Given the Supreme Court of Canada’s refusal to hear the case of J. Cote & Son Excavating Ltd. v. City of Burnaby, the implications of the use of reprisal clauses on the Canadian construction industry is quickly garnering worry within the construction community.
Read CCA’s press release on the Supreme Court of Canada’s decision
The decision effectively upholds the use of “reprisal clauses” in tender documents. The clause used by the City of Burnaby against J. Cote & Son Excavating stated that the city would not accept tenders from any party that is, or has been within the last two years, involved in legal proceedings initiated against Burnaby arising out of a contract for works or services.
This ruling has serious implications for contractors as it condones placing contractors on a two-year blacklist, banning them from bidding on city projects.
The use of reprisal clauses is prevalent throughout the country, with many cities and municipalities including them in their procurement policies and by-laws. The consequences of their application range from automatic debarment to discretionary disqualifications from bidding.
CCA supports a fair, transparent and uniform procurement process
Reprisal clauses are contrary to the principle of an open and fair tendering process, producing the most competitive price and efficient use of taxpayer dollars. There are also ripe opportunities for abuse of these clauses and unequal treatment by Canadian courts since their use in Quebec was banned yet the BC Court of Appeal as well as the Superior Court of Justice in Ontario allow their use as legitimate business considerations.
Small contractors, who are often limited not only by financial but also geographical constraints, will find themselves bearing the brunt of these reprisal clauses. In the spirit of encouraging open and fair competition within the industry, the federal government ought to adopt a position against the use of reprisal clauses in any of its contracts.
CCA is pursuing the issue with the federal government, asking that federal lawmakers pass a regulation or statute barring the use of reprisal policies in federal government procurement – and potentially blocking reprisal policies at any level of government where the project is partially funded by the federal government.
CCA is meeting with various government departments to recommend the inclusion of a “No Reprisal Policy” as a condition on any public procurement using federal funding. Any project using federal funds should be subject to one uniform standard, and not unfairly disadvantage some contractors solely on the basis of the geographical location they operate in and its particular by-laws and/or policies.
Reprisal clauses: History and position