quantity, the purchase

would need to be tendered under the Purchasing By-Law.

- Administration advised that the City’s portion (Part C) of Tender 02-04 provided

pricing for panel system furniture that is interchangeable and of the same

product line as the DND furniture.

- Based on our review of the documentation available, it appears to have been

unknown to Administration that Part C of the Tender had not yet been awarded

to any proponent. As a result, the report incorrectly stated that Monarch had

been awarded the contract. (Referring to the Award of Part A)

h) Based on Administration’s recommendation to save time on tendering and to

take advantage of quantity discounts provided in Monarch’s prices for the 400

CHS project, Council resolved:


- That APPROVAL BE GIVEN to award the successful bidder from the “Tender

for Panel Systems Furniture, Income Security Building, Tender No. 02-04” the

furniture and equipment for the WPS/DND Comprehensive Training Facility.

Why are we

concerned?

3.3.5 The Impact of the Furniture Tender 02-04 Errors

a) The impacts of the errors on the furniture tender are similar to those that occurred

on the RFP award, which are covered 400 CHS Report I-A.

b) There was a measurable financial cost to the City for the errors made.

c) The actions of the City affected the City’s goodwill with the Tender Proponents,

which damage the City’s ability to attract quality proponents to participate in future

Tender and RFP calls. The following is a sample of communications that were

forwarded to the City from the various Proponents and their suppliers, expressing

disagreement as to the City’s direction in awarding Part C of the tender:

i) Tayco, February 6, 2004

Tayco expressed concern about the results of the tender to the Purchasing

Manager in a strong letter which stated...“At the official Bid Opening, we

discovered that we were the lowest bid by a substantial margin of all the

manufacturers that met the specifications outlined.”

“Within 24 hours of the official Bid Opening, I was informed that we had been

disqualified. In complete disbelief my associates and I began to research the

reasoning” … “This error, if not reviewed promptly, will cost your City

$400,000 at a minimum.”

ii) Eagle Office Furnishings, February 2, 2005

Eagle expressed concern about the transparency and fairness of the award of

Part A of the Tender. Eagle sent copies of a letter to the 400 CHS Project

Manager, a City Councillor and the City’s Purchasing Manager that closed

with the hope that, at least in the future,: “You have informed our President

that there would be a “level playing field” when it comes to the future award

of the furniture portion known as Part “C”, and we thank you for that

commitment.”

iii) Monarch Basics, April 25, 2005

Monarch, the proponent awarded the Tender had a strong position: “We were

told from the very beginning that the City of Windsor was going to single

source the total bid.” First – so that all furniture matched. Second – because


of pricing (the larger the order the better the pricing)”

iv) Artoplex, (Supplier for Eagle Office Furniture) May 31, 2005

In a letter addressed to the City’s Purchasing manager, Artoplex expressed

concerns about the City’s decision not to award Tender 02-04 Part C to the

lowest bidder: “We do not read anywhere in the tender document that part A

and C could be combined together to award the contract.”

v) Mayhew & Associates:

We did not find any correspondence to the City from Mayhew, the apparently

lowest compliant bidder from Part C of the tender.

The legal memorandum attached as Appendix A – II is required reading to obtain a full

understanding of this report.

For full comprehension of the legal issues of the review and to gain background for many of the

400 CHS report recommendations, please read Appendix A, Parts I and II.


4.0 APPENDIX A-II: THE LEGAL MEMORANDUM


3839471.10

MEMORANDUMToronto

Sent via E-mail

To: Angela BerryLead Auditor, City of Windsor

c. Andrew Roman

From: William M. Pigott

Date: November 13, 2009

Subject: Corporation of the City of WindsorRe: Bid Process for Panel System Furniture (Tender 02-04)

File: 115855.1

INTRODUCTION

Our task is to address the issues more fully described later in this memorandum. Those issues arise from tender number 02-04 for panel system furniture at the new Income Security Building, 400 City Hall Square, Windsor, Ontario (the “Tender”).

ISSUES

The issues to be addressed are the following:

• Did the City of Windsor (the “City”) follow its own procurement policy and also comply with then current procurement law?

• What can the City do to reduce procurement problems in the future?

• What is the risk of legal action against the City by one of the disgruntled bidders and what is the likely damage exposure should a disgruntled bidder succeed?

• What are the implications of making the issues respecting the Tender public?

CONCLUSIONS

Various terms in this section “conclusions” are defined later in this memo. For ease of reference:

• “Canada” means the Department of Human Resources and Skills Development, represented by Public Works Government Services Canada;

• Canada intended to purchase one of the types of furniture described in the Tender, being either Part A (stackable) or Part B (monolithic);


mail

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3839471.10

• The City intended to purchase the furniture described in the Tender as Part C;

• The bold faced names, with the exception of Artopex which is a furniture manufacturer, are the five bidders on the Tender;

• “WPS” means the Windsor Police Services/Department of National Defence/The Comprehensive Training Facility which is another building not initially involved in the Tender;

• The “bidding contract” is the contract, formed between the City and any bidder submitting a compliant bid, which defines the obligations of the City and each compliant bidder during the period in which bids are evaluated and an award of contract for furniture is made.

Following closing of the Tender February 3rd, 2004, Canada decided to purchase the furniture described in Part A (rather than Part B). The City deferred a decision on Part C until May of 2005.

(i) Did The City Follow Its Own Procurement Policy And Also Comply With Current Procurement Law?

With respect to the award of Part A, the City complied generally with the procurement policy described in City of Windsor by-law No. 9-20001 (“by-law 9-2000”). However, the bid documents as issued had several omissions. As well, before the Tender closed, changes were made to the bid process which were not properly reflected in the amended bid documents.

Based on the information which has been provided to us, the bid documents as issued and as later amended did not deal with and codify:

• The nature of the prequalification process which resulted in three of the bidders being invited to bid (Eagle, Inscape, Monarch);

• The limited terms and conditions under which the additional two bidders were invited to participate in the bid process (Mayhew Tayco);

• The role and authority of Canada in determining who would be awarded a contract;

• The intent of the City to purchase Part C from the successful bidder for either Part A or Part B, possibly based on the lowest aggregate price for such parts.

The City evaluated the bids received as though the bid documents did reflect the four issues mentioned above. In doing so, the City breached its implied obligation under the “bidding

1 City of Windsor By-Law No. 9 – 2000, a by-law To Establish Purchasing and Materials Management Policies

and Procedures passed and effective January 4th, 2000.


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3839471.10

contract” to treat all bidders fairly and evenly. Further, the City breached the “bidding contract” with the bidder which submitted a compliant bid (Eagle) when it awarded the contract for Part A to a bidder - Monarch – which had submitted a non-compliant bid. Bidders which submit non-compliant bids do not have the “bidding contract” with the City.

With respect to the award of a contract for WPS, the City did not follow by-law 9-2000 and sole sourced the furniture purchase to the supplier awarded the contract for Part A, namely Monarch. There were no procurement law issues around this purchase because there was no procurement process devoted to the WPS. At the time the WPS purchase was made, the City believed that it would achieve savings by taking advantage of quantity pricing rather than taking such a small scope of supply back to the market.

With respect to the award of contract for Part C, the City did not follow by-law 9-2000, anticipating that prices for the scope of supply would be higher if it went back to the marketplace. Another driver in this decision was the assertion by Monarch that it had been promised an award of Part C and had begun performance of the work. There is no breach of prevailing procurement law because, had there been a “bidding contract” with Monarch (or any other bidder), it had expired in the spring of 2004 when the bid irrevocability period expired.

