"Exclusionary Bidding Clauses" (EBC)

Nationally, CCA has lead the charge while here in Ontario, the Construction and Design Alliance of Ontario (CDAO) is at the forefront of opposing such clauses being brought in by various public owners.

Including litigation in such EBC is clearly not acceptable and should be removed.

The rationalization by owners has been that they wish to stop "frivolous and vexatious lawsuits." The reality is that they are intended to intimidate and prevent service providers from accessing their rights to justice before a court if necessary.

No owner that we have challenged has been able to support their claims of such lawsuits. Are there one or two? Yes, but there is no endemic plague of such suits sweeping the country. Rather, there is a plague of poor Prequalification programs, terrible Contractor Performance systems, failure of effective ADR programs, and unfair and unprofessional Tendering procedures that ignore years of legal precedent and industry practice.

In our opinion, the failure to address these problems leads many service providers to challenge owners over delay claims and change orders through the courts. In some cases, owners have only been able to name one project that particularly upset them, yet when looked at, there are questions as to what happened to the oversight in the contract. Further, there is a lack of an effective Prequalification system in many jurisdictions.

There are times a service provider may or should be penalized but EBC clauses don’t do that. They are solely an intimidation tactic to try and force a service provider to walk away.

The OGCA supports and has effectively worked with a number of owners to address these issues. We have collaborated with buyers on effective Prequalification, ADR, Vendor of Record, and Performance systems. They have proved effective and the owners have seen the benefit.

But a few still desire the EBC clause, so what will be the industry answer?

We had been awaiting the result of a case in BC. The City of Burnaby had such a clause and the contractor challenged it in court. As it made its way to a hearing in the BC Supreme Court, the City removed the EBC from the tenders that affected the contractor and declined to offer any argument to defend it on the merits they had removed the clause, saying that the question of merits was "moot." Why did it take so long to realize a problem, forcing an application to go to the B.C. Supreme Court, before removing the clause?

So, why did the City remove the clause and essentially back down?

Did they realize that their case would fail? That would make sense but why then are other Municipal and Public bodies that must be aware of this still arguing and supporting such Exclusionary Bidding Clauses?

The industry is not going to go away in its opposition to these onerous and outrageous clauses. We will continue to oppose them, for we at the OGCA are not alone and our industry partners are no less opposed to these clauses than we are.

One hopes that Public leaders will realize this is a futile and divisive action and that working with the industry to address their concerns is a far better way to ensure quality and successful projects.