The Supreme Court of Yukon has ordered the Kluane First Nation to pay more than $318,000 for illegally awarding a construction contract to its own development corporation.
The money is owed to Cobalt Construction Inc., which submitted the lowest bid for the work.
The work was for road upgrades in Burwash Landing, including the installation of culverts and ditches, according to Justice Leigh Gower’s judgement.
While the Kluane First Nation had initially intended to use its members as labourers on the project, it agreed to go through a competitive tendering process at the insistence of the Yukon government, which was providing some of the funding.
Cobalt submitted the lowest bid and Kluane Corp. submitted the second lowest bid.
However, the First Nation’s ranking process for the bids gave Kluane the top-ranked spot.
Kluane Corp. was awarded the project.
But the company did not submit 10 per cent security with its bids, as it was required to do by the tender.
It submitted the security two days after the bid deadline, after being asked to do so by the First Nation.
As a result of the delay, Kluane’s bid should have been disqualified from the competition, Justice Gower ruled.
The First Nation argued through the proceedings that Cobalt’s bid, too, did not meet the tender criteria, according to the written judgement.
It argued that Cobalt did not properly list subcontractors and did not make the best efforts to attract subcontractors from Burwash Landing.
However, this line of reasoning only emerged in an amended statement of defence, after the First Nation had deemed Cobalt’s bid compliant.
“The obvious problem with this argument is that there is no evidence whatsoever that KFN actually concluded that Cobalt’s bid was non-compliant, at any time or on any basis,” wrote Gower. “Rather, KFN is attempting to justify its actions after the fact.”
Jon Rudolph, Cobalt’s operations manager, said the company missed out on $318,251 in profits because of the lost contract.
Kluane Corp. said it ultimately made only $77,465 profit on the contract.
But Gower noted that the development corporation had to spend more than $400,000 on equipment rental, while Cobalt owned its own.
Gower ruled that Cobalt’s calculation of missed profit was reasonable.
He ordered the sum payed in full, plus interest and some costs.
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