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What is bid shopping?

in Commercial Practice by Jeremy Lum-Danson / June 27,2015

The integrity of the bidding process can only be preserved if it is fair. Fairness was discussed in Martell Building Limited v. Canada, [2000] 2 SCR 860. In that case, the Supreme Court held that tender contracts have an implied obligation to treat all bidders equally as well as the obligation to protect and promote the integrity of the bidding process. As such, a prime contractor is prohibited from engaging in shopping a subcontractor’s bid.

“Bid shopping” was defined by the trial judge in Naylor Group Inc. v. Ellis-Don Construction Ltd.,[1996] OJ No 3247, 31 CLR (2d) 195 (ON Gen Div), rev’d [1999] 119 OAC 182 (ONCA), var’d 2001 SCC 58, [2001] 2 SCR 943 as “the practice of soliciting a bid from a contractor, with whom one has no intention of dealing, and then disclosing or using that in an attempt to drive prices down amongst contractors with whom one does intend to deal”.

The Court of Appeal in Naylor thought it sufficient if the “shopping” was to get a bid “for the same value or less”.

Owners and prime contractors ought understand what constitutes bid shopping and avoid it at all costs.