The Association of Consulting Engineering Companies (ACEC) Canada is scolding municipalities it alleges are punishing companies that sue them by denying procurement opportunities.
In an advisory message to members, ACEC alleged that municipalities and other public agencies are prohibiting engineering firms and contractors from participating in procurement opportunities with the municipality, sometimes for an extended period of time, if they are or have been engaged in either litigation or alternative dispute resolution with that municipality.
John Gamble, president of ACEC, said the practice is coercive and violates companies’ rights to pursue legal relief without fear of retaliation, whether clients intend it to or not.
“Every Canadian has the right to go to court, this being one of the fundamental freedoms enjoyed by Canadians by way of our Charter of Rights and Freedoms,” read the statement.
“ACEC believes such sanctions by public clients effectively coerce member firms into not exercising their legal rights (both in law and contractually) by threat of barring them from participating in projects.”
The ACEC stated the sanctions penalize firms even when the result of legal action shows that the firms have been proven to be in the right, or even when client-launched actions are proven to be frivolous.
Gamble said the issue is something that crops up from time to time and ACEC recently heard that a company was facing a five year ban on seeking projects. He said, in that particular situation, it looks like the parties will be able to come to a favorable resolution.
Gamble encouraged clients to choose contracts based on a company’s performance in a clear and transparent manner rather than on their legal history, which can be misleading.
A party may spend years involved in a court case only to be cleared of any wrongdoing, noted Gamble.
He also expressed concern that frivolous litigation could be launched simply to remove a party from contention.
Keith Sashaw, president and CEO of ACEC-BC said his organization supports the national association’s position.
Sashaw went on to condemn requirements that companies provide their legal history to clients during procurement, calling it “highly inappropriate” and saying consultants shouldn’t have to “plead their innocence” to do their jobs.
He stated that the ACEC-BC views the use of litigation history as unfair, misleading and irrelevant in a request for proposal.
“It is a reality in our industry that sooner or later most consulting firms will be involved in litigation. Should a well-established firm then be compared unfavorably with, say, an inexperienced firm that has avoided litigation to date, perhaps because of a lack of ‘real project’ background?” Sashaw said.
He explained that often all parties involved in a project are named in suits regardless if they are involved in the contentious issue.
He called these efforts “shotgun litigation” that can unfairly damage reputations.
Attorney Duncan Card, a partner at Toronto law firm Bennett Jones LLP and an expert in procurement issues, explained some of the nuts and bolts of procurement law.
Card noted that he is not aware of the details of ACEC’s allegations and could not comment on them specifically.
He said governments have a general duty to act fairly, and to treat all vendors equally and without undue bias. If it doesn’t, government can be held accountable. That is the fundamental premise that governments must work from and act consistently with. However, governments also have requirements when it comes to spending public monies, including for procurement, said Card.
They must consider “value for money” qualitative assessments, procurement efficiency and issues of prudent risk management. The latter also involves risk analysis that must be reasonable, fairly conducted and with the best public interest in mind.
Government is required to take into account reasonable assessments of risk, expected vendor reliability and even a vendor’s record of goods or services delivery to assess the quality and suitability of any particular vendor.
Card said some vendors may be identified, over time, as not being vendors that are in the public interest to buy from or otherwise retain. He said patterns of behavior, attributes and qualities based on the direct experience of the customer may influence these procurement decisions.
But these decisions cannot be guided by animosity, punishment, retribution, or unprofessional personal vendettas, Card said.
“It is not beyond conceivability that those, who seemed to be sued often for breach of contract or other failures, or who otherwise have frequently launched frivolous and nuisance actions against that government with outlandish claims might, over time, constitute themselves as companies that are not in the best interest of the government to do business with – just a bad match that wastes taxpayer money,” he said.
Card added that during his career practicing law he has not encountered any government that has formally issued a procurement policy that states it will not buy goods or services from any vendor who either the government has sued or who has sued the government.