COMMUNIQUÉ TO MEMBERS: INNSERVICES ISSUES ADDENDUM TO INCLUDE NEGLIGENCE-BASED INDEMNIFICATION LANGUAGE HOWEVER, ADDITIONAL CONCERNS REMAIN UNADDRESSED

Nov. 12, 2019

No. 19/005 – November 12, 2019

Background:

On October 21, 2019 CEO informed InnServices of its concerns with multiple clauses contained in RFP No. P-19-CWW251- Engineering Services for Sewage Pumping Station # 4 Upgrades. InnServices issued a subsequent addendum that addressed CEO’s concerns pertaining to the Section 8.01 Supplier Indemnity clause. The revised language includes terms for negligence-based indemnification. While CEO recognizes and appreciates this revision, InnServices did not address the other issues brought to its attention.

CEO’s Position:

CEO has identified the following additional clauses of concern that have not been addressed:

• 2.01 Lack of Reciprocal Indemnity

CEO highlights that this clause does not provide for reciprocal indemnity from InnServices to the Consultant. CEO expressed that such expectations were not reasonable and did not reflect a balanced approach to indemnification that should be applied to public infrastructure projects in Ontario, therefore CEO recommended that this clause be removed.

• 3.05 Responsibility of Supplier

This clause establishes the Consultant’s liability for the conduct of its directors, officers, employees, agents, partners, affiliates, volunteers and subcontractors without limiting the liability to negligent acts or omission. CEO informed InnServices that Consultants cannot be appropriately insured and bear the liability for “…all damages, costs, expenses, losses, claims or actions arising from any breach of the Contract resulting from the actions of the above-mentioned individuals and entities” unless these provisions are the result of negligent errors or omissions. CEO proposed that the clause be amended so as to facilitate the Consultant’s ability to secure the required insurance.

• 4.02 Deliverables Warranty

CEO informed InnServices that this clause was more applicable to an equipment/material supply contract and not appropriate for a Professional Services contract. CEO recommended that this clause be removed. CEO also noted that any clauses addressing deliverables for professional services should not be subject to revision of work based on a broad “opinion” of InnServices. CEO further recommended that the following language be inserted into clauses that address deliverables and potential rectification: “Any rectification notice must have reasonable request for corrections referencing the original scope of work, the Contract, Industry Standards, and/or Requirements of Law”.

• 6.05 Injunctive and Other Relief

It is CEO’s position that it is unreasonable and unacceptable for Consultants to abide by InnServices’ ability to arbitrarily “obtain” injunctive relief without any proof of damage. CEO recommended that this clause be amended to state that “…InnServices is entitled to seek injunctive relief…” upon the basis of proven damage.

Conclusion:

Members who have bid on Request for Proposal No. P-19-CWW251- Engineering Services for Sewage Pumping Station # 4 Upgrades should be aware that while InnServices has updated its indemnification clause with negligence-based language, there are still several areas of concern in the contract.

ADVISORY TO MEMBERS: TOWN OF BRADFORD WEST GWILLIMBURY RFP CONTAINS PROBLEMATIC TERMS AND CONDITIONS

Nov. 12, 2019

No. 19/006 – November 11, 2019

Issue:

Consulting Engineers of Ontario (CEO) is advising members to use caution and consult their insurance and legal counsel before submitting project proposals to the Town of Bradford West Gwillimbury. CEO recently proposed amendments for the Town’s Request for Proposal No. P-19-64- Professional Engineering Consulting Services for the Bradford Water Pollution Control Plant Reviews and Upgrades Project. The Town has yet to respond to our concerns. Consequently, member firms considering future RFP submissions are advised that some terms and conditions will be very difficult, if not impossible, to adequately insure through our industry’s insurance providers.

CEO Position:

CEO strongly believes that having fair, insurable agreements attracts more positive interest from the consulting engineering industry and leads to better project outcomes for clients.

Provisions in the Town’s RFP create five significant areas of caution for Consultants:

• Section 4.02 Deliverables Warranty appears to be applicable to an equipment/material supply contract, as such its inclusion in a Professional Services contract is not appropriate as it contains language that exceeds a reasonable Standard of Care.
  

