Procurement Pitfalls in Ontario Infrastructure: How to Avoid Costly Disputes
Procurement disputes continue to shape the delivery of Ontario’s largest infrastructure projects. These disputes do more than delay projects. They increase costs, damage reputations, and in some cases, derail the entire procurement process.
The risk is not limited to public owners. Private developers and owners also rely on structured procurement processes that mirror public tenders. Whether the procurement is for a transit expansion, hospital build, or a major mixed-use development, both owners and bidders face legal and commercial risks when the rules are not followed.
This article outlines the legal framework that governs procurement in Ontario, highlights common pitfalls, and offers practical guidance for both owners and bidders seeking to avoid costly disputes.
The Legal Landscape
The Common Law
A distinctive feature of Canadian procurement law is the “Contract A / Contract B” model originating from the 1981 Supreme Court of Canada decision in R v Ron Engineering.
When an owner issues a binding tender or RFP and a bidder submits a compliant bid, a “Contract A” forms between them. This creates a set of procedural and substantive obligations on both parties. For owners, the core duty is to run the competition in accordance with the stated terms and conditions and to treat bidders fairly and consistently. For bidders, the core duty is to honour their bid. If selected, the bidder is expected to enter into the contract in accordance with the terms and conditions of the procurement document and its bid. Once an award is made, “Contract B” is formed for the performance of the work itself.
The model does not apply to all competitions. Non-binding processes - such as requests for information, requests for prequalification, best-and-final-offer negotiations, or processes where bids are revocable and the final contract is to be negotiated after award – do not create Contract A obligations. As will be outlined below, where it is permissible, it may be strategically advantageous to structure the procurement of work to use a non-binding process.
Legislation and Treaties
At different levels of government, additional rules must be considered. Municipalities and municipal corporations are governed by procurement by-laws, provincial agencies by directives such as the Broader Public Sector Procurement Directive and the Ontario Public Service Procurement Directive, and federal entities by statutes and trade treaties such as the Canadian Free Trade Agreement (CFTA) and the Canada–European Union Comprehensive Economic and Trade Agreement (CETA).
These legislative instruments reinforce the core principles of fairness, non-discrimination, and transparency. They also create practical obligations that owners need to consider when structuring a procurement. For example, some public owners may be obligated to procure work or services by way of a binding process and may not have the flexibility to engage in a non-binding process. For bidders, this means that procurement processes may differ depending on the level of government involved, and knowing which rules apply is critical to assessing compliance risk.
The common thread across all legislation and treaties is simple: clarity, consistency, and transparency. Processes that reflect those values are less likely to attract challenges and more likely to deliver predictable outcomes.
Common Procurement Pitfalls
Despite a well-understood framework, procurement disputes continue to arise. Many are preventable. The following pitfalls are among the most common in Ontario and often sit at the root of costly disagreements.
Owner-Side Mistakes
Ambiguous or inconsistent language - Ambiguity is a frequent trigger of disputes. If requirements or evaluation criteria are unclear or internally inconsistent, bidders will make reasonable but divergent assumptions. The risk is highest where the documents mix the language of a binding tender with the language of a flexible, negotiable process. A short internal “consistency audit” before release (such as checking definitions, cross-references, schedules, and any form of agreement) goes a long way to preventing disputes.
Not understanding the difference between binding and non-binding processes – As was stated above, one common ambiguity or inconsistency in procurement documents is mixing provisions that provide for a binding process with language that allows for negotiation or the revocation of bids. Alternatively, owners set up a binding procurement process when they want to have the flexibility of negotiating with the successful bidder. It is important for owners to determine at the outset whether they want the procurement process to be binding or not. Inconsistency creates confusion for bidders and increases the risk of a dispute.
Failure to apply evaluation criteria as written – Procurement processes are designed around evaluation criteria. Problems arise when those criteria are re-interpreted after closing, applied out of sequence, or combined with new considerations that were not disclosed. Even small deviations can create the appearance that the process was driven by outcome rather than rule. It is critical to train evaluators on the criteria, use scoring guides that mirror the RFP or tender language and keep a clear audit trail that shows how the final recommendation follows the published criteria.
