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The Alberta Construction Association (ACA) recently issued a province-wide industry alert to contractors after confirming that Contract A was removed from the procurement process by some project owners.

The association and its local partners also sent a letter to the province, noting the practice is increasing, which is a concerning trend for the industry, a “significant violation” of the public sector procurement process, and may constitute unacceptable levels of risk for the contractors.

“By removing Contract A, the owner is placing all of the litigation risk on to the prime contractor,” explains ACA executive director Warren Singh. “This means they are vulnerable to being sued if anything were to go wrong and there is no accountability on the owner in that case.

“Also, there is nothing to protect contractors should the owner place any change orders or modify or end the contract.”

In Canadian contract law, Contract A typically includes terms and conditions such as deadlines, evaluation criteria, privilege clauses and often the requirement for bid security. It serves to protect the legitimate expectations and interests of all parties and ensure fairness, openness and transparency between the owner and each bidder who responds to a procurement call.

Contract A is a landmark convention created in 1981 by the Supreme Court of Canada in a case that involved Ron Engineering. However, the ACA reports contractors are increasingly starting to see Contract A removed in municipalities such as Lethbridge and Grande Cache.

Earlier, in B.C., the provincial construction association there issued an alert after a rise in incidents. The association has reported a steady increase in the practice over the last six months.

Singh says if public sector owners continue to remove Contract A it will make it more difficult to find contractors willing to accept the risk of the contract.

“It will by that nature mean that costs go up as the price of risk will need to be a part of the contract and less bids will be offered.”

As well as increasing risk for bidders, the ACA maintains the absence of Contract A could undermine the integrity of the procurement process as it will lack transparency and cause bid shopping, unequal treatment, legal vulnerabilities, and reputational damage to the public sector owner.

“It creates distrust between the contractor and the owner at the beginning of the bidding process” says Singh. “This means that it may mean less bids on a project, less willingness to work with the same public owner and likely more legal action. All of which will see costs rising for projects and more money needed from taxpayers to mitigate risk.”

The ACA has been in contact with the Province of Alberta to advise officials of the concerns. From conversations that Singh has had with provincial officials, it appears they are not changing the status quo.

“There has been growing concern about what we have seen in B.C. and the growing removal of Contract A has created a growing sense of distrust around these moves. Many of our larger members work in both provinces and brought it to our attention at our board meetings.

“We started seeing that and then we got a few more instances that came up in Grande Cache on one of their projects.”

After hearing about those situations and others, ACA officials dug deeper and figured contractors should know what’s happening, says Singh.

Singh says the ACA is not providing legal advice but is merely advising contractors who come across the issue to seek independent counsel.

“The contractor or whomever is bidding, they need to look at the contract. They’ve got to test that and verify that and put legal on this.”

While a procurement document that includes wording attempting to exclude Contract A will not necessarily, in and of itself, waive the common law duty of the owner to act fairly, Singh advises contractors to read all procurement documents carefully, use the RFI process to question the intent of the owner’s procurement process in cases where Contract A has been removed, and inform their local construction association and ACA of any irregularities.

The ACA is in the initial phase of gathering and verifying information but wants to put it on the radar of members.

Singh says the legal precedence was set several years ago and he doesn’t understand why it’s being raised again.

The solution?

“The simplest solution is to not try and go around Contract A in the procurement process. Working with the industry on the process could allow both parties to see better results rather than trying unbalance the situation.”