CEO informed the Town that provisions such as “shall be free from defects in material, workmanship and design” go beyond a Consultant’s standard of care. CEO also noted that this language, and the inclusion of “Warranty” in the title of the clause imply an unattainable standard of perfection and recommended it be removed. CEO also informed the town that clauses addressing deliverables for professional services should not be subject to revision of work based on a broad “opinion”. CEO recommended that the following alternative language be used to address deliverables: “Any rectification notice must have reasonable request for corrections referencing the original scope of work, the Contract, Industry Standards, and/or Requirements of Law”.

• Section 6.05 Injunctive and Other Relief allows the Town to arbitrability obtain injunctive relief
  

CEO believes strongly that the requirement for the Consultant to abide by the ability for the Town to arbitrarily “obtain” injunctive relief without any substantial evidence of damage is unreasonable and unacceptable. CEO recommended that the clause be amended to state that owners are entitled to seek injunctive relief upon the basis of proven damage.

• Section 8.01 Consultant Indemnity establishes a one-sided indemnity and is not limited to a Consultant’s negligence acts, errors, and omissions.
  

As written, this indemnification clause does not require the Town to provide any obligation of indemnification for any acts that would cause harm/damage to the Consultant. CEO also informed the Town that requiring Consultants to indemnify and hold harmless the “Indemnified parties from and against any and all [Claims]” is a problematic requirement when not expressly tied to a Consultant’s negligence.

• Section 8.01 Consultant Indemnity requires Consultants to indemnify vaguely defined parties who may not be under the care and control of Consultants.
  

CEO informed that Town that the inclusion of indemnified parties such as “independent contractors” is not reasonable as Consultants cannot be expected to assume any liability for any damages or delays caused by parties outside of their control or responsibility. CEO also noted that the provision “or otherwise in connection with, the Contract” further aggravates this condition by creating a vaguely defined liability that would include parties that are outside of the Consultant’s control or responsibility. CEO proposed that the Town omit both of the aforementioned terms so as to establish a reasonable limitation of liability for the Consultant.

• Section 8.01 Consultant Indemnity subjects Consultants to undue penalties for unreasonable damages.
  

The clause creates an expectation that Consultants “…indemnify and hold harmless the Indemnified Parties for any incidental, indirect, special or consequential damages…”. CEO advised the Town that these types of damages are very often difficult to accurately quantify, and as such are prone to create a liability to be borne by the Consultant that is disproportionate to the risk inherent to the services they are contracted to provide.

Conclusion:

CEO encourages members to make project decisions on a case-by-case basis, having carefully reviewed the terms and conditions and considered the merits of individual assignments. Consult with your insurance and legal counsel before accepting any questionable agreement terms; and should you experience difficulty, contact CEO and make use of our contract Rapid Response Service. CEO staff will work with you to assess the problem and where possible develop an industry position addressing your concerns that we will use to advocate on your behalf to try and achieve necessary change.

BULLETIN TO MEMBERS: ADJUDICATION IS IN FULL EFFECT IN ONTARIO: THIS IS WHAT YOU NEED TO KNOW

Nov. 8, 2019

No. 19/008 – November 8, 2019

Issue

On October 1^st, 2019 the prompt payment and adjudication provisions of Ontario’s Construction Act (“the Act”) came into effect. The Ontario Dispute Adjudication for Construction Contracts (“ODACC”), also known as the Authorized Nominating Authority (“ANA”) under the Act, has published its pre-designed adjudication processes, timelines and fees as this final phase of the Act comes into force. CEO is encouraging member firms to carefully read the summary below on the adjudication processes and the related timelines and fees. Full details on the adjudication regime are available on the ODACC website. CEO is strongly urging member firms to familiarize themselves with the details of the adjudication process and to understand the obligations that now exist under the new law.

Adjudication

The adjudication process is intended to resolve construction disputes outside of the courts or alternative dispute resolution processes in a timely fashion, as the project is being completed, and to keep money flowing through the construction pyramid. It provides for the Adjudicator to render a determination a maximum of 30-days after receiving the documents of the party referring the matter to adjudication, unless both parties agree to an extension. The scope of issues that can be adjudicated are limited to; valuation of services, payment (including changes orders or proposed change orders), notices of non-payment, claims for set-off (against liens or trusts), payment or non-payment of holdback, and other disputes to which parties agree.

