Can an RFP Be Designed to Avoid the Creation of a Contract a and What Are the Consequences?

Concept

The inquiry into whether a Request for Proposal (RFP) can be engineered to sidestep the formation of “Contract A” is an examination of the very architecture of procurement law. At its heart, this question grapples with a legal framework established to instill integrity and fairness into the competitive bidding process. The foundational concept, originating from Canadian jurisprudence with the landmark case R. v. Ron Engineering (1981), is the “Contract A / Contract B” paradigm.

This structure posits that the issuance of a tender or RFP is not merely an invitation to negotiate; it functions as a unilateral offer to create a preliminary process contract, designated as Contract A. The submission of a compliant bid by a proponent constitutes acceptance of this offer, thereby forming Contract A. This initial contract governs the bidding process itself, binding both the issuer and the bidder to a set of explicit and implicit terms. Contract B, in contrast, is the subsequent, substantive contract for the actual goods or services, awarded to the successful bidder.

The creation of Contract A was a deliberate judicial intervention designed to protect the integrity of the bidding system. Before its establishment, bidders could withdraw their tenders at any time before acceptance, creating significant risk and instability for project owners. Contract A addresses this by making bids irrevocable once submitted and binding bidders to the terms of their proposal. In return for this commitment from bidders, the law imposes a set of reciprocal obligations on the RFP issuer.

These duties, implied within Contract A, include the obligation to treat all bidders fairly and equally, to disclose all relevant information, and to evaluate bids based only on the criteria set out in the RFP documents. Any deviation from these duties constitutes a breach of Contract A, exposing the issuer to legal action for damages, which can include the bidder’s proposal preparation costs and even lost profits.

The Contract A/Contract B framework transforms a request for proposals into a binding preliminary contract governing the rules of the procurement competition.

Understanding the conditions that give rise to Contract A is fundamental. Courts do not simply assume its existence. They scrutinize the RFP’s language and structure to determine the issuer’s intent. Factors that signal an intention to form Contract A include the requirement for bid security, specified evaluation criteria, language of irrevocability for submitted bids, and a lack of any provision for future negotiation on material terms.

When these elements are present, the RFP looks less like a simple request for information and more like a formal, structured competition with defined rules, leading courts to infer the existence of a binding process contract. The entire framework is a judicial construct to enforce a specific standard of conduct, ensuring that the party soliciting bids operates with a high degree of fairness and integrity throughout the procurement process.

Strategy

Given the stringent duties imposed by Contract A, a primary strategic objective for many procurement issuers is to structure their solicitation documents to prevent its formation. This allows the issuer to retain maximum flexibility and discretion, unburdened by the implied duties of fairness that characterize the Contract A framework. The core strategy revolves around fundamentally altering the nature of the RFP from a formal, binding tender call into a non-binding request for negotiations. This is often accomplished through the use of what is sometimes termed a Non-Binding RFP (NRFP) or a similar, less formal procurement vehicle.

Designing for Discretion

The most critical tool in this strategic design is the inclusion of clear, unambiguous language that explicitly disclaims any intention to create a binding legal relationship. A well-drafted RFP seeking to avoid Contract A will contain a “privilege clause” or “disclaimer” that goes far beyond the standard text. It must state unequivocally that the document is not a call for tenders, that no contractual obligations arise upon submission of a proposal, and that the issuer reserves the absolute right to negotiate with any party, change the scope of the project, or cancel the process at any time without liability. The objective is to dismantle the architectural pillars that typically support the inference of Contract A. The language must be precise, leaving no room for a court to interpret the issuer’s intent as creating a formal, binding competition.

Further strategic elements involve structuring the process to emphasize negotiation over rigid evaluation. An RFP designed to avoid Contract A will often deliberately leave material terms open for discussion. Instead of presenting a non-negotiable set of specifications, it frames the requirements as a starting point for dialogue.

This signals to both proponents and the courts that the final agreement (Contract B) will be the product of bilateral negotiations, not the acceptance of a pre-defined offer. The process might be explicitly labeled as a “Request for Expressions of Interest” or a “Pre-qualification,” followed by a more informal negotiation phase with a short-list of candidates.

Strategic avoidance of Contract A hinges on transforming the procurement process from a rigid competition into a flexible framework for negotiation.

Comparative Frameworks of Procurement Approach

The strategic choice between a traditional RFP (inviting Contract A) and a non-binding process involves a trade-off between control and fairness. The table below outlines the divergent paths these two approaches create.

