Call for tenders in co-ownership

Expenses related to work in a co-ownership are a source of concern for many syndicates of co-owners. The average age of Quebec co-ownership now exceeds 30 years and many of them must or will soon have to carry out major repairs to the common portions. The primary mission of the syndicate, it should be remembered, is to ensure the preservation of the immovable. The competition between undertakings offering services in this area therefore enables the syndicates to choose from among the tenders proposed by the latter, the most competitive tender, bearing in mind that price is not the only selection criterion.

The call for tenders

This is where a tendering procedure comes into its own, as it clarifies the scope of work and clearly establishes the syndicate's requirements. However, the lowest bidder rule, which we often hear about, does not apply here, in principle.

What is a call for tenders?

A call for tenders, as its name suggests, is a request made by a client (in this case, a syndicate of co-owners) to a certain number of contractors, so that they make him an offer to carry out the work projected in the call for tenders, at the cost they consider required.

A call for tenders may be open to all contractors, in a specific field (for example, masonry contractors) or more generally, when the work concerns several components of the building and is aimed at various trades. They will then be general contractors to whom we will turn. They will then indicate, in their tender documents, the list of subcontractors with whom they intend to perform the work. 

A call for tenders may also be made by invitation.  We then address a limited number of entrepreneurs, either in the field specifically concerned, or general, depending on the circumstances. The choice of the contractors invited is the responsibility of the client, usually with the help of the professional retained by him to guide him in this choice and supervise the work thereafter. Depending on the type of work envisaged, it will be either an engineer, an architect or a professional technologist. And since entrepreneurs are known in the field, a "natural preselection" will have already been carried out by this time. In divided co-ownership, there are generally such calls for tenders by invitation. The tender is usually sent to about five or six contractors, knowing in advance that only half will respond to the invitation in most cases.

Competitive tendering

The objective of a call for tenders is to put the various bidders in competition, in order to identify the one whose bid, in the opinion of the client – always supported by the selected professional – best meets the needs of the syndicate, in particular according to its expertise and the price it proposes. The tender therefore constitutes the offer to contract that a contractor submits to the client, but no contractual obligation is then created between the client and the tenderers.

However, the syndicate could incur its extra-contractual liability by launching a call for tenders. This could be the case, for example, if the process is unfair or flawed, intentionally or unintentionally. Hence the importance of properly preparing and drafting tender documents, as well as conducting the process correctly.

Syndicates of co-owners are required, like any other natural or legal person, to act fairly towards all bidders. Articles 6, 7 and 1375 of the Civil Code of Quebec require that all persons conduct themselves in good faith, in their contractual or other relations. By acting in an abusive, discriminatory or unfair manner with respect to one or more of the bidders, the syndicate would expose itself to legal proceedings for damages (art. 1457 of the Civil Code of Quebec).

A call for tenders is a process of a certain complexity, involving the preparation of specifications and plans and specifications, which detail the scope of the work, as well as the requirements and standards to be respected. There are also documents describing the general conditions of the site (opening date, estimated end date; provision of electricity, sanitary facilities, winter protection (if applicable); minimum insurance coverage; performance bond requirements (if applicable); list of subcontractors (if applicable); site supervision (if applicable), etc.) and special conditions , covering, in particular, the rules and procedures for drafting, receiving and opening tenders.  

All this involves additional costs; It is therefore understandable that the tendering process is mainly reserved for work of a certain size. However, there is no specific standard for this.

The main steps in a tendering process are:

  • Preparation of specifications and plans and specifications;
  • Preparation of tender documents (general conditions, special conditions);
  • Sending the call for tenders (open or by invitation);
  • A deadline for submitting tenders;
  • Opening of bids;
  • The award of the contract to one of the bidders;
  • The signing of the written contract.

Is a syndicate of co-owners required to have a call for tenders prepared?

In general, syndicates of co-owners are not legally required to have calls for tenders prepared when they undertake work. The choice is up to them to do so, depending on the circumstances, in particular because of the complexity or scope of the work. The opinion of the building professional takes on all its importance here, as does the duty of care and diligence addressed to directors.

A syndicate may, however, decide to subject a call for tenders to the process established by the Bureau des Soumissions Dépôts du Québec (B.D.S.Q.). It provides for very strict structured rules, in addition to guaranteeing a high degree of impartiality. For certain types of specialized work, including plumbing and electrical work, the use of the B.D.S.Q. may even be required.

Although this is very infrequent, a syndicate could also be required, under a provision of the declaration of co-ownership, to call for tenders when it undertakes certain types of projects or work whose costs will exceed a certain amount.

In any case, when the work is large-scale, it becomes for all practical purposes imperative to follow a well-structured tendering process, supervised by a building professional. This usually includes monitoring of the work by this professional, at various pivotal stages of progress, which provides an additional guarantee of the quality of the work. The basic rules of prudence and diligence imposed on board members alone justify doing so. This significantly reduces the risk of inaccuracy in the scope of work, as well as errors and potential lawsuits.

Is a syndicate of co-owners obliged to retain the services of the lowest bidder?

No, there is no obligation to award the contract to the lowest bidder, unless the syndicate has agreed to do so, under the terms of the tender. A syndicate of co-owners may even reserve the right not to choose any of the tenders in the tender document.

Moreover, the price proposed by the various tendering contractors is not the only criterion to be considered for the purpose of awarding the contract. Certain details, certain details that a tenderer provides for in his tender could also be taken into account, in order to decide between the different tenders.

What is a performance bond?

Tender documents sometimes require contractors to provide performance bonds. It is in fact a commitment, by a third party, which thus ensures either the completion of the work by itself, or the payment of the cost of the work that would be completed and that would be carried out by another contractor, in the event of inability of the chosen bidder to complete the work – due to bankruptcy or other reason.

Such a performance bond further increases the overall costs of a call for tenders; It is therefore understandable that this requirement will generally be reserved for the most important cases.

WHAT YOU SHOULD KNOW !​  The Condolegal.com web radio of October 5, 2022 dealt with calls for tenders for co-ownership work. You can listen to it in replay, by consulting this hyperlink.

http://www.condolegal.com/images/Boutons_encadres/A_retenir.pngWHAT TO KEEP IN MIND : A tendering process is nothing less than an "insurance policy" for syndicates of co-owners undertaking major repairs or repairs to the building. This significantly reduces the risk of defects and poor workmanship. This contribution should not be neglected, notwithstanding the costs involved.

WARNING ! The specifications must make it possible to know in a sufficiently precise way the details of the various works planned, as well as their overall cost. This allows the board of directors to obtain the necessary information to make an informed decision.

 

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