Québec Court of Appeal comments on eligibility requirements for general contractors in a public call for tenders

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Oct 8, 2020

On September 8, 2020, the Québec Court of Appeal released its decision in Société québécoise des infrastructures v. Agences Robert Janvier ltée [PDF], 2020 QCCA 1140, in which it overturned a trial decision which had found that the winning bidder’s submission in a public call for tenders was ineligible on the basis that the bidder in question did not hold all of the required permits to carry out the work.

This decision provides important comments on eligibility requirements in the procurement context that will be relevant for general contractors in Québec submitting a tender to a public body.

Background

In 2012, the Société québécoise des infrastructures (“SQI”) issued a public call for tenders in relation to the provision and installation of doors, frames and hardware for the construction of a new detention center. The contract was awarded to Donlox, and Agences Robert Janvier Ltd.’s (“ARJ”) tender was second. ARJ argued that Donlox’s submission was ineligible, given that the latter did not hold a “locksmith agency” permit from the Bureau de la Sécurité Privée (“BSP”), which ARJ contended was necessary for the completion of the work. BSP was consulted as to whether such a permit was necessary in this particular case and it concluded that it was not required. ARJ instituted an application for damages.

The Québec Superior Court had to decide whether Donlox’s bid was compliant with the rules applicable to the bidding process. As part of the eligibility requirements to submit a tender, the bidding documents prepared by the SQI required that bidders hold all necessary permits. Such a requirement is also codified in section 6 of Québec’s Regulation respecting construction contracts of public bodies. Based on these provisions, the Superior Court held that the failure to hold a required permit would constitute a “major irregularity”, which would invalidate the bid. In interpreting the provisions relating to locksmith work in the Private Security Act, the Superior Court of Québec concluded that a contractor carrying out such work was required to hold a locksmith agency permit. As such, it ruled that Donlox’s bid was ineligible since it did not hold such a permit at the time of the opening of the bid.

The Québec Court of Appeal (the “Court”) reversed the Superior Court’s decision.

Specific requirements in tender documents

While the tender documents mentioned that bidders must hold all the necessary permits, the Court observed that they did not specifically require that the bidder hold a locksmith agency permit from the BSP. There was nothing in the tender documents that explicitly identified the types of administrative authorizations (e.g. permits, licenses or accreditations) that would constitute a prerequisite to submit a tender. The Court held that a bidder should only be disqualified in cases where the bidder did not fulfill an explicitly required condition in the tender documents.

Possibility to sub-contract part of the work to a permit-holding entity

Further, Donlox held a general contractor’s license. In Québec, such licenses are granted by the Régie du bâtiment du Québec pursuant to the Regulation respecting the professional qualification of contractors and owner-builders. According to article 2101 of the Civil Code of Québec, as a general rule contractors have a right to sub-contract work. Since Donlox retained the ability to sub-contract work to a permit-holding entity should the need later arise, the Court held that it was unnecessary for Donlox itself to hold the permit at the time of the opening of tenders, even if one had been explicitly required.

Comment

This decision provides a practical approach to the eligibility requirements that general contractors must fulfill in the context of a public call for tenders in Québec. The Québec Court of Appeal considered that invalidating a bid for failure to hold a given permit at the time of the opening of the tenders, where there is a possibility to sub-contract part of the work, would be a disproportionate response.

Absent the mention of a specific permit in the tender documents as a prerequisite to obtaining a bid, it appears that a general contractor in Québec has the option to sub-contract part of the work to a permit-holding entity should the need thereafter arise. However, such cases are fact-specific and will depend upon, among other things:

  • the legal framework governing the requirement to obtain administrative authorizations for the completion of the work;
  • the specific language used in the tender documents;
  • whether the construction mandate involves a variety of works (the general contractor cannot sub-contract the entirety of the construction contract to another entity); and
  • whether the call for tenders is public or private.

Thus, while this decision provides a less rigid interpretation of eligibility requirements in a call for tenders in Québec, general contractors within Québec should nonetheless aim to hold all relevant permits where practicable in order to minimize uncertainty.

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