Can a municipality or public body require the AMP authorization to contract below the thresholds set by the government?

The answer is "no", according to the Superior Court of Québec's decision dated March 30, 2023 in the case of L.A. Hébert ltée v. Ville de Lorraine.[1]

It should be noted that tenderers are required to hold an authorization to contract issued by Québec's Autorité des marchés publics (AMP Authorization) when submitting a bid on a public contract[2] if the expenditure amount set out in the contract (including any renewal option) is equal to or greater than the following applicable thresholds:[3]

• $1 million for a services contract or subcontract.
• $5 million for a construction contract or subcontract.

Certain lower thresholds apply to the City of Montréal.[4]

Underlying facts

In December 2019, the City of Lorraine (the City) launched a public tender for a construction contract. When the tender was launched, the City estimated the value of the work at $5.3 million, i.e. above the $5 million threshold at which AMP Authorization is required. Section 35 of the City's project specifications stipulated as a condition of eligibility that all tenderers had to hold AMP Authorization when submitting bids:

9267-7368 Québec inc., which did not hold AMP Authorization, submitted a bid in the amount of $4.2 million and was the lowest bidder. Meanwhile, L.A. Hébert ltée, which did hold AMP Authorization, submitted a bid in the amount of $4.4 million and was the second-lowest bidder.

At the conclusion of the call for tenders, despite the eligibility condition set out in Section 35 of its project specifications, the City awarded the contract to 9267-7368 Québec inc.

Parties' claims

L.A. Hébert ltée sued the City, claiming that it should have been awarded the contract since 9267-7368 Québec inc. did not meet the essential eligibility condition of holding AMP Authorization.

Meanwhile, the City claimed that it was not required to ensure compliance with the AMP Authorization condition since the amount of the bid submitted by 9267-7368 Québec inc. was $4.2 million, i.e. less than the $5 million threshold set by the Québec Government.

Principles and reasoning

Called on to interpret Section 35 of the City's project specifications (see above), the Court ruled that, in particular, the section must be read in light of the applicable provisions of the Act respecting contracting by public bodies and the various decrees adopted pursuant to that legislation setting out thresholds for holding AMP Authorization.

The Court pointed out that contract givers and bidders must comply with the regulatory framework for public contracts, under which contractors are required to hold AMP Authorization for any public contracts involving construction work that involves an expenditure equal to or greater than $5 million. Conversely, AMP Authorization cannot be required if this threshold is not reached, unless the municipality or public body has obtained a specific authorization from the government, in accordance with Section 21.17.1 of the Act respecting contracting by public bodies. In this regard, the call for tenders documents issued by a municipality or public body cannot stipulate requirements that are more stringent than those adopted by lawmakers with respect to AMP Authorization.

Since the contract amount was less than the $5 million threshold and since the City was not authorized by the government to nevertheless require AMP Authorization, the Court concluded that the City had correctly exercised its discretionary power by awarding the contract to 9267-7368 Québec inc.

Conclusion

In their call for tenders documents, municipalities and public bodies must pay particular attention to how the eligibility condition concerning AMP Authorization is drafted. In this regard, it is advisable to include a general clause specifying that tenderers must hold AMP Authorization when submitting bids if the bid amount is equal to or greater than the threshold set by the government.

For further information on this decision or on drafting call for tenders documents, or for more general assistance concerning your current or future public contracting projects, please contact the members of Gowling WLG's Infrastructure team.