Attached to these Conclusions as Appendix A is a table listing the five bidders under the Tender, their price and our assessment as to whether they are compliant or not.

(ii) What Can The City Do To Reduce Procurement Problems In The Future?

We recommend that the City adopt template request for proposal and bid documents to ensure consistency in its processes (both with and without the “bidding contract”). We recommend that, if template documents are adopted, in-service seminars be convened to brief City purchasing staff on the use of these materials and their implications.

(iii) What Is The Risk Of Legal Action Against The City Of Windsor (The “City”) By One Of The Disgruntled Tender Bidders And What Is The Likely Damage Exposure Should A Disgruntled Bidder Succeed?

(a) Award of Contract for Part A

As a result of materials transmitted to us November 4, 2009, we believe that two of the five bids received were non-compliant (Monarch, Inscape). Two other bids may be non-compliant (Mayhew, Tayco), depending on the materiality of qualifications which both bids included. There is no evidence to suggest that the bid of Eagle is non-compliant.2

2 We have been unable to determine whether the bids of Mayhew and Tayco are or are non-compliant. Without

the complete bid submissions of both entities supported by analysis from the consultant, we have insufficient information to make a judgment on whether the qualifications of each bidder are serious enough to render their bids non-compliant. As well, a review of the full bids submitted would reveal whether there are any other qualifications, mistakes or defects in the bids from those two parties.


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The Monarch bid was non-compliant because its monetary offer to the City was conditional upon the City awarding Monarch Part A or Part B plus Part C to secure the price discounts which Monarch claimed were imbedded in its bid.

It appears that Tayco, Eagle and Artopex (the last being the supplier to Mayhew and Eagle) all complained to the City about the process but have not subsequently commenced proceedings (so far as we are aware) to pursue perceived rights. The City has an arguable limitations defence should claims be asserted by any of these three parties. If Tayco were to make a claim against the City, Tayco would be obliged to prove that its bid was compliant in spite of the qualifications which it wrote on the Bid Form and on the specifications.

Inscape was the second lowest pre-qualified bidder to meet the furniture specifications of Canada. However, the Inscape bid is non-compliant because it failed to provide a price for meeting the requirements of Part B. If Inscape were to argue that Monarch – a non-compliant bidder – should not have been awarded the contract, the City has a defence that it cannot be liable for a breach of the “bidding contract” where the complainant does not have the “bidding contract” with the City. The City may also have a limitation defence against Inscape. It may not be worthwhile for Inscape to pursue a claim, given the amount at stake, the evidentiary burden, the cost of litigation and the shortcomings in its bid.

Mayhew was the low bidder for Part A and Part B. It made no complaints upon being rejected as a potential supplier although its manufacturer, Artopex, sent a letter to the City May 31st, 2005 concerning the Tender. We were provided with the first page of the Mayhew bid which includes a qualification around power locations on panels. Depending on the materiality of this qualification, the Mayhew bid may be non-compliant. If Mayhew is inclined to claim, it may determine that such a claim is not worthwhile given the amount at stake, the evidentiary burden, the cost of litigation and the possibility that it might not have the “bidding contract” with the City.

Even if the City had, and then breached, the “bidding contract” with both Inscape and Mayhew, only one of those bidders can recover substantial damages. And, that would be the bidder who can demonstrate that, but for the breach of the “bidding contract”, it would have received the award of Part A. A bidder which proves a breach of the “bidding contract” but cannot prove the breach prevented it from being awarded Part A recovers nominal damages. So, Mayhew (as well as Inscape) has to consider the size of its investment in time and legal costs against the possibility of recovery.

Eagle is the only compliant bidder under the Tender. Eagle could claim that the City breached its “bidding contract” with Eagle when the City awarded Part A to Monarch – a non-compliant bidder. Eagle faces a limitation defence, given its 2004 complaints about the Tender. If Eagleovercomes the limitation defence, it will have to prove that – in spite of being the highest bidder – it would have been awarded Part A but for the City’s breach of the ´bidding contract”.

(b) Furniture Purchase for WPS and Award of Contract for Part C

In both transactions, by-law 9-2000 was considered and then bypassed. However, neither purchase transaction conferred any legal rights on any of the bidders. The two purchases are


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separate and apart from the Tender because the bids submitted pursuant to the Tender had expired.

(iv) What Are the Implications of Making the Issues Respecting the Tender Public?

The issue is one of risk management. The City will have to assess the likelihood that any of the bidders will take action against the City. If the assessment is that there is no serious chance of a bidder taking action (keeping in mind that only one bidder can recover substantial damages), then the report may be made public, from a purely legal perspective. If the City is concerned that one or more bidders will bring an action against the City, then the City may consider either redactions from the report or preserving the report as an in camera document.

The City should consider not making the report on the Tender public at all. Owner errors in running bid processes – stemming from a lack of understanding of the “bidding contract” – are very common. The difficulties with the Tender do not involve any form of outside interference with the process. Canada obtained the furniture it wanted from the lowest pre-qualified bidder (although not necessarily the lowest compliant pre-qualified bidder).

FACTS

Attached as Schedule 1 to this memorandum is a list of the documents that you were able to furnish in connection with the Tender.

We have had the opportunity to review an excerpt from a draft report, being section 5.0 titled “The 400 CHS Furniture Tender” (the “Draft”) which was quite helpful. However, we understand that your own review of the Tender has been significantly hampered by a lack of most of the key documents pertaining to the Tender. For example, you have been able to locate only the first page of the Bid Form for all bidders and some additional elements of the Tayco bid which were attached to correspondence from that company. In addition, you are not confident that you have a copy of the Tender package itself as issued. Accordingly, the opinions and recommendations expressed in this memorandum are based upon, and limited by, the facts and documents which have been made available to us.

(i) Original Tender

By a letter dated January 16th, 2004,3 the City extended an invitation to various potential bidders to obtain the Tender documents and submit a bid.

Based on the information provided, the Tender, as originally issued, was composed of:

• Instructions to Bidders;

3 The letter dated January 16th, 2003 is on the Corporation of the City of Windsor letterhead and is titled “Dear Sir/Madam”. The letter is signed Greg Cecile, Acting Supervisor of Purchasing. Although the letter is not addressed to any specific vendor, we understand the letter was, in fact, directed to the three vendors who were considered pre-qualified at the time the letter was transmitted.


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• General Conditions;

• Bid Form;

• Specifications for Part A and Part B4.

The Tender package was prepared by J.P. Thomson Associates Ltd. (the “Consultant”). Although it is normal for a procurement such as this one to be prepared and managed by a consultant, there was some concern expressed in the documents provided that it was unusual for the Consultant to conduct the process rather than City staff. Provided appropriate approvals are received from Council or from staff, by-law 9-2000 (in force at the time) permits the City to appoint a consultant to prepare and manage a project involving a procurement process.

The original Tender called for bids to be submitted to meet two different furniture specifications. Part A of the specifications sought pricing for a furniture system that was “stackable” while Part B sought pricing for a furniture system that was “monolithic”. These two alternative systems (the City would purchase either Part A or Part B) were intended for that portion of the Income Security Building (the “Building”) that would be occupied by the Department of Human Resources and Skills Development, represented by Public Works Government Services Canada (collectively “Canada”). The Tender was to close February 3rd, 2004.

(ii) Relationship Between Canada And The City

Canada and the City entered a lease dated July 11th, 2003 under which – stated generally – the City would design and build the Building and provide other, related services. Canada would be a tenant pursuant to a long term lease (the “Lease”).5 Canada would not occupy all of the Building; a portion would be occupied by the City for different purposes.

