Procurement is essential to doing business, whether in the public sector or the private marketplace. Two of the most common methods for acquiring goods, services, or construction work are tendering and the Request for Proposal (RFP) process. While these terms are often used interchangeably, they represent distinct procurement methods with different legal frameworks, obligations, and risks.

For Ontario businesses, understanding the difference between tendering and RFPs is not merely a matter of terminology. It can mean the difference between a legally binding contract and a flexible negotiation, between a costly dispute and a smooth transaction.

The Role of Procurement Processes

Procurement processes exist to help buyers, whether government entities, large corporations, or smaller organizations, acquire goods and services in a way that is efficient, transparent, and legally compliant.

In Ontario’s public sector, procurement is often governed by specific legislation, policies, and directives, such as the Broader Public Sector Procurement Directive. These rules set procedural fairness requirements, conflict-of-interest provisions, and documentation standards. Even in the private sector, contractual and common law principles apply, and disputes can arise if procurement processes are mishandled.

Tendering and RFPs both aim to secure the most advantageous deal for the buyer, but they differ in the amount of flexibility afforded, the legal obligations created, and the level of formality involved.

What Is Tendering?

Tendering is a formal and structured procurement process in which a buyer issues an invitation to suppliers to submit a bid for a clearly defined scope of work. The key feature of tendering is that the requirements, specifications, and evaluation criteria are set in advance and are typically non-negotiable.

The law governing tendering has been shaped significantly by court decisions such as R. v. Ron Engineering & Construction (Eastern) Ltd. This landmark case established the “Contract A / Contract B” framework. Under this model:

• Contract A is formed when a compliant bid is submitted in response to the tender call. It creates a binding legal relationship between the bidder and the purchaser with obligations on both sides.
• Contract B is the eventual performance contract awarded to the winning bidder.

Because Contract A is legally binding, bidders in a tendering process are typically held to their bid prices and terms, and purchasers must follow the tender’s stated evaluation rules.

Key Characteristics of Tendering

Tendering is generally characterized by:

• A high degree of formality and compliance requirements;
• Strict adherence to the bid terms and specifications;
• Minimal flexibility once bids are submitted; and
• Legal obligations that can arise even before the final contract is signed.

Purchasers who deviate from the stated evaluation process or award criteria risk legal challenges, including claims for breach of Contract A. Similarly, bidders who withdraw a bid or fail to meet the tender conditions may face liability.

What Is a Request for Proposal (RFP)?

A Request for Proposal (RFP) is a procurement method designed to invite potential suppliers to propose solutions to a problem or requirement that is not yet fully defined. Unlike tendering, RFPs are typically more flexible and encourage creativity in how suppliers meet the buyer’s needs.

In an RFP process, the buyer outlines the desired outcome, objectives, and evaluation criteria but often leaves room for bidders to propose different approaches, technologies, or pricing structures. The evaluation process may include negotiations, clarifications, or revisions before the final contract is awarded.

Legal Framework for RFPs in Ontario

RFPs in Ontario do not always trigger the same strict Contract A obligations as a formal tender, although they can if the language of the RFP creates a binding bid contract. Courts will look at the terms of the solicitation to determine whether a contractual relationship exists at the proposal stage.

Many RFPs are structured to avoid creating Contract A obligations, instead allowing the purchaser to negotiate freely with one or more proponents. This approach reduces the risk of litigation over procedural fairness but increases the importance of careful drafting to ensure the process reflects the buyer’s intentions.

Comparing Tendering and RFP Processes

While both tendering and RFPs aim to secure the best value for the buyer, the fundamental difference lies in flexibility and legal risk. Tendering locks in both parties to a set of defined rules, which often results in fewer surprises but greater legal exposure if the rules are not followed. RFPs allow for more negotiation and customization but can be less predictable in outcome.

In Ontario, businesses must recognize that calling something an “RFP” does not automatically avoid tendering rules. If the procurement document has all the hallmarks of a tender (clear specifications, binding bid requirements, and no room for negotiation), courts may treat it as such for legal purposes.

Risks for Purchasers in Tendering and RFPs

For purchasers, the choice between tendering and an RFP has significant consequences. In tendering, procedural missteps, such as awarding to a non-compliant bidder or changing evaluation criteria mid-process, can result in costly legal challenges.

In an RFP process, poorly drafted terms can inadvertently create binding obligations, limiting the purchaser’s ability to negotiate or reject proposals. Purchasers must also ensure compliance with applicable procurement directives, particularly in the public sector.

Risks for Bidders in Tendering and RFPs

For bidders, tendering poses the risk of being locked into a bid price and terms without the opportunity to revise them later. Failure to submit a compliant bid can lead to immediate disqualification, regardless of price competitiveness.

In RFPs, the risk often lies in investing substantial time and resources into developing a proposal without the guarantee of a contract. Bidders must also be mindful of intellectual property provisions to ensure proprietary information is protected.

Practical Considerations in Choosing the Right Procurement Process

The nature of the procurement need should guide the decision between tendering and RFPs. Tendering works best when the scope of work is well-defined, pricing is the main competitive factor, and the buyer wants to minimize negotiation.

RFPs are more suitable when the buyer seeks innovative solutions, multiple approaches may be viable, or qualitative factors such as methodology and experience are as important as price.

Best Procurement Practices for Ontario Businesses

While each situation turns on its particular circumstances and governing rules and regulations, there are some standard best practices Ontario businesses can employ to avoid costly procurement disputes.

For purchasers:

• Ensure the procurement document clearly reflects whether it is intended to be a binding tender or a flexible RFP.
• Follow the stated process strictly in tendering situations.
• Include clear evaluation criteria and timelines.

For bidders:

• Read the procurement document carefully to determine whether Contract A obligations apply.
• Ask clarification questions early in the process.
• Ensure proposals are compliant, complete, and address all stated evaluation criteria.

The Evolving Landscape of Procurement Law

Procurement law continues to evolve through court decisions and policy updates. Courts have examined whether certain RFPs triggered Contract A obligations, the extent of the duty of fairness, and the remedies available for bidders who believe a process was mishandled.

Public sector entities are also adapting procurement practices to address emerging priorities such as environmental sustainability, social procurement, and diversity in the supply chain. These shifts may influence the choice between tendering and RFPs and the design of procurement documents.

Contact Willis Business Law for Comprehensive Procurement Advice in Windsor-Essex County

Tendering and RFPs are essential procurement tools, but they carry different legal implications and strategic considerations. Businesses must understand the procedural differences and the contractual and litigation risks associated with each. The talented business lawyers at Willis Business Law provide multifaceted guidance to purchasers and bidders that protects their interests, reduces risk, and maximizes opportunities in Ontario’s competitive procurement marketplace. To book a consultation, please contact us online or call 519-945-5470.