While the Adjudicator has the discretion to conduct adjudications in the manner he or she determines is appropriate for the circumstances, the ODACC has prepared the following four pre-designed Adjudication Processes to:

• allow Parties to have a sense of the anticipated cost to adjudicate their dispute;
• allow Parties to have some input into the Adjudicator’s decision regarding the design of the appropriate process;
• help Adjudicators to ensure that the cost of the process is proportionate to the amount in dispute; and
• minimize disputes between Parties and the Adjudicator that could arise over fees.
  
• Pre-Designed Adjudication Process #1 (Two-Page Written Adjudication):
  

Adjudication in writing only, with the submissions of Parties’ arguments and photographs limited to two (2) pages per Party (not including a copy of the construction contract and disputed invoice, both of which must be submitted); and the adjudicator’s determination is expected to be approximately one to two (1-2) pages.

• Pre-Designed Adjudication Process #2 (Five-Page Written Adjudication):
  

Adjudication in writing only, with the submissions of Parties’ arguments and photographs limited to five (5) pages per Party (not including a copy of the construction contract and disputed invoice, both of which must be submitted); and the adjudicator’s determination is expected to be approximately one to two (1-2) pages.

• Pre-Designed Adjudication Process #3 (Five-Page Written Adjudication plus Ten Pages of Documents):
  

Adjudication in writing only, with the submissions of Parties’ arguments and photographs limited to five (5) pages per Party (not including a copy of the construction contract and disputed invoice, both of which must be submitted); Each Party may submit additional documents, parts of documents and witness statements to a maximum of ten (10) pages; and the adjudicator’s determination is expected to be approximately five (5) pages.

• Pre-Designed Adjudication Process #4 (Oral Webcast Adjudication, Ten Page Submissions and Documents):
  

Submission of Parties’ arguments and photographs is limited to ten (10) pages per Party (not including a copy of the construction contract and disputed invoice, both of which must be submitted); Each Party may submit additional documents, parts of documents, and witness statements to a maximum of 25 pages (in total); Each Party has half an hour to make an oral presentation; Presentation can be conducted by videoconference or teleconference (but will not be in person); and Determination is expected to be approximately five (5) pages.

An important aspect of these pre-designed processes is that they all allow for submission of disputed contracts and invoices. This puts an increased significance on the wording and language used in parties’ contracts and invoices at all levels of a project. CEO is encouraging member firms to work with project clients to have included in their contracts the terms and conditions necessary to accommodate the processes and timelines required to facilitate the proper execution of their professional services according to the new system. Equally important, CEO is encouraging member firms, if they have not already done so, to review and modify their internal document management and information systems. The nature and tight timelines of the adjudication process will require firms to modify current protocols so that project-relevant information such as proposals, agreements, drawings, invoices, emails, notes and memos can be produced and shared in a timely fashion. A firm’s success at adjudication will chiefly be driven by having on-hand fact-based evidence.

Timelines

The ODACC has also published several suggested adjudication timelines based on the Act. All four pre-designed adjudication processes have the same first four suggested steps (with some slight deviations depending on the selected process). Each timeline begins with the appointment of an adjudicator:

• Day 1: The adjudicator is selected by the parties or appointed by ODACC.
  
• Day 5: Claimant sets out its position, provides a copy of the construction contract and disputed invoice, and supplies any documents that it intends to rely on
  
• Day 7: The adjudicator determines the balance of the adjudication process and communicates that to the parties, including the respondent’s deadline to respond to the claimant’s submission
  
• Day 12: The respondent submits a response

Following these first stages of each adjudications process, the remaining steps are suggested as follows (determined by the nature of the pre-designed processes):

• Pre-designed Adjudication Processes 1-3 all require an adjudicator’s Draft Determination to be provided to ODACC on Day 20.
  
• Pre-designed Adjudication Processes 4 requires an oral hearing on Day 18 followed by the adjudicator’s Draft Determination to be provided to ODACC on Day 25.
  

Unless an extension is granted, having been agreed to by the parties to the adjudication, the entire adjudication process for all pre-designed options state that a decision will be released by ODACC 35 days after an adjudicator is appointed pursuant to the requirements in the Act. Please visit the ODACC website for additional timeline details.