There are several attachments to the Lease which describe Canada’s requirements for the Building including such things as the size of the floor plate, the requirements for Building systems and specifications for cleaning requirements. Schedule E to the Lease is entitled “Terms and Conditions Applicable to the Leasee’s Improvements”. This Schedule incorporates Appendix 1 which is a “Sub-Agreement” between the City and Canada covering what the City is to do to ready the Building for occupancy. Among other things, the City was to purchase furniture for Canada under a bid process more particularly described in Schedule E. Under the Sub-Agreement, Canada would pay the City the direct cost of the furniture plus a management

4 It has not been possible to obtain a copy of the original Tender package as issued. The version provided is the

“best evidence” currently available. For purposes of this memorandum, we have assumed that the Tender package issued was substantially the same as the one provided to us and described in the memorandum. We also assume that the only addenda issued respecting the Tender were Addenda 1 and 2.

5 The Lease is dated July 11th, 2003 and, through its several attachments, provides, in addition to the terms of Canada’s tenancy, the ancillary services that will be provided by the City, including the acquisition of the furniture described in the Tender.


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fee of 3%. It was the requirements of Schedule E and of the Sub-Agreement which resulted in the Tender.

The terms of Schedule E are incorporated by reference into the Sub-Agreement. Schedule E, paragraph 7 requires the City to indemnify and save Canada harmless from any liability arising out of the City’s obligations to Canada, “…unless caused by the neglect or fault of the lessee.” Schedule A also provided that Canada had a right of approval over any subcontracts awarded by the City.

Schedule E does not confer a right of audit on Canada and does not include any language that expressly states that the City, in carrying out a competitive bid process, must comply with prevailing bid law in the purchase of furniture for Canada. Section 11.6 of the Lease does confer a right of audit on Canada in relation to operating costs that are charged to Canada during its tenancy. It does not appear that the right of audit conferred by Section 11.6 of the Lease was intended to extend to the Tender.

(iii) Addenda Issued During Tender Process

On January 23rd, 2004, Addendum #1 was issued.6 The addendum is incorrectly dated January 23rd, 2003.

Addendum #1 added Part C to the furniture specification to solicit a unit price bid for one furniture station as more particularly described in the specification for Part C. Approximately 250 units would be purchased by the City, if an award of contract was made. This furniture was intended for that portion of the Building to be occupied by the City.

Addendum #2 was issued January 29th, 2004. The addendum made an immaterial change to the Instructions to Bidders. As well, the addendum made some amendments to the technical specifications for Part A and Part B.

(iv) Pre-Qualification of Bidders

There was a pre-qualification process which predated the issue of Tender documents. Canada stipulated that the only vendors to be allowed to bid would be those which had “standing orders” from Canada at that time and who were posting the lowest list prices for the type of furniture that

6 Addendum No. 1 fundamentally altered the Tender by adding Part C which represented a purchase that would

be made by the City for its own account. Based on e-mails provided to us and covering the fall of 2003, and particularly an e-mail dated November 27th, 2003 from John Miceli to Amy Desjardins, Canada and the City intended to purchase the City’s furniture and Canada’s furniture from a common vendor for the following three reasons: “It is understood by all parties at the meeting that the City of Windsor and HRDC will use a common supplier. The goal of using a common supplier for screens is firstly to achieve savings, secondly to create a common theme throughout the building and thirdly the ability to interchange screens should the need to do so arise.” While that agreement may have been well understood between the City and Canada, the Tender documents expressed the common vendor as an intention while leaving the City the discretion to breakup the order and use more than one vendor.


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Canada wanted. These three pre-qualified vendors would then display their product line to familiarize the City with what was on offer. Then, the Tender would commence with the three pre-qualified bidders – basically – invited to bid.

The Instructions to Bidders do not mention anything about pre-qualification.

The three original “pre-qualified” bidders were Monarch Basics (“Monarch”), Inscape Ltd.(“Inscape”) and Eagle Office (“Eagle”).

Some time prior to closing, Mayhew and Associates (“Mayhew”) and Tayco Panelink Ltd.(“Tayco”) made inquiries of the Consultant to determine if they could bid on some portion of the furniture included in the Tender. The excerpt from the Draft quotes an in-camera meeting of City Council (“Council”) February 23rd, 2004 stating that the Consultant permitted Mayhew to participate in the Tender by submitting an alternate panel system which would be considered only if the pre-qualified panel systems failed to meet Canada’s budget requirements. The same meeting made reference to the bid of Tayco – which must have been added to the pre-qualified list before closing – and indicates that Tayco’s bid was deemed not to meet the furniture specifications.7 No addendum or other document has been found by the City to confirm the inclusion of these two new bidders in the Tender or to create any limitations on how they might participate. It is not clear whether Mayhew and Tayco were added to the Tender before or after Addendum #1 was issued.

(v) Bid Closing and Award of Part A

Bids closed February 3rd, 2004. There was a public opening shortly after closing. At the public opening, it was reported that five bidders responded. The five bidders were identified and their pricing for Parts A, B and C were read.

As reported in the Draft, there was some urgency in completing the purchase of the furniture required by Canada; its allocation for the furniture purchase had to be spent/committed prior to March 31st, 2004 or it would be lost. Section 1.10 of the Instructions to Bidders requires the successful bidder to deliver all of the furnishings ordered to a storage facility provided by the City on or before March 31st, 2004. This provision was clearly intended to deal with Part A or Part B. However, we have seen no documents that indicate any amendment to the Instructions to Bidders to exempt Part C from this delivery requirement.

7 See paragraph 5.2.1 included in Section 5.0 of the excerpt from the draft report dated September 8th, 2009.


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Based on a report dated January 22nd, 20048, Council authorized “administration” to make an award of the furniture contract to the low bidder which meets the specifications. Then, “administration” was to report the results of the Tender to Council. This was a departure from the process prescribed in by-law No. 9 – 2000 which required a Council resolution for a contract of this magnitude. One of the mitigating factors in authorizing administration to make the award was the fact that Canada would reimburse the City for the costs of Canada’s furniture and pay a management fee.

(vi) Rejection of Tayco and Mayhew Bids

Canada preferred the stackable furniture solution offered by Part A of the specifications. In the analysis which followed the submission of bids, the evaluation team determined that both Mayhew and Tayco did not meet Canada’s needs for Part A and both of those bids, though each provided a lower price, were set aside in favour of Monarch. Apparently, Monarch’s bid did not exceed the furniture budget of Canada and so was judged to be the lowest bidder which met all of Canada’s requirements for Part A.

The contract for Part A was awarded to Monarch. There is no record that Mayhew raised an objection to being eliminated as not conforming with the specifications. However, Tayco did object and registered its objections by telephone on February 5th, 2004,9 having learned that it was disqualified. The City has no record of Tayco commencing an action in connection with its complaints about the award of the contract for Part A.

Opposite paragraph 5.2.1 in the Draft, there is a listing of the bid prices from the five vendors that submitted for Part A. Mayhew is the lowest of the five. As I understand it, you have not been able to locate any documents or other records which suggest that Mayhew complained of its treatment in early 2004 or was aware that it might have had a complaint. Mayhew is an Artopex dealer and Artopex wrote a letter to the City May 31st, 2005 complaining about the Tender. Eagle was provided with a copy of that letter but not Mayhew. It may be that Mayhew,through Artopex, was aware of the perceived irregularities with the Tender. However, we cannot be certain of that.

