Judge: Award of tender not binding

A SUPPLIER of medical equipment has been ordered to pay $174,910.75 in legal costs to the South West Regional Health Authority (SWRHA) after a failed claim for over $3 million which the company said was owed to it after the authority reneged on a contract to provide a 3D digital mammography system.

Clinitech Company Ltd (CCL) claimed the SWRHA breached a contract for the supply of certain medical equipment. In its claim, heard before Justice Margaret Mohammed, CCL pleaded the cost of a $91,800 down payment it said it made to a distributor; loss of profits in the sum of $2,016,110; and loss of job opportunity.

It contended that it presented a bid to the SWRHA, which advertised for the supply, installation and commissioning of medical equipment for the radiology department, operating theatres and others under its control, and its bid of $5 million was accepted in September 2015.

Clinitech said it presented a performance bond for $500,000, made the down payment and was awaiting delivery of the contract and purchase orders from the SWRHA when, on June 13, 2016, it was told the letter of award had been rescinded and the performance bond was being released.

In its lawsuit, argued by Anand Ramlogan, SC, Alvin Pariagsingh and Kavita Sarran, the company said the letter of award created a binding contract with an obligation to pay and a legitimate expectation that the contract would be performed and payment forthcoming.

However, the SWRHA in its defence, argued by attorneys Roger Kawalsingh and Ravi Mungalsingh, while not disputing that the letter of award had been issued, said there was no contract in place.

According to the SWRHA’s attorneys, the award was rescinded because of a lack of funds, and because CCL needed to revise the quoted prices, which was considered a variation.

The attorneys argued that until a purchase order was issued, a contract signed by both parties, and if the bid could not be maintained, it rendered the tender process voidable at the SWRHA’s option.

The authority also contended that its policy was that contract values over $1.5 million must be sent to the Health Ministry for further approval and the recommendations of the ministry will be applied.

It argued that as part of its duty, as a health authority, it has to ensure that its medical equipment is properly maintained, working, and modern so that it can properly serve the public and owed a duty of care to the ministry to ensure that all equipment purchased was capable of carrying out the work it was required to do, and was not exorbitantly priced.

The SWRHA said the company was under no obligation to provide the item until the purchase order and written contract were entered into.

In her decision, Justice Mohammed said the letter of award was not sufficient to make a binding contract in this case, as a clause in the invitation to tender document gave the SWRHA the reserved right to reject all, at any time, before the award of the contract.

She held there were two stages in the process: the letter of award and the award of the contract, and there was no unequivocal acceptance of CCL’s bid offer.

Mohammed also held that CCL ought to have known of the statutory provisions outlined in the Regional Health Authorities Act as it relates to tenders since the funding was from the State and it was contracting with a public authority where approval from the minister was required.