Fees

The adjudication process comes with associated Adjudication Fees that may be agreed upon by the Claimants, Respondents and Adjudicator. In the event that the Parties and Adjudicator are not able to agree upon the fee, the ODACC has set the following Adjudication Fee structure:

Adjudication Fee, if Parties and Adjudicator Do Not Agree on the Adjudication Fee

Amount Claimed on Notice of Adjudication	Adjudication Fee
≤ $9,999	$800
$10,000 ≤ $24,999	$1,000
$25,000 ≤ $34,999	$2,000
$35,000 ≤ $49,999	$3,000
$50,000 ≤ $249,999	Adjudicator hourly rate of $250
$250,000 ≤ $499,999	Adjudicator hourly rate of $400
$500,000 ≤ $1,000,000	Adjudicator hourly rate of $500
> $1,000,000	Adjudicator hourly rate of $750

Please see the ODACC website for additional information on Adjudication Fees, Adjudication Referral Fees, Certification Fees, and Adjudicator Appointment Fees.

What this means for CEO Members

The adjudication process is expected to help resolve disputes for any construction procurements that commenced as of October 1, 2019. Now that different adjudication processes have been clearly established, CEO expects to see an eventual increase in disputes using this system as parties learn to apply and respond to the new rules. CEO members should prepare and familiarize themselves with the adjudication processes, timelines, and fees.

ADVISORY TO MEMBERS: INSTANCES OF MUNICIPAL ASSIGNMENT DOCUMENTS MISREPRESENTING THE MEA/CEO CLIENT/ENGINEER AGREEMENT FOR PROFESSIONAL CONSULTING SERVICES HAVE OCCURRED

Sep. 26, 2019

No. 19/005 – September 26, 2019

Issue:

It has been brought to CEO’s attention that some municipalities are using outdated versions of the MEA/CEO Client/Engineer Agreement for Professional Consulting Services (“MEA/CEO Agreement”), or are altering the copyrighted document and/or falsely presenting their own terms and conditions as the MEA/CEO Agreement. These alternate versions of the Agreement are in violation of copyright and can contain uninsurable and unacceptable terms and conditions. CEO is advising member firms to use caution and carefully review anything that appears to be the MEA/CEO Agreement that is contained in municipal assignment documents.

CEO Position:

It is CEO’s position that municipalities should not be procuring professional services under the guise of the MEA/CEO Agreement if the terms and conditions have been altered. Member firms should not accept any terms and conditions or sign any municipal contracts presented as the MEA/CEO Agreement before reviewing the language against the official document.

CEO has updated the MEA/CEO Agreement to a fillable field format that enables consultants and municipalities to customize the agreement for individual projects and to easily make necessary changes through supplementary conditions.

Conclusion:

While the misuse and misrepresentation of the MEA/CEO Standard Agreement in municipal assignment documents may not be widespread, CEO is notifying member firms to be cautious as they could potentially be accepting unreasonable and/or uninsurable terms and conditions. Should you encounter an altered version of the MEA/CEO Standard Agreement, CEO is encouraging member firms to contact their insurance provider, legal counsel and us to make use of our contract Rapid Response Service.

BULLETIN TO MEMBERS: CERTIFICATE OF RECOGNITION (COR™): WHAT IMPACT & IMPLICATIONS THE CONSULTING ENGINEERING INDUSTRY NEEDS TO CONSIDER

Sep. 26, 2019

No. 19/006 – September 19, 2019

Issue:

Since 2015, CEO has identified the Certificate of Recognition (COR™) as an emerging issue requiring the attention of the Consulting Engineering industry. Public sector clients are increasingly expecting Consultants and professional service providers to be COR™ registered or certified as a requirement to qualify for their project assignments. While COR™ was initially developed for contractors and subcontractors, the market is evolving to use COR™ as a risk management tool to vet proponents based on their commitment to a quality occupational health and safety management system. The philosophy behind the requirement of COR™ for Consultants bidding on public work is continuing to spread throughout provincial and municipal procurement systems across the province.

Most notably, Infrastructure Ontario, Metrolinx, the City of Toronto, Toronto Transit Corporation, City of Brampton, and Town of Milton all have COR™ requirements for professional services proponents. The number of participating public sector clients is expected to continue to grow.