However, this strategy is not without its own risks. Courts will look past the labels and disclaimers if the underlying structure of the process mirrors a traditional tender. If an issuer includes classic hallmarks of Contract A, such as mandatory bid security or irrevocability periods, while also claiming the process is non-binding, it creates an ambiguity that a court may resolve in favor of the bidder by finding that Contract A was formed despite the issuer’s claims to the contrary. Therefore, strategic execution requires absolute consistency between the stated intent and the actual mechanics of the procurement process.

Execution

Executing a procurement strategy designed to avoid the formation of Contract A carries significant and distinct consequences for both the issuer and the participating proponents. The successful execution of this strategy fundamentally alters the legal landscape of the procurement, shifting the balance of power heavily in favor of the issuer but introducing new considerations related to market reputation and the nature of potential legal challenges.

Consequences of Avoiding Contract A

When an RFP is successfully designed to be non-binding, the primary consequence is the elimination of the contractual duties of fairness and equality that are the cornerstones of the Contract A framework. The issuer is no longer bound to a rigid evaluation scheme and is free to enter into parallel negotiations with multiple proponents, modify project requirements mid-stream, or even favor a proposal that is not the lowest-priced or highest-scoring. This operational flexibility can be highly advantageous, particularly in complex projects where requirements are emergent and collaboration with potential vendors is needed to define the final solution.

For bidders, the consequences are equally stark. In the absence of Contract A, their recourse in the face of perceived unfairness is severely limited. They cannot sue for breach of contract, as no process contract exists. Their primary avenue for legal challenge shifts from contract law to administrative law, specifically an application for judicial review.

This is a higher bar to clear. The bidder must prove that the public body’s decision was unreasonable or lacked procedural fairness, which is generally a more difficult standard to meet than proving a breach of the contractual duty of fairness. Furthermore, the remedies available under judicial review are typically less favorable. Instead of financial damages for lost profits, a successful challenge is more likely to result in an order quashing the contract award and requiring the issuer to re-run the procurement process, a pyrrhic victory for a proponent who has already invested significant resources.

The absence of Contract A replaces a bidder’s contractual right to fairness with a more limited ability to challenge the procedural reasonableness of the issuer’s conduct.

Risk Profile Comparison

The decision to avoid Contract A is a calculated risk. The following table details the shifting risk profile for the procurement issuer.

Market Perception and Bidder Participation

An often-underestimated consequence is the impact on the procurement’s competitiveness. While avoiding Contract A grants the issuer extensive power, it does so at the cost of providing certainty to bidders. Sophisticated proponents invest substantial time and money in preparing detailed proposals. They may be unwilling to make this investment in a process that offers no guarantee of fair treatment.

An issuer who consistently uses non-binding processes may develop a reputation for running unfair or unpredictable procurements, leading to a smaller pool of bidders and ultimately, less competitive pricing and lower quality submissions. The very flexibility sought by avoiding Contract A can, if abused, undermine the ultimate goal of achieving best value.

• Bid Chilling ▴ A potential consequence where fewer proponents submit bids due to the perceived unfairness or uncertainty of the process.
• Reduced Quality ▴ Bidders may submit less detailed or innovative proposals, unwilling to invest heavily without any process guarantees.
• Reputational Damage ▴ The issuer may become known as a difficult or untrustworthy partner, affecting future procurement efforts.

Therefore, the execution of a non-binding RFP is a delicate balancing act. The legal freedom it provides must be wielded with care, maintaining a process that is still perceived as fundamentally fair and rational, even if the strict contractual duties of the Contract A framework have been successfully disclaimed.

Reflection

The decision to architect a procurement process outside the traditional Contract A framework is a profound one. It requires a deep understanding of the legal mechanics at play and a clear-eyed assessment of the strategic trade-offs. The knowledge that such a path is possible prompts a critical examination of an organization’s own procurement philosophy. Is the paramount objective maximum flexibility and discretionary power, or is it the cultivation of a competitive, transparent marketplace built on a foundation of procedural certainty?

There is no single correct answer. The optimal design depends entirely on the specific project, the maturity of the market, and the long-term strategic goals of the organization. Viewing procurement not as a series of administrative tasks but as the design of a complex legal and economic system allows for a more sophisticated approach, one where every clause and every procedural step is a deliberate choice with foreseeable consequences.