INF

OR

MA

TIO

N T

EC

HN

OL

OG

Y

S U M M I T : C A N A D A ’ S M A G A Z I N E O N P U B L I C S E C T O R P U R C H A S I N G A U T U M N 2 0 0 2 F O C U S O N I T 3

When professional contract managerschoose electronic communications,the potential legal risks rise as one

gets more interactive. At the light end ofthe scale, those who simply post informa-tion on the Internet on “pure information”sites have some risk, but it is largely man-ageable by attention to detail. Ensure thatwhat goes up on the owner’s site is true,accurate and not misleading or defamatory;and employ a “non-reliance” exclusionclause with a statement like “do not relyupon this information as it may be inaccu-rate.” These actions will go a long way toreducing an owner’s legal risk.

In the middle of the scale are thosewebsites that purport to have informationthat owners want a bidder to rely on and,perhaps, to download. In this scenario, anowner must spend more time ensuring thatwhat is on their site is complete, accurateand true. Equally, in this scenario, a “non-reliance” exclusion clause is a necessity butis of somewhat uncertain value. The courtscould find such an exclusion clause unen-forceable as unreasonable in all the circum-stances. Additionally, due to the purportedreliability of the information on an owner’swebsite, the website owner must ensure thecontent can in fact be successfully down-loaded in its entirety. This is importantwhen considering an Invitation to Tender orRequest for Proposal (RFP) package, whichbidders are to download and reply to withhardcopy bids. You should know the lim-itations and faults of the various browserspeople might be using. Additionally, unlike

a pure information-only site, the owner ofa “reliable information” site must do moreto protect the site and its contents fromhackers, attackers, and gremlins. One cannever be certain of security in the electron-ic world, despite the claims of secure sitebuilders. Money must be allocated to secu-rity issues both at the outset and on a con-tinuing basis, simply to stay even with thenever-ending mutations of these risks.

At the heavy end of the scale are fullyinteractive websites, where bidders bothreceive Invitations or RFPs and reply withbids electronically. These site owners facethe full spectrum of legal risks.Where thereis no option of obtaining a paper copy ofthe Invitation, RFP, or the bid itself (exceptby printing out the electronic version) secu-rity of the information and integrity of thesystem takes on paramount importance.Legally binding and enforceable contractsare being formed electronically, and thereis little room for error in receiving, sending,or storing the information once received.

This is not much of a concern for com-petitive bidding in the US, where many ofthe e-tendering system builders are located,as America does not have legally bindingcompetitive bidding. But for Canadians, itcould be an area of significance, especiallysince our laws do not allow for correction ofbids after the bidding is closed. Thus, fullyinteractive website owners must take a greatdeal more care initially and continuously.

It will not simply be a matter of theowner excluding all liability for what couldhappen. Having set up the entire process,

the owner will likely have to assume someof the risk, especially for those processeswhere electronic reply is the only optionfor the bidders.

It is equally unlikely that the courts willturn a blind eye to preventable problems. Ifthe owner has taken reasonable steps toensure accuracy, integrity and certainty insending, receiving and storing information,then the courts will likely allow some lee-way. But where the owner could have spentmore time, care, or money to secure theinformation but didn’t, it is unlikely thecourts will have much sympathy.

It may be that for fully interactive e-tendering to work lawfully and seamlesslyin Canada, owners will be forced to changesome of the time-honoured practices of thecompetitive bid process – such as the rulethat bids are unchangeable for any reasonafter closing, or the rule that a bid must befully compliant before it will be considered.Not many e-tender owners appear to havedone this yet, but it may be time to createtwo sets of rules – one for paper bids andanother for e-bids.

Until then, it behooves owners who arestriving for successful e-tendering to remem-ber that “the devil is in the details.”

Robert C. Worthington is president of Worthington& Associates Ltd (www.purchasinglaw.com), aVancouver-based company specializing in businesseducation and training in purchasing law. He haslectured on law for public and private corporationin-house seminars, as well as at the University ofBritish Columbia. He is the author of the PurchasingLaw Handbook and several legal texts.

E-tendering posespotential legal risks

by Robert C. Worthington

Eric

Lea

se M

orga

n