Background:

Introduced to Ontario in 2011, COR™ became a requirement for contractors and sub-contractors working on provincial government and agency projects. As a health and safety management system, COR™ is aimed to reduce the human and financial costs associated with workplace incidents and injuries and provides a foundation to develop, monitor, and advance a firm’s health and safety as well as mitigate risk.

As COR™ continues to integrate into the Ontario marketplace, there has been a clear desire from public clients to have both their Contractors and Consultants aligned with the same safety culture, and as such they have decided to make COR™ registration and/or certification a requirement for Consultants within their RFPs.

Conclusion:

Member firms can expect to see an increased requirement to be COR™ registered and/or certified in more public sector RFPs. Consulting Engineers need to consider and anticipate the growing public sector client requirement to be COR™ certified/registered.

COMMUNIQUÉ TO MEMBERS: CITY OF OTTAWA TO CONSIDER PROPOSED REVISIONS DURING NEGOTIATIONS STAGE OF RFP EVALUATION PROCESS

Sep. 10, 2019

No. 19/003 – September 10, 2019

Background:

On August 23, 2019 CEO informed the City of Ottawa of our industry’s concerns with the Indemnification clause, and other clauses related to standard of care for Consultants, within its RFP for a Solid Waste Master Plan (RFP No. 19419-91843-P01). The City promptly responded to CEO offering to issue an Addendum permitting respondents to propose amendments to the City’s General Terms and Conditions for consideration during the Negotiations stage of the evaluation process.

Currently, the City is reviewing the in-depth comments and feedback provided by CEO member firms. CEO appreciates the City’s flexibility and willingness to negotiate important conditions such as those within this RFP.

CEO’s Position:

CEO has highlighted the following issues of concern in the identified clauses:

• 5.2. Indemnification

It is CEO’s position that this clause compromised the Professional Liability insurance coverage that CEO member firms are required to carry. The clause as presently written compromises CEO members’ ability to obtain appropriate coverage. CEO proposed that the City amend its current indemnification clause to reflect negligence-based indemnification.

• 2.2.4. Conduct of Work

Section 2.2.4 under Conduct of Work required that the Consultant’s work “…be free from any defect in manufacture, material and workmanship”. CEO noted that this provision created an unattainable standard of perfection for Consultants to achieve. Further, CEO proposed that the City strike the “warranty” provision in this clause. CEO informed the City that Professional Liability policies expressly exclude warranties for professional services as their inclusion creates an unrealistic and unachievable standard.

• 2.22.1. Staff and Methods

Section 2.22.1 under Staff and Methods required Consultants to “perform the Work to a professional standard in accordance with current “best practices”. CEO informed the City that the term “current best practices” is relative, subjective, vague and should be altered to read as “current industry standard practices” to accurately capture the professional standard to which Consultants are accountable.

• 7.0. Quality Control of Services and Deliverables

It is CEO’s position that Section 7.0 Quality Control of Services and Deliverables also elevated a Consultant’s standard of care by requiring “high quality deliverables”. CEO recommended that the City removes the term “high”. Further, CEO also held the position that the “the expectation is that all deliverables, including drafts, are to be free of errors, contradictions and spelling mistakes” is broad and a potential risk for undue liability. CEO recommended that this provision be qualified by negligence.

Conclusion:

Members who have bid on Request for Proposal No. 19419-91843-P01- Solid Waste Master Plan should be aware that the City will be open to negotiations at the evaluation stage of this bid document. CEO encourages member firms to refer to the commentary above when negotiating with the City of Ottawa and continues to recommend a thorough review of all RFP and contract documents by member firms for their projects, even in instances where there are multiple projects with the same client.

BULLETIN TO MEMBERS: GOVERNMENT ANNOUNCES APPOINTMENT OF ADR CHAMBERS INC. AS AUTHORIZED NOMINATING AUTHORITY (ANA) TO ADMINISTER ADJUDICATION REGIME UNDER ONTARIO’S CONSTRUCTION ACT

Aug. 29, 2019

No. 19/004 – August 1, 2019

ISSUE

On July 18th 2019, the Ministry of the Attorney General announced the appointment of ADR Chambers Inc. to act as the Authorized Nominating Authority (ANA or the “Authority”) to administer Ontario’s adjudication regime under the Construction Act. The Authority will oversee the adjudication process for construction disputes, including the training and qualification of adjudicators. This appointment brings Ontario one step closer to the full implementation of the Act. This is expected to take place on October 1, 2019 with the proclamation of the regulations enabling the new prompt payment and adjudication regimes.