8 The report recognized the proposed exception to the by-law requirements which the report expressed as follows:

“The City’s Purchasing Bylaw (#9-2000) requires all tenders or contracts that exceed $100,000 to report to council after the tender is closed. Administration has determined that the traditional time lines associated with the tendering process and obtaining Council approval for award of tender will not allow us to meet the requested deadline from PWGSC. Given that the tender proponents are being pre-qualified based on vendors of record with PWGSC, that PWGSC must approve all acquisitions on behalf of HRDC fit-up and that the expenditures are fully funded by the federal government, administration is seeking pre-approval from Council for award of tender in relation to the tenant fit-up for the HRDC space.”

9 The objection was apparently registered by voicemail. An account of the voicemail appears in an e-mail dated February 5th, 2004 from Luigi Mastandrea to John Bortolotti in which the sender says: “I received a voicemail from David Rivers of Tayco International calling on behalf of the president. He was inquiring why they were disqualified…I anticipate Inscape will contact your office.”


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The materials received from the City November 4, 2009 included a tabulation sheet dated February 3, 2004 to which is attached the first page of the Bid Form of all five bidders, including Mayhew. 10 The first page of the Bid Form of Mayhew includes the following note:

“NOTE: Specifications or quantities were not included in BID package regarding power locations on panels. Therefore, to provide a BID price Mayhew + Associates has made recommendations. This is subject to change if required.”

It does not appear that this note caused concern for the City because the only information concerning the rejection of the Mayhew bid lies in a quotation from the February 23rd, 2004 in-camera meeting of Council which indicates that Mayhew had submitted an alternate proposal. Our sense is that Mayhew’s bid was not seriously considered because another bidder met Canada’s furniture specifications. As discussed later in this memorandum, if Mayhew’s bid was compliant and can be argued to have met the specifications of Canada for Part A, it may have a cause of action against the City of which Mayhew is not currently aware.

On November 4, 2009, we were provided with a copy of the first page of the Bid Form submitted by Tayco. In the same bundle of materials, we received a copy of a letter dated February 3rd, 2004 from Tayco to the City. 11 The writer enclosed excerpts from the bid of Tayco. A review of those materials discloses handwritten notes on two pages of the bid form and three handwritten amendments to the Furniture Specifications for Part C. If those notes and qualifications are material, then the Tayco bid is non-compliant. Compliant or not, the Tayco bid – as indicated earlier – was eliminated as not conforming with the specifications. For Tayco to make a claim against the City, then, in addition to advancing a limitations defence, it will be open to the City to argue that the Tayco bid was non-compliant because it was qualified.

(vii) Monarch Bid Qualification

Although the City has been unable to locate complete copies of any of the bids, there is evidence from an e-mail dated April 25th, 2005 that Monarch’s bid was qualified as to price.12 In that e-mail from Todd Palcit to John Miceli at 3:16 p.m., Mr. Palcit reminds Mr. Miceli that Monarch’s bid included the following statement:

10 The first page of the Bid Form for all five bidders is attached to a tabulation sheet dated February 3rd, 2004.11 The materials from Tayco – providing evidence that their bid may be qualified – is attached to a letter to the

city from Tayco dated February 3, 2004 and directed to Mr. Greg Cecile of the City.12 E-mail to John Miceli from Todd Palcit of Monarch April 25th, 2005 at 3:16 p.m. In addition to reminding the

City of its price qualification, Monarch pointed out its understanding around the purchase from a common vendor. The e-mail includes the following comment:“We were told from the very beginning that the City of Windsor was going to single source the total bid. First –so that all furniture matched. Second – because of pricing (the larger the order the better the pricing).”The e-mail also details the additional expenses which Monarch says it incurred in the expectation of an award of Part C. The e-mail reads:“Based on option “C” we have incurred additional expenses: numerous meetings on layout, electrical, data, and telecommunications; consultations with City departments (still receiving phone calls as of April 21, 2005); co-ordination of Installation Company for furniture installation”.


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“Our price is based on receiving the total bid. For example – either part “A” and “C” or “B” and “C”.

Assuming this language appeared in the Monarch bid or in an accompanying letter, then, Monarch has not submitted a price for Part A as requested by the Instructions to Bidders. Instead, it has submitted a price for Part A that is contingent upon it also being awarded Part C. The proviso which Monarch stipulated in its bid appears to fall within the definition of “qualified bid” found in by-law 9-2000 which reads as follows:

“‘Qualified bid’ means a limited or conditional offer that modifies or does not meet some important terms, condition or specification of the bid invitation, which limitation or condition may constitute grounds to disqualify the bid.”

Some history is required to determine whether the Instructions to Bidders – properly understood – made a firm commitment to award both Part A and Part C to a single bidder. As issued, the Tender anticipated an award of Part A or Part B. Addendum #1 added Part C but did not otherwise amend the Instructions to Bidders (in doing so, it also meant – if you read the Instructions to Bidders literally – that Part C also had to be delivered before March 31st, 2004). Also, it appears that the drafter of the original Instructions to Bidders considered the possibility of having more than one supplier provide the requirements of either Part A or Part B. The relevant sections of the Instructions to Bidders read as follows:

“1.08A. In submitting this Bid, the Bidder recognizes and accepts the right of the Owner to accept any Bid which may be deemed to be the most advantageous to the Owner (or any part thereof) at the price submitted, or to reject any or all Bids. …it is the intent from the owner to purchase from one supplier only.” [emphasis added]

1.08C. Owner reserves the right to accept any tender/bid, in whole, or a portion thereof.”

The Draft makes several references to discussions which occurred in 2001, 2002 and 2003 respecting the purchase of common work stations and the purchase of those work stations from a common supplier. Those were internal discussions involving the City, some of its departments, the Consultant and, on at least one occasion, with Canada. While those may have been the intentions communicated at the time, the wording of the Instructions to Bidders opens the door to the City to make a split award. The Instructions to Bidders do not create a clear mandate for one supplier, much less that an award would be made on the best combined price between Part A (or Part B) and Part C.

Underscoring the impression that the Instructions to Bidders intended to address only Part A and Part B of the Specifications, section 1.10A reads, in part, as follows:

“Production of furnishings will proceed immediately after award of tender. Delivery must be on or before March 31st, 2004. …

B. The Successful Bidder shall include all costs for labour and material to ensure that all furnishings for this project will be delivered to a storage facility provided by the City of Windsor on or before March 31st, 2004…”


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(viii) Inscape Bid

Our original assessment of the Inscape bid was that it was compliant. A subsequent review of the February 3rd tabulation sheet (see footnote 10 above) records that Inscape did not price Part B in its bid.

Section 1.04A. of the Instructions to Bidders, reads, in part, as follows:

“.. All blank spaces in the form must be completed in full. .. Bid proposals not submitted in this manner may be rejected.”

The first page of the Bid Form (as revised by Addendum 1) includes the following statement:

“Part A, Part B and Part C must be submitted by bidder.”

Section 1.04A. of the Instructions to Bidders gives the City some discretion in the event that a bidder does not fill in a “blank”. From reviewing materials submitted by Tayco (see footnote 11 above), it is apparent that there are a multitude of blanks in the materials that a bidder is to complete. However, when it comes to the Bid Form, the submission of a price for Part B is mandatory and there is no language conferring a discretion on the City to overlook the failure of Inscape to price this component of the work scope.

It is more likely than not that the Inscape bid is non-compliant for failure to bid for Part B.

(ix) Eagle Bid

The Eagle bid was the highest of all five bids received. Its bid appears to have received little attention, likely because it was never a serious contender for an award. Unless additional information comes to light, it appears that Eagle is the only pre-qualified bidder which is compliant. Eagle’s bid contemplated Artopex as its manufacturer. Artopex made a complaint May 31st, 2005 concerning the award of Part C.