Acceptance of non-compliant bids - A core principle of the Contract A/Contract B model is that only compliant bids can be accepted. Non-compliant bids are supposed to be rejected. In the absence of a privilege clause allowing for waiver, mandatory requirements are generally applied strictly, and arguments about “substantial compliance” rarely succeed. Even if disqualification reduces competition, accepting non-compliant bids creates real legal risk.
Post-closing bid repair or negotiation - “Fixing” a bid after closing or negotiating materially different terms with a preferred bidder under a binding process create obvious fairness concerns. To be clear, some procurement models are designed to include negotiation phases and these approaches can work well if they are available to an owner. If the process is binding and non-negotiable, do not retrofit flexibility once bids are in.
Overreliance on privilege or discretion clauses - Privilege clauses are intended to preserve business judgment. They are not a cure-all. If the process lacks basic fairness, broad privilege wording rarely resolves the underlying issue. A better approach is to use privilege clauses to preserve genuine options (e.g., cancel and re-issue if materially flawed) while building the real protection through clear rules and consistent execution.
Inadequate record-keeping - Evaluation notes, consolidated scoring sheets, conflict-of-interest declarations, and debriefing summaries are not paperwork for its own sake. They are the backbone of process integrity. When documentation is thin or inconsistent, it becomes difficult to demonstrate that the evaluation followed the rules.
Bidder-Side Mistakes
Submitting non-compliant bids - Many disqualifications are avoidable. Missing bid bonds or irrevocable letters of credit, unsigned forms, unacknowledged addenda, incomplete pricing schedules, and expired insurance certificates are common culprits. A pre-submission compliance checklist and checking a bid for content as well as compliance is often all it takes to avoid a fatal defect.
Confusing mandatory and discretionary criteria - Bidders sometimes assume that mandatory requirements are flexible. In practice, “mandatory” always means strict compliance. If a procurement document says the bidder “shall” or “will” do something, it should be treated as non-negotiable. If the owner intends flexibility, the owner can confirm it in an addendum.
Not seeking clarification early - Ambiguous terms should be clarified before closing. Bidders who remain silent often lose credibility if they later try to challenge the same terms. Using the clarification process proactively can avoid disqualification and disputes.
Negotiating the awarded contract - A frequent misstep is attempting to rewrite the form of contract after award in a binding, non-negotiable process. In a binding procurement process, there is no room to amend the form of contract set out in the procurement document as the bidder is obligated to enter into the contract that has been tendered. Substantial deviations at the contract-finalization stage can lead to disqualification or cancellation and re-tendering.
Practical Guidance and Key Takeaways
Procurement disputes can often be avoided through discipline and attention to detail. For owners, the most important safeguards are clarity in drafting, consistency in applying evaluation criteria, and careful documentation of the decision-making process. Ambiguous procurement documents or records that do not align with published criteria create risk and erode confidence in the outcome. Building a short governance layer into large competitions pays off: confirm whether the process is binding or non-binding, align privilege language with the actual flexibility intended, train evaluators on the scoring guide and keep a tight audit trail. On high-value or high-profile projects, fairness monitors or pre-release legal reviews add practical assurance without slowing delivery.
Bidders, in turn, benefit from a structured approach that treats compliance as a non-negotiable baseline. Creating processes for checking bids for compliance, an early clarification plan, and conservative assumptions about mandatory requirements reduce the chance of a disqualifying defect. Where requirements seem impractical, raise the issue during the addenda process and secure a written addendum rather than expecting leniency. Documenting communications and raising issues proactively not only preserves rights, but it also demonstrates professionalism and often improves relationships, regardless of the outcome.
Looking ahead, fairness expectations will continue to shape procurement design. Trade agreements will remain a practical constraint on domestic preference policies, while sector-specific directives will continue to influence transparency and documentation standards.
Careful preparation and disciplined execution are the best ways to keep projects on track. Owners who invest in clear documents, predictable evaluation, and good records tend to achieve smoother procurements. Bidders who invest in compliance, early clarifications, and internal governance tend to avoid disqualification traps and make stronger business cases. Whether acting as owner or bidder, process integrity at the outset is far less costly than dealing with a dispute after the fact.
Contact our Construction Group to learn how we can support your next project with strategic, practical legal solutions.