ADR Chambers Inc. delivers alternative dispute resolution services across a broad range of sectors and industries. Based on the provisions of the Construction Act, the Authority will be responsible for, among other things:

• Creating a website to enable parties to learn about adjudication and access services
• Providing a public registry of adjudicators
• Developing and overseeing training programs for adjudicators
• Qualifying individuals who meet the prescribed requirements as adjudicators
• Maintaining a fee schedule, a code of conduct, and a complaints procedure
• If requested by the parties, appointing an adjudicator to a dispute from a roster which it will maintain
• Publishing educational materials regarding the adjudication process and an annual report

The Authority will operate independently of government and will be self-funded. Preparations are currently underway for regular operations and an adjudication website is being developed that will include information about the Authority’s process for qualifying as an adjudicator.

WHAT THIS MEANS FOR CEO MEMBERS

The long-awaited appointment of the ANA clears the way for the government to proceed with its proclamation of regulations to bring in to force Ontario’s prompt payment and adjudication regimes on October 1, 2019. However, with just two months remaining before this deadline, much work remains to be done.

Before the first adjudication can take place the ANA must first establish, publish and recruit adjudicator candidates from qualifications criteria. The intake process and architecture needs to be created and operationalized, facilitating their selection, training and certification. Only once this is in place and properly functioning can a functional and accountable roster of available adjudicators be made available to the public. Supporting this is the need for an enforceable code of conduct and oversight process.

Last, but certainly not least, the ANA must develop fees for adjudication services. Much speculation remains about what adjudication fees will be and how they will be established. Certainly, the spirit of the law is a motivated by the principle of dispute resolution addressed in real time, reasonably, as projects continue. The emphasis is on avoiding the lengthy and costly process of going to court. With that in mind, general consensus among industry stakeholders is that adjudicators will operate under a reasonable daily fee. The question that remains is what that fee will be and what process will be used to establish that fee. It is not unreasonable for Ontario’s infrastructure sector to expect the ANA to hold meaningful public consultations on how that fee will be set.

A lot remains to be achieved in a short span of time. While adjudication notices are not expected to start flowing immediately following the October 1st implementation date of the new regime, it is not unreasonable for the infrastructure sector to expect that this system would be in place and functional in time for the enabling regulations to come in to force. CEO is continuing to actively pursue information on this issue and where possible shape the creation and implementation of as efficient and effective an alternative dispute resolution system as possible.

ADVISORY TO MEMBERS: UNITED COUNTIES OF PRESCOTT RUSSELL RFP CONTAIN PROBLEMATIC TERMS AND CONDITIONS

Aug. 29, 2019

No. 19/004 – August 29, 2019

Issue:

Consulting Engineers of Ontario (CEO) is advising members to use caution and consult their insurance and legal counsel before submitting project proposals to the United Counties of Prescott Russell. CEO recently proposed amendments for Prescott Russell’s Request for Proposal No. PW2019-25 to improve Section A. Information for Bidders, Section 15. Liability Insurance, Section B. General Conditions, Section 13. Representations, Warranties and Conditions, and Section C. Project Information and Terms of Reference, Section 6. Health and Safety and Section 8. Liquidated Damages/Penalties. Prescott Russell acknowledged CEO’s comments but has not modified its terms and conditions. Consequently, member firms considering future RFP submissions are advised that some terms and conditions will be very difficult, if not impossible, to adequately insure through our industry’s insurance providers.

CEO Position:

CEO strongly believes that having fair, insurable agreements attracts more positive interest from the consulting engineering industry and leads to better project outcomes for clients.

The provisions in Prescott Russell’s RFP creates six significant problems for CEO members:

• Section A. Information for Bidders, Section 15. Liability Insurance contains several insurance extensions that are unreasonable to require from Consultants.

The requested Commercial General Liability insurance extensions under Sub-Section I include the “Removal or weakening of support of any property, building, or land, whether such support is natural or otherwise”, “use of explosives for blasting”, and “vibration from pile driving, or caisson work…”. CEO noted that it is unreasonable to require Consultants to obtain extensions that are intended and only available to contractors who have exposure to these particular risks. These provisions are not typically found in a Consultant’s Commercial General Liability policy, and CEO requested that they be removed.