In a letter dated February 9, 2004, Eagle sent a lengthy letter to Mayor Francis. Among other things, Eagle complained about the treatment of Tayco and its apparent disqualification for not meeting specifications. Eagle made no mention of its own bid although it was clear that Eagle felt it was wrong on the part of the City to award a contract to Monarch when Tayco provided a lower price. Eagle does not mention the bid of Mayhew which is lower than the bid submitted by Tayco.

Eagle’s bid was the highest of the five received for Part A. Although there is no budget for Part A mentioned in the Instructions to Bidders, one must consider whether Canada would have agreed to an award of contract for Part A to Eagle given the cost. Should Eagle decide to sue the City, the City would assert a limitations defence, arguing that Eagle knew or should have known that there were Tender process flaws when it wrote its letter of February 9, 2004. Setting aside that impediment, Eagle would be obliged to prove that, but for the City’s breach of the “bidding


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contract”, Eagle would have been awarded the supply contract. The probabilities are that Eaglewould be dissuaded from action by the costs of litigation when considered against potential recovery.13

(x) Purchase of Furniture for the Windsor Police Services/Department of National Defence/The Comprehensive Training Facility (“WPS”)

In early 2004, the City was building the WPS. The budget for the WPS project was approximately $15,600,000 which included a furniture and equipment allowance of $150,000. Reasoning that both time and money would be saved by purchasing WPS furniture from Monarch, Council accepted a report from staff dated April 20th, 200414 and authorized the furniture for WPS to be purchased from Monarch using the same prices it had quoted for Part C. This transaction – characterized as “piggybacking” – appears to fall outside of the requirements of by-law 9-2000 as it lacked a prior authorization by Council and was not the result of by-law 9-2000 mandated competitive procurement.

The value of the WPS purchase from Monarch was approximately $55,000 plus taxes. This may have contributed to the sense – on Monarch’s part – that it had received an assurance of an award of Part C as early as April of 2004.

(xi) Award of Part C

The Instructions to Bidders provided that bids will remain open and irrevocable for a period 120 days after bid closing (section 1.08B). As well, section 1.14B provided that unit prices would, “…be held and valid for 18 months…after bid closing date in order that additional items may be ordered if required.”

The City did not award a contract for Part C within the 120 day period following the closing date. So, the bids made on Part C expired and the City had no legal right to make an award and to use the “bidding contract” to force the bidder to sign a contract honouring the price it bid on February 3rd, 2004. The unit pricing that was to remain available for eighteen months applied to Part A – a contract which was awarded to Monarch.

In an e-mail from Todd Palcit of Monarch to John Miceli April 25th, 2005,15 Mr. Miceli reminds the City of the following:

13 The letter of February 9, 2004 from Eagle to Mayor Francis is signed by Paul Fields, President of Eagle.14 The report concludes with the following statement or rationale for the purchase:

“It anticipated that there will be no advantage to re-tendering the small amount of furniture required for the Windsor Police Services at the Comprehensive Training Facility. Since it is projected that using the recent ISB fit-up contract would result in cost savings, resolve timing constraints and be fully interchangeable with the Department of National Defence’s furniture, it is recommended that the current contract with Monarch Office Supply Inc. be extended to include the Windsor Police Service fit-up requirements of the Comprehensive Training Facility.”

15 See footnote 11 above for quotes from this e-mail.


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• The order had to be Part A plus Part C;

• Monarch provided a price discount conditional upon receiving the order for Part A (or Part B) and Part C;

• Based on the assumption of being awarded both parts, Monarch hired and was paying a designer;

• Based on the assumption of a dual award, Monarch incurred a variety of other expenses.

In a report to Council May 30th, 2005,16 administration recommended that a contract be executed with Monarch to purchase the furniture specified in Part C at the price originally bid by Monarch in February of 2004. According to the report, Monarch offered the best combined price (Part A and Part C) among all bidders. When the award was made to Monarch for Part C, the City was well aware that other bidders had offered significantly lower pricing for the Part C furniture only – though for a different manufacturer.

The Council report of May 30th, 2005 mentions another furniture tender that is about to be issued. The City did commence another furniture tender process in May or June of 2005 for the purpose of acquiring supplementary equipment. While three of the bidders from the Tender were included in this bid process (Eagle, Mayhew, Monarch) this bid process has no bearing on the analysis of the Tender.

LEGAL ANALYSIS

(i) The Bidding Contract

The bid documents issued for the Tender are structured so that any bidder which submits a compliant bid has the “bidding contract” with the City. The “bidding contract” was first identified in the case R. v. Ron Engineering & Construction (Eastern) Ltd., [1981] 1 S.C.R. 111, 119 D.L.R. (3d) 267, 13 B.L.R. 72, 35 N.R. 40 (“Ron”) decided by the Supreme Court of Canada in 1981. Under the “bidding contract”, the bidder has a contractual obligation to keep its bid open for the period of irrevocability and, if the contract is awarded, to sign the contract for the price bid. The obligation of the City under the “bidding contract” is to carry out its evaluation of bids and the award of contract (if it awards the contract) in the manner described in the bid

16 The City had considered awarding Part C to a vendor other than Monarch and paying Monarch the costs that it

had incurred in expectation of an award of Part C. The City decided against this option after consultations with Monarch which are recorded in the report as follows:“With the permission of the Chair of the Steering Committee, Administration met with Todd Palcit of Monarchon May 20th, 2005 to discuss this option. During these discussions, it became clear to Administration that Monarch had clearly been told by City representatives that it had been awarded Part C of the Contract and that Monarch had acted on the reasonable expectations of receiving the award by hiring an Auto Cad designer to work on the project and by informing the supplier, Teknion, that it would be receiving the furniture order. As a result, Teknion has also budgeted for this major piece of work.”


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documents. Subsequent case law has further articulated this obligation as one requiring the City to treat compliant bidders fairly and equally. Because the “bidding contract” is a real contract, a party which breaches it may be liable to the innocent party for contract level damages.

A more complete discussion of the “bidding contract” appears in Andrew Roman’s memorandum dated October 27th, 2009, section II, page 14.

An owner does not treat compliant bidders fairly and equally under the “bidding contract” where it conducts a bid evaluation using criteria not disclosed in the bid documents. In the Supreme Court of Canada decision Martel Building Ltd. v. Canada, 2000 SCC 60, [2000] 2 S.C.R. 860, [2000] S.C.J. No. 60 (“Martel”), the Supreme Court of Canada confirmed the implied obligation of an owner to treat bidders fairly and equally in circumstances where the Crown had conducted a bid evaluation using criteria that were not disclosed in the Instructions to Bidders. Martel, and other cases dealing with similar facts, are applicable here because it appears that Mayhew and Tayco received different treatment – treatment not stipulated in the Instructions to Bidders – as to their eligibility to receive an award of a contract for furniture.

To the extent that the Instructions to Bidders failed to disclose elements of the process – such as the role of Canada – the prospect exists that the City – if challenged may be found to have treated bidders like Mayhew and Tayco unfairly, thus breaching the “bidding contract”.

