The Quebec Government has provided public authorities with a means to evaluate a contractor’s performance on a given project and, where a negative evaluation is issued, the contractor may be barred from responding to any further call for tenders issued by the public authority for the following two years.
The Regulation respecting construction contracts of public bodies1, which was enacted pursuant to the Act respecting contracting of public bodies2 requires a public body to report the unsatisfactory performance of a contractor:
A public body must record in a report the evaluation of any contractor whose performance is considered to be unsatisfactory3
The public authority is required to report within 60 days after the end of the contract and a copy of the report provided to the contractor which is then provided 30 days to provide his written comments and response.4
The chief executive officer of the public body is then provided with 30 days to either uphold or cancel the evaluation and inform the contractor of his decision.
Where the chief executive officer fails to act within that prescribed time, the contractor’s performance is deemed to be satisfactory.5
A finding that his performance was unsatisfactory has significant repercussions for the contractor as he may, provided that it is expressly stipulated in the tender documents, be disqualified from participating in any subsequent tenders issued by the public body for the next 2 years.6
The Regulation’s wording is sufficiently large to provide the public authority with a large measure of discretion in assessing whether it considers a contractor’s performance to be unsatisfactory. The Regulation does not set out any criteria for making that assessment so that, as things now stand, it is left to the public authority to either set out the criteria in advance or simply make its assessment at the end of a project, based on its own, often undisclosed, criteria.
As a result, contractors faced with the serious consequences of a negative evaluation may be tempted to challenge the public authority’s finding that his performance was unsatisfactory. The recent cases tned to show that the contractors are faced with an uphill battle.
The Québec Court of Appeal in the case of construction DJL Inc. vs. Procureur général du Québec7 was recently seized of a matter raising the issue and disposed of it in a manner which supports the public authority’s wide discretion in making its finding.
Construction DJL had contracted with the Québec Ministry of transport (the “MTQ”) for the construction of a section of highway in Quebec. At the end of the contract, the MTQ issued a report concluding that DJL’s performance was unsatisfactory in that the quality of DJL’s resources, of its communications and collaboration were below standard. DJL’s failure to respect the schedules , the project’s structural and engineering requirements were such that the MTQ issued its report concluding that the contractor’s performance was unsatisfactory.
DJL, having been advised of the MTQ’s decision, challenged same and brought a motion seeking to have it stayedand to safeguard its rights pending a final determination by the court.8
The Québec Superior Court dismissed both applications holding that DJL had not shown that it had an appearance of right to the stay and safeguard order as the evidence showed that both parties had followed the process set out in the Regulation in that the negative evaluation was provided to DJL, DJL had commented on it and the MTQ’s decision subsequently maintained.
The Superior Court also held that the wording of art. 58 of the Regulation which requires the chief executive officer of the public authority to, after receipt of the contractor’s response, to either maintain or cancel the negative evaluation does not require that the decision be motivated.
Finally the Superior Court held that it was doubtful that the DJL would suffer any serious or irreparable harm should the MTQ’s decision be maintained because, in the court’s view, DJL was not disqualified from all types of contracts with the MTQ and that there was no evidence of a bid being refused by the MTQ on the basis of the negative evaluation.
The Superior Court also considered the public interest and held that the stay was not, on balance, warranted because to grant the stay, as requested by DJL, would amount to exempting DJL from the operation of the Act respecting the contracting of public bodies which was adopted in the public interest in order to ensure the transparency of the contractual process, the fair and equitable treatment of competitors, and the possibility for only qualified competitors to participate in public tenders.
Unsatisfied with the judgment in first instance. DJL sought leave to appeal this decision to the Court of Appeal , which, in the end, dismissed the DJL’s application for leave.
The Court of Appeal relied on an earlier decision in Consultants Aecom inc. vs. Société immobilière du Québec9, where the engineering firm was seeking injunctive relief seeking to stay a decision to disqualify it for a tender issued following an unfavorable evaluation of its performance on a previous project and to have the earlier negative evaluation set aside. The Court of Appeal, in that case, upheld the public authority’s decision and found that the wording of the Regulation was such that it did not give rise to injunctive relief in those circumstances.
In the end, the Court of Appeal dismissed DJL’s motion for leave to appeal.
Although, there are still relatively few cases dealing with the issue, it appears that the courts attach a great deal of importance to the public interest considerations that underlie the legislative and regulatory requirements governing the public procurement of construction contracts when assessing the merits of a challenge of a pulic authority’s negative evalution. As a result, successfully challenging a public owner’s negative evaluation will, based on the existing jurisprudence, be difficult and will likely require some evidence of grievous conduct on the part of the authority.