The City of Estevan has been hit with a six-figure lawsuit from a local company.
The Mercury has learned Turnbull Excavating has sued the City of Estevan over issues stemming from a tender issued earlier this year.
Filed on Oct. 17 in the Court of Queen's Bench, the suit accuses the City of failing to act in good faith and breach of contract. Turnbull Excavating is asking for damages in excess of $450,000 plus court costs.
In an interview Friday, Mayor Roy Ludwig said the matter was before the courts and it would be irresponsible to speak on the particulars of the case at this time. However, he added that the City hopes for a speedy resolution and to mend their relationship with Turnbull Excavating.
"(Turnbull Excavating) is a good contractor in our community and we hope to get past this and continue what we thought was a good working relationship," Ludwig said.
The Mercury also contacted Turnbull Excavating for a comment on the story but had not received one as of press time.
According to the statement of claim obtained by The Mercury, the suit revolves around a tender issued in the spring to build a 1.2 kilometre pipeline of 450 mm diameter PVC pipe and 2.4 km of 350 mm HDPE gravity sewer main.
On May 3, Turnbull Excavating submitted a bid for $3.216 million which ultimately proved to be the low tender by over $380,000. On May 7, the suit says that Associated Engineering - the firm that was hired to issue the tender and review the bids on behalf of the City - recommended that Turnbull Excavating be awarded the tender and asked the City for instructions to issue a notice award to the company.
However, on May 22, the claim noted that Turnbull Excavating received a letter from city manager Jim Puffalt, which said, in part "Attached please (sic) the summary of the recent tender showing the low tender to be Turnbull construction at the tendered price of $3,191,345.00 the City of Estevan is prepared to award the contract to the low bidder however require written commitment to pay one-quarter of the cost as previously discussed.
"It is proposed that the City manage the contract and bill the partners on a monthly basis the costs of the contract of ($878,086.00 each). Please correspond as quickly as possible so the work can start."
The issue of paying the $878,086 is one of the major points of contention as Turnbull Excavating claims in the suit that there was no discussion with the City about paying one-quarter of the cost and the payment was not a term of the tender contract.
Because they did not agree to the term, Turnbull Excavating was ultimately not awarded the contract. However, in the statement of claim, they contend that because they did submit a compliant bid, upon submission of the bid a contract was formed between Turnbull Excavating and the City. Further, the suit alleges that the City was not authorized by the terms of the invitation to bid to reject all bids on the basis that a quarter of the cost was to be remitted back to the City and did not cancel the competition within the meaning of the terms of the invitation to bid.
By failing to award the contract to Turnbull Excavating, the suit contends that the City breached the terms of the contract and failed to enter into any negotiations with Turnbull Excavating regarding any cost saving measures required or available, preliminary to the awarding of the contract.
The suit goes on to claim that the City breached its obligation of good faith and duty to treat all bidders fairly when they rejected all bids on the condition that one-quarter of the project be returned to the City; by inserting a term in the acceptance of the bid that was not disclosed, expressed or implied and by failing to disclose that a quarter of the project costs were to be reimbursed in the invitation to bidders.
The suit also goes on to claim that the City failed to apply the standard practice and custom in the construction industry when it failed to negotiate with the lowest bidder in the event that bid prices were higher than expected and inserted a valuation criteria, which was not disclosed and considered commercially unreasonable. It also says that a contract was breached when the City did not award the contract for the job as per the instructions to the bidders.
As a result of those alleged issues, Turnbull Excavating is asking for in excess of $450,000 plus legal costs and the cost to prepare the bid, applicable interest, compensation for loss of opportunity for projects they were not able to bid on because of the irrevocability of the bid and anything further that the judge sees fit to award.