The implied obligation of fairness read into the “bidding contract” by Martel is not the only implied term in the “bidding contract”. In the Supreme Court of Canada decision MJB Enterprises Ltd. v. Defence Construction (1951) Ltd. (1994), 164 A.R. 399, 18 C.L.R (2d) 120 (Q.B.), affd (1997), 196 A.R. 124, 33 C.L.R. (2d) 1 (C.A.), revd, [1999] 1 S.C.R. 619, 170 D.L.R. (4th) 577, 44 C.L.R. (2d) 163 (“MJB”), the Supreme Court of Canada ruled on a situation where an owner awarded the contract to a non-compliant bidder under circumstances where it had received other compliant bids. The Supreme Court of Canada held that it was an implied term of the “bidding contract” that, absent some contrary intention expressed in the bid documents, it was an implied obligation of the owner to accept only a compliant bid where compliant bids had been received. The Instructions to Bidders, section 1.08A, gives the City the right “…to accept any Bid which may be deemed to be most advantageous… or to reject any or all Bids.” The Court in MJB ruled that this kind of language – known as the “privilege clause” –is not sufficient to negate the implied obligation of the City to award the contract to a compliant bidder (or not at all) when it has received compliant bids.

(ii) Bid Compliance/Bid Rejection

Here, the bid documents included furniture specifications which described the characteristics or requirements of the furniture without stipulating a specific brand or manufacturer. Often, this type of specification is called a “performance specification”. Reference is made to the performance specification because there is a distinction to be made between whether the bids received were compliant (creating the “bidding contract”) as opposed to whether the particular furniture proposed met the requirements of the specifications. It is quite possible to submit a bid that is compliant (submitted on time, properly completed, includes the bid security etc.) and one which, while compliant, does not meet the requirements of the performance specifications and so, after evaluation, is rejected. To express the distinction between compliance and evaluation, the following are the steps, expressed as a continuum:


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• On time delivery of the bid;

• Assessment of whether the bid is compliant or not;

• For compliant bids, evaluation of the furniture solution and other elements of the bid including price.

The Instructions to Bidders do not commit the City to award the entire supply to one vendor. Section 1.08A does express the “intent” of the City, “…to purchase from one supplier only.” While that is an intention – an intention originally directed at Part A or Part B – it falls short of a contractual commitment. Working against a contractual commitment is other language in the Instructions to Bidders which enables the City to accept part of a bid or to accept a bid in whole or in part. So, if the bid is, for example, Part A and Part C, the City has stated its preference for one supplier but enabled itself contractually to proceed with more than one. While an argument can be made that Monarch, by stipulating that its prices are conditional upon being awarded Part A or B and Part C, was bidding in the spirit of the City’s invitation, it had the opportunity (section 1.06A) to obtain pre-closing clarification as to whether the City intended:

• to purchase all Part A (or Part B) and Part C furniture from a single vendor;

• to solicit bids and award a contract on the basis of the best aggregate/combined price for Part A (or Part B) and Part C.

While it may have been the intention of the City to proceed with a single vendor on the best combined price, the bid documents are, at best, equivocal on those points. There is no evidence available to us to suggest that Monarch sought a clarification from the City, in the form of an addendum. The bid documents govern over unwritten intentions and expectations. Accordingly, there is a strong likelihood that the Monarch bid was non-compliant as a result of qualifying its bid.

In addition to Monarch, the bid of Inscape is very likely non-compliant. Although less clear, it may also be that the bids of Mayhew and Tayco are also non-compliant. Tayco believes that it was rejected because its equipment is deemed unsatisfactory. It is less clear why Mayhew was rejected, unless it was on the basis that the City received a bid from a pre-qualified bidder (Monarch) which was within the budget of Canada and therefore merited an award of contract. Eagle is the only pre-qualified bidder whose bid – based on the available evidence – appears to be compliant.

DID THE CITY FOLLOW ITS OWN PROCUREMENT POLICY AND ALSO COMPLY WITH CURRENT PROCUREMENT LAW?

(i) Award of Contract for Part A

By-law 9-2000 requires that a competitive bid process be convened for purchases of the magnitude described in the Tender. Such a process was convened in the form of the Tender with an award of contract for Part A being the outcome. As has already been indicated in this memorandum, there were decisions taken during the conduct of the Tender which themselves fell outside the requirements of by-law 9-2000 because of the urgency of the situation – perhaps


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somewhat self-inflicted – to meet the purchasing deadline. It can be said that by-law 9-2000 was not followed to the letter. But, there can be no argument that the overall intent of the by-law was observed.

As more fully discussed in the sections of this memorandum dealing with the facts and dealing with the legal analysis, the conduct of the Tender did not comply with current procurement law. The bid documents themselves did not reflect the intentions of the City as to how the bid process would be conducted. The bid documents failed to codify the intentions of the City and Canada in several material respects, including:

• The pre-qualification of the three original bidders;

• The role of Canada in deciding which bidder met its requirements;

• The limited nature of the eligibility of Mayhew and Tayco;

• The intent of the City to purchase Part C from the successful bidder for Part A/B, possibly based on the lowest aggregate price for the two parts.

Both the City and Canada knew how they wanted the Tender to be conducted. In fact, they proceeded to conduct it that way. The problem is that the way that the City behaved was inconsistent with the terms and conditions of the bid documents. So, the City did not treat the bidders fairly and evenly and thus breached the “bidding contract”. To compound these problems, the award of contract was made to Monarch – a non-compliant bidder.

The Tender was competitive, the bids received were reviewed from the perspective of technical requirements and price and an award was made to the lowest of the three pre-qualified bidders. It appears that a “bidding contract” was breached. However, there is no suggestion of other behaviours or interferences with the procurement process that would require further investigation.

(ii) Furniture Purchase for WPS and Award of Contract for Part C

To effect the furniture purchase for WPS, the City secured a quote from Monarch, using the prices Monarch submitted in response to the Tender. Then, the City issued a purchase order to Monarch. This process contravenes by-law 9-2000 in that the value of the purchase exceeded the “small purchase order limit” described in the by-law and was undertaken without a competitive procurement procedure. This is not to say that the purchase was improvident as the City was levering pricing off the Tender and may not have done as well had it tendered this relatively modest scope of supply (apparently approximately $55,000). The report to Council April 20, 2004 concluded there would be no advantage in re-tendering and Council agreed. Because there was no competitive procurement process – and this purchase was not included within the scope of the Tender – current procurement law is not an issue.

With respect to the award of a contract for Part C, approval of the award was given by Council May 30, 2005. By that time, all the bids for Part C had expired and neither the City nor the bidders had any obligations to one another under the “bidding contract”, assuming one existed for each bidder. The City concluded that it would be preferable to award the contract to


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Monarch, given the acceleration in cost since the Tender closed and given the position advanced by Monarch that its bid price covered Part A and Part C and that it had been assured that Part C would be awarded to it. The City chose to bypass by-law 9-2000 although Council may have felt that it had no option but to purchase from Monarch. There are no implications for prevailing bid law as no “bidding contract” was offered or intended in connection with the award of Part C at the time it was made.

WHAT CAN THE CITY DO TO REDUCE PROCUREMENT PROBLEMS IN THE FUTURE?

With respect to by-law 9-2000 compliance, there is little that can be said. The Council has a mind of its own and if it chooses to ignore its own by-laws there will be consequences which, here, had no impact on the “bidding contract”.

The difficulties with the Tender – and in the earlier issues surrounding the RFP for the design and construction of the Building – point up the need for a better understanding of current procurement law and practice. These difficulties also suggest that the City should develop a set of standard bid and request for proposal documents which comply with the current procurement by-law, are current with prevailing procurement law and give the City both discretion and protection when it conducts these processes.

(i) Instructions To Bidders

We suggest the development of a template set of Instructions to Bidders and bid forms for processes such as the Tender. These documents would be suitable for the purchase of products and equipment - such as furniture - as well as construction projects.

