This is practical question that gets to the heart of a persistent concern raised by the industry – when standard form agreements are substantially modified through supplementary conditions, the result can be a document that bears little resemblance to the original in terms of risk allocation. This often results in loss of the fair and balanced approach to risk allocation, consistent with the Abrahamson principle, intended by the original industry-developed form.

As to how procurement officers and their lawyers can be encouraged to take a more balanced approach, we would suggest education and advocacy as follows:

Education: Work to educate the industry, including owners and their advisors, that one-sided risk allocation does not eliminate risk — it transfers it to the contractor or consultant, who will price that risk into their bid or elect not to bid at all. As a result, the owner often pays for the imbalance through reduced competition, higher pricing and contingencies, and, ultimately, disputes and claims.

Legal Advice: As legal counsel we work with our clients to flag provisions in their contracts (including supplementary conditions) that shift risk in a manner that is unbalanced and/or that is likely to be seen as unreasonable, result in inflated pricing, or deter qualified proponents from bidding. This allows informed decisions to be made.

Advocacy: Associations such as the CDAO play a critical role in engaging with industry, including public sector bodies, to advocate for procurement and contracting practices that reflect industry norms and promote project success. This includes advocacy pushing back on supplementary conditions that undermine the risk allocation established in standard forms.

The OGCA, acting as the voice for the ICI Construction sector was not consulted.

Thus far, during the initial stages of the Buy Ontario legislation, we see that that buyer of construction are selecting to enforce the requirements through liquidated damages being linked to the tender submissions.

The idea is that a contractor provides their percentage of Ontario and/or Canadian products to be included into the project and if that threshold is not met, then liquidated damages are levied against the contractor.

This legislation has not been tried or tested prior to the launch and the industry is fearful that the government has placed contractors into a risky position. This is evident for a few reasons.

Firstly, general contractors must rely on their subtrades in order to ascertain the percentage of Ontario or Canadian products that are going into their portion of the work. The subtrades may not know, or they may divulge a higher percentage than is the case in order to be seen in a more favourable light by the general contractors.

Secondly, some products have not been manufactured in Ontario or Canada for decades, or ever. Those industries don’t just appear out of nowhere, but must be encouraged over time.

Thirdly, specifications must be written to allow for substitutions instead of sole sourcing products. This initialization commences at the design stage and not the construction phase. Therefore, all future projects must be looked at through a Buy Ontario lens instead of trying to accommodate this in the shot term.

Lastly, the level of administrative burden on the general contactor to attempt to prove the percentage content of Ontario items is exponentially greater since the legislation requires proof. Additionally, the legislation is vague as to what percentage a product has to been with Canadian items and /or assembled in Canada to satisfy the requirement.

All this to say that contractors will need to cost in additional liquidated damages as a cost on items that may not be deemed Canadian enough. The legislation could have been clearer and therein eliminated all of the ambiguity. Instead, it is very vague and assumes that the industry will figure things out…eventually.

The industry believes that a phase in period, coupled with education and information sessions is appropriate for this new endeavour.

Firstly, since specific directives and regulations have not yet been published, this leaves operational details yet to be determined. So, there will be no standardization in requests and each public buyer will make up their own requirements.

Secondly, the entire infrastructure industry understands that the Buy Ontario Act was created to directly respond to the roller coaster of tariffs being levied by the President of the United States. But just demanding that the infrastructure sector comply and not providing any clarity or time to implement sounds, and looks, exactly like what the U.S. President is doing.

Thirdly, this legislation will be very problematic for general contactors, since they are the ones being held responsible.

The industry does have some suggestions on how to make it better, but the government has already launched this with little to no consultation and now it is our issue to manage.

The Consultant was reminded that products/ materials must be specified in a manner that avoids limiting competition. When developing product specifications, the Consultant may include either:

a. A performance specification ensuring that more than one product will meet all of the technical performance criteria (preferred), or

b. A list of three acceptable products/ materials.

For circumstances where the Consultant believes that there is a valid reason for specifying a single product/ material, the Consultant will need to submit written justification that clearly substantiates why that specific product/ material is required. Any requests need to be submitted to DCC for review and approval as early in the design process as feasible.

Risk dumping in procuring services for infrastructure projects occurs when clients shift disproportionate risks to consultants or vendors who lack the control or resources to manage them effectively. This often arises in fixed-price or design-build contracts where owners or prime contractors prioritize low bids over fair allocation. Common examples include imposing unlimited liability, demanding work without signed agreements, and holding consultants accountable for owner-provided data, and a few other examples (See below).

Common Risk Examples:

Unlimited or uncapped liability: Clients require consultants to indemnify for all project damages, including those from client decisions or third-party actions, exposing firms to financial burdens that are beyond their control.

Liability for preliminary or owner-furnished designs: Consultants bear responsibility for defects in initial designs or data provided by the client, despite limited verification opportunities or enough information provided during the bidding process.

Quantity overruns and fixed-price guarantees: Firms must guarantee material quantities or costs based on incomplete pre-award info, absorbing overruns from design evolution or site unknowns. If there are events impacting the supply chain, causing pricing increases or delays in getting inventory, the consultant is unfairly penalized.

Heightened standard of care: Contracts demand perfection beyond industry norms (e.g., no errors allowed), rather than reasonable care, in aggressive bid environments.

Payment withholding and backcharges: Clients hold payments or deduct costs unilaterally for alleged issues, undermining insurance protections and cash flow.

Why These Are Problematic

These shifts incentivize low-ball bids, leading to inadequate contingencies and claims against consultants when realities emerge. Specifically, Engineering Consultants can't control owner or contractor delays, regulatory changes, or changes to the site conditions, yet bear the fallout, increasing disputes and insurance costs. Fair allocation assigns risks to the best-equipped party, like owners for policy decisions, or shared risks when it comes to unforeseen problems, like supply chain disruptions.