We also suggest that any template Instructions to Bidders include language limiting the liability of the City for a breach of the “bidding contract”. As well, we would imbed an arbitration provision – arbitration at the option of the City – to enable the City to arbitrate a bid dispute under circumstances of its choosing.

(ii) RFPs

With respect to requests for proposal, we suggest that a template be developed which enables the City to elect between a true RFP which does not create the “bidding contract” and one which does. As well, it is possible to develop a request for proposal template which is a hybrid, meaning that part of the process is a true RFP (does not create the “bidding contract”) while another part of the process does.

By way of an illustration of a “hybrid”, consider the Tender. If a hybrid had been used for the Tender, the bidders may have been asked to submit their proposals in two separate envelopes. The first envelope would be their response to the specifications for the furniture. This response might also include information about their company, their installation crew, their financial information and similar history. This first envelope would be opened and reviewed. If the City was satisfied with the corporate biography and with the furniture specification, it would open envelope #2.


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Envelope #2 is a true bid – creating the “bidding contract” with compliant bidders. The bid represents an irrevocable offer for the scope of supply required by the specifications and the offer would be irrevocable – just like the Tender was. The City would only open envelope #2 for those bidders whose technical solution met the specifications. So, in the case of the Tender (assuming our information is correct that Canada rejected their furniture solutions), envelope #2 for Mayhew and for Tayco would never have been opened.

(iii) In Service Support

If the City were to embark on a program of developing a template for its bids and RFPs, it would not be sufficient to simply provide the documents and assume that they would be put to use. An important element of that program would be in service seminars describing to the user group the underlying legal framework and illustrating how the documents work. Buy-in by the procurement personnel is essential to success.

WHAT IS THE RISK OF LEGAL ACTION AGAINST THE CITY OF WINDSOR (THE “CITY”) BY ONE OF THE DISGRUNTLED BIDDERS AND WHAT IS THE LIKELY DAMAGE EXPOSURE SHOULD A DISGRUNTLED BIDDER SUCCEED?

(i) Award of Contract for Part A

Complaints were received from Tayco shortly after tenders closed. Those complaints – in more detail – were set out by Eagle, on behalf of Tayco, in a fax dated February 2nd, 2005.17 Apparently, Tayco had sent a registered letter to the City a few days earlier – a letter which the City currently does not have. There was also a letter to the City from Artopex dated May 31st, 2005,18 complaining about the treatment of Eagle. Currently, the Artopex website shows both Eagle and Mayhew as authorized distributors of Artopex products. For purposes of this

17 The thrust of the Tayco objection is that their specifications should not have been rejected and that it was in the

City’s best interests to accept Tayco as significant savings could be obtained. The letter includes the following assertion:“Initially, Tayco was told we were disqualified because we did not hold a National Standing offer with the Federal Government. This was totally false information and at no time was a Tayco representative contacted to verify the status of our Standing Offer. As a matter of fact we furnished our Standing Offer Number after we heard that someone other than ourselves had given mis-information. Can you identify the source of this mis-information and address why we were never initially contacted?”The letter goes on to make the following statement about the involvement of Tayco in the bidding process:“According to the documents, the Chief Architect involved in the project had to pre-approve various potential suppliers before they could quote. Tayco contacted John Bortolotti at J. P. Thomson Associates Ltd. and he approved Tayco based on the telephone call and shortly thereafter e-mailed the document and drawings to David Rivers…thereby accept Tayco based on our award wining stackable panel system.”

18 The complaint by Artopex is quite simple and appears to be made on behalf of Eagle. The letter includes the statement:“We do not read anywhere in the tender document that part A and C could be combined together to award the contract.”


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memorandum, I have assumed that both Eagle and Mayhew were authorized distributors in the period running from 2002 through 2005.

The complaints made by Tayco and Eagle were wide ranging. Among other things, Taycocomplained that it did have a standing order number from Canada. It also asserted that its stackable panel system was suitable and expressed concern that the specifications had been prepared with a particular product line in mind – Teknion. In essence, their complaints are directed at why they were not evaluated differently rather than whether the successful bidder was or was not compliant. One could also infer that they were complaining that the City had a “secret agenda” – having an undisclosed preference for Teknion. Bidder complaints about contract awards are quite common. Absent further information that suggests that there is merit to the complaint, it should not be given much weight.

Whatever the details of the complaints about the Tender, it is clear that more than two years havepassed since those parties made their complaints and, presumably, recognized that they might have a cause of action against the City. Under the Limitations Act (Ontario), a party has two years from the date it discovers a claim (or should reasonably have discovered the claim) to commence litigation to pursue its claim. Failure to act before the expiration of that two year period results in the claim being statute barred.

With respect to Tayco and Eagle, both raised complaints about the Part A process in 2004 and again in 2005. If either of those parties were to launch a claim, the City has a limitations defence to assert against such claims. Without more facts/documentation we do not know whether the defence will succeed or not.

Inscape was the second highest pre-qualified bidder finishing some $28,000 above Monarch.There is no information in the documents that have been provided to us that Inscape made any complaint about the Tender, post submission. If Inscape received information now that Monarch was non-compliant, it might consider commencing an action for breach of the “bidding contract”. To succeed, Inscape would be obliged to prove that its omission of Part B in its bid was insufficient to render its bid non-compliant. If it could overcome that problem, Inscape would then be obliged to prove that, but for the City’s breach of the “bidding contract” it would have received an award of Part A.

With respect to Mayhew, the circumstances are a bit cloudy. Mayhew qualified its bid by making its pricing subject to certain assumptions. Whether its bid is non-compliant or not, would depend on the availability of further evidence which demonstrated whether the qualification was material or not. Setting aside the issue of compliance, there is a suggestion in the documents provided to us that Mayhew’s furniture did not meet the Part A specifications. If Mayhewdecided – in 2009-2010 – that it was wronged in 2004, then it would first have to prove that it had the “bidding contract” with the City and then establish that its furniture line was acceptableto Canada. Then, Mayhew will have to prove that, but for the City’s breach of the “bidding contract”, it would have received the furniture order and made a reasonable profit on it. As indicated earlier, Artopex complained about the project May 31st, 2005. Mayhew is an authorized distributor of Artopex products. It may turn out – should Mayhew commence an action – that they knew of problems with the Tender more than two years’ ago so that there may be a limitation defence available to the City.


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There is nothing in the Lease or the Sub-Agreement with Canada which confers on Canada any rights that would be triggered should one or more furniture bidders bring an action against the City. Under the Lease, if Canada is sued, it is entitled to an indemnity from the City. It is possible that Canada would allege breach of the Sub-Agreement should it form the view that the City conducted a bid process which resulted in Canada paying more money for the furniture than it should have done. On the information available to us, Canada rejected the offerings of Mayhew and Tayco as not meeting its specifications. Canada selected Monarch – apparently at prices lower than were then listed under its standing order – and so has received what it bargained for. It does not appear that the City has any material exposure to Canada around the bids of Mayhew and Tayco.

(ii) The Furniture Purchase for WPS

There was no bid process with respect to this purchase. Simply, the City obtained a quote from Monarch (based on pricing made in its bid in response to the Tender) and issued a separate purchase order. The purchase contravenes by-law 9-2000. However, this purchase does not confer any rights on any of the bidders on the Tender as the transaction is separate and apartfrom the Tender and pertains to a different project. There are no “bidding contract” issues in connection with this purchase.

(iii) The Award of Part C

By the time the award of Part C had been made, all bids to the Tender had expired. That means the “bidding contract” between the City and any compliant bidder was over. The City no longer owed any duty of fairness – or any other “bidding contract” duty - to the bidders. Neither did any bidder have any “bidding contract” obligations to the City.

While there is clearly concern from several quarters that the City spent more money on Part C than necessary, the City has no exposure to any of the bidders on the Tender – or to Canada – in relation to the award of the contract for Part C.

(iv) Damages

Where a bidder has the “bidding contract” with the City and can prove that the City breached the “bidding contract”, it is entitled to damages. The amount of the damages depends in part on where the bidder stood in relation to the other compliant bidders.

Taking Mayhew as an example, and assuming no limitation defence, to obtain recovery from the City, Mayhew would have to prove that its bid was compliant. Then, it would have to prove that, but for a breach of the “bidding contract” by the City, it would have been awarded the contract to supply the Part A furniture. If Mayhew can establish both of those threshold issues, it must then prove its damages. Under the prevailing case law, its damages would be the overhead and profit it would reasonably have earned had it supplied the furniture and had no significant difficulties. Assume a net profit of, say, 25%, the damages Mayhew could recover are in the order of $50,000 to $60,000.

If another bidder – which was not the true low compliant bidder – could also prove that it was compliant and that the City breached the “bidding contract”, it could also recover damages.


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However, since it cannot prove that, but for the breach of the “bidding contract” by the City it would have received the order, its damage recovery is significantly lower. Based on the case law, the likely maximum recovery of such a bidder is the cost of preparing its bid.

One of the practical issues which any bidder must consider before commencing an action for a breach of the “bidding contract” is the cost of bringing an action weighed against the potential for recovery. Even in the case of Mayhew, it is a questionable use of resources to commence an action to recover $50,000. Pure legal costs apart, a prospective supplier to any large customer does not help its cause by suing its existing or prospective client.

WHAT ARE THE IMPLICATIONS OF MAKING THE ISSUES RESPECTING THE TENDER PUBLIC?

The discussion under this heading relates to the potential for legal action in relation to the award of the contract for Part A. This because there are no “bidding contract” implications for the awards made for the WPS or Part C transactions because neither of those purchases involved the “bidding contract”.

The issue here is really one of risk management. First, assume that all of the bidders except Monarch review the report and conclude that they have a cause of action against the City.

(i) Business Case for a Lawsuit

Mayhew was the low bidder but its bid may well be non-compliant. In addition to a compliance defence, it will be confronted with a claim under the Limitations Act (Ontario) that it should have known – more than two years ago – that there may have been some irregularities with the Tender. Against the backdrop of an equipment line that was not favoured by Canada and the cost of bringing proceedings, a lawsuit at this stage may not be very attractive.

Eagle’s bid is probably compliant. However, its bid was the highest of all five bids received. Eagle faces a limitations defence as well as an argument that, its price being so high, it did not have a reasonable chance of receiving the award. Given the hurdles it faces in proving its case and the cost of litigation, a suit by Eagle is unlikely.

If Inscape became aware that the Monarch bid was non-compliant, it could commence an action against the City. The City would respond with a two-part defence, being the non-compliance of the Inscape bid and a limitations defence. Given the cost of litigation, the chances of success and the damages to be recovered, a suit by Inscape is not likely.

Tayco faces a similar dilemma. It has a problem with its bid (it added notes to the Bid Form andattempted to amend the specifications) and it faces a limitations defence. Its bid was higher than that of Mayhew and its furniture line appears to have been rejected by Canada. Its prospects for success are dim and it is likely that it would view a investment in the lawsuit as something not worth pursuing.


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(ii) Release of Report, Redacted

With respect to the potential for redaction, we assume that the full report would be made available to Council in camera with the redacted version being made public.

Assuming for a moment that the in-camera report is not leaked, a redacted version of the report would probably need to remove an enormous amount of information in order to prevent a potential litigant from figuring out who the bidders were and what the outcome was. So, redaction may not be a practical approach.

(iii) The Report is Not Released

The City should consider whether, having made the report “in camera” it should be released at all. The “bidding contract” is a concept that is not well understood by many owners – leading them into mistakes and often litigation. As surprising as it may sound, not many lawyers are familiar with the “bidding contract” regime either, even though the underlying case law has been around for nearly three decades. Here, it appears that, when the Tender was originally issued and then amended to include Part C, no one appreciated that the Instructions to Bidders should deal with such things as:

• The limited opportunities being given to Mayhew and Tayco;

• The exclusion of Part C from the March 31st, 2004 delivery deadline;

• The lack of reference to any pre-qualification that pre-dated the issue of the Tender;

• The failure to clearly stipulate that one vendor would or would not supply the total order for Part A and Part C (assuming an award is made) and, if it was to be a single supplier, that the combined price bid would govern;

• The failure to identify the role of Canada in assessing the acceptability of the furniture solutions being proposed.

The documents we have reviewed suggest that the Tender – once it was issued – was conducted with some haste. Given the deadline of March 31st, 2004, there was little time for reflection on the award of Part A. One of the consequences of the “hurry up” nature of the process was that no one appreciated that – based on the Instructions to Bidders as issued – the Monarch bid was non-compliant.

In what has been provided to us, there is no suggestion of any Council or other interference in the conduct of the Tender. Technical/legal mistakes were made during the Tender. Nonetheless, Canada obtained the furniture it wanted, from a pre-qualified bidder at the lowest of the three prices obtained from the pre-qualified bidders. It might be said that the City got the right outcome for the wrong reasons.

On the purchases for Part C and the WPS, there are no legal issues around the “bidding contract”. The flaw with these two purchases is that they were sole sourced which is not compliant with by-law 9-2000. Sole sourcing is a very sensitive issue these days and critics of it


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seemed disinclined to accept explanations. Here, the mitigating factor – in both purchases – is that the pricing was obtained through an earlier competitive process, being the Tender. As well, the supplier was the low pre-qualified bidder under the Tender, albeit its bid was probably non-compliant. Should criticism arise, the vulnerability is the existence of pricing from competitive bidders on the Tender which was significantly lower than the pricing from Monarch. The issues which arise from the WPS do not include a breach of the “bidding contract”.

NEXT STEPS

I would be pleased to discuss this material with you once you have had a chance to review it.

WMP:bls


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APPENDIX ATO CONCLUSIONS

CORPORATION OF THE CITY OF WINDSORRE: BID PROCESS FOR PANEL SYSTEM FURNITURE (TENDER 02-04)

Bidder Pre-qualifiedby pwgsc

Compliantnote 1

Pricefor parts

Comments

Monarch

Awardee for Part A, Part C and WPS

Yes No A $334,292.11B $192,456.78C $5,527.75

$4,601.53

This bid is non-compliant because the price for Part A was conditional on the bidder receiving an award for Part C.

Inscape Yes No A $362,406.90B No BidC $6,168.17

This bid is non-compliant because it fails to provide a price for Part B.

Eagle Yes Yes A $403,397.28B $214,562.52C $5,369.26

No information is available which suggests this bid is non-compliant.

Mayhew No Uncertain A $217,853.90B $200,538.20C $3,703.41

This bid is conditional on assumptions written on the Bid Form, Page 1. This bid will be non-compliant if the assumptions represent a material alteration to what was called for under the Tender.

Tayco No Uncertain A $232,062.67B $210,800.90C $4,226.04

This bid is conditional on notes written on the Bid Form and amendments made to the specifications. This bid will be non-compliant if the conditions written onto it represent a material alteration to what was called for under the Tender.

Note 1: Assessment of compliance based on limited information. Complete copies of the bids as submitted are not available for review.