• Section 15, Sub-Section III regarding Professional Liability Insurance states that “…the Corporation shall be added as an additional Insured…”.

In this context, the Corporation (also known as Prescott Russell) would be considered a third party, and a Consultant’s professional liability policy will not cover third parties, as such CEO requested that this provision should be removed.

• Section 15, Sub-Section g. of the clause includes “fines” as an item for which the Consultant must indemnify the United Counties.

A Consultant’s Professional Liability insurance will not provide insurance for broad and undefined items such as “fines”. CEO recommended that this term be removed.

• Section B. General Conditions, Section 13. Representations, Warranties and Conditions creates an obligation for the Consultant’s work to “…be free of defects in workmanship and materials…”.

This requirement goes beyond a Consultant’s reasonable standard of care. The language used and the inclusion of “Warranties” in the title of the clause imply an unattainable standard of perfection for the Consultant to achieve. Further, the clause inappropriately required that the Consultant’s services must be performed in a “professional and worker like manner by personnel”. CEO noted that this statement is highly subjective and as such it is not reasonable to require Consultants be contractually obligated to such a condition. CEO recommended that Prescott Russell replace its clause with language that appropriately captured the Consultant’s Standard of Care.

• Section C. Project Information and Terms of Reference, Section 6. Health and Safety contains provisions that do not apply to Consultants.

CEO supports Work Place Health and Safety however, it is our firm belief that these responsibilities should be assumed by the appropriate party as stipulated by current statute. Ontario’s Occupational Health and Safety Act states that such responsibilities are to be assumed by the party exercising care and control over the project. It also states that no party can contract out of or contractually assume these responsibilities. CEO has proposed that the United Counties replace its current Health and Safety clause.

• Section 8. Liquidated Damages/Penalties subjects Consultants to undue penalties for unreasonable damages.

CEO informed Prescott Russell that liquidated damages are an inappropriate instrument to be applied to professional services. By not linking these particular damages to a Consultant’s negligence, Consultants could be subject to undue and uninsured penalties for unreasonable damages. This clause is uninsurable, creates punitive measures for delays and was recommended to be removed.

Conclusion:

CEO encourages members to make project decisions on a case-by-case basis, having considered the merits of individual assignments. Consult with your insurance and legal counsel before accepting any questionable agreement terms; and should you experience difficulty, contact CEO and make use of our contract Rapid Response Service. CEO staff will work with you to assess the problem and where possible develop an industry position addressing your concerns that we will use to advocate on your behalf to try and achieve necessary change.

COMMUNIQUÉ TO MEMBERS: YORK REGION ISSUES ADDENDUM WITH RECORD OF ENGINEER AMENDMENTS TO RFP

Jun. 12, 2019

No. 19/002 – June 11, 2019

Issue Background:

CEO is pleased to announce that York Region has made an amendment to RFP No. P-19-99- Site Coordination and Inspection Services for Highway 27 CPR Bridge Replacement and Road Widening from Martin Grove Road to Rutherford Road based on recommendations proposed by our Rapid Response Team.

On May 30, 2019 CEO brought to the Region’s attention our industry’s concerns with the Record of Engineer clause. The Region promptly responded providing an extension on the RFP’s closing date to allow for a review of the issue and our proposed solution. On June 6^th, the Region published an Addendum incorporating our proposed amendments, fully addressing CEO’s concerns. CEO appreciates the Region’s prompt action.

York Region’s Amendments:

On June 6^th, York Region’s Director, Procurement Office, Jerry Paglia informed CEO that the following clause under Section 6.3.4 would be replaced:

Record of Engineer

The Site Coordinator shall provide written and sealed confirmation that the Construction Project has been completed in accordance with the Project Plans.

CEO highlighted the following concerns with the clause:

• The use of an engineer’s seal is governed by Professional Engineers Ontario under the Professional Engineers Act. CEO explained that a client request for a document to be sealed is not sufficient reason for doing so. It is the nature of the work and the nature of the document that determines whether the seal must be used.
  
• CEO noted that even with a full-time inspector on site, it is not possible for Consultants to see every element of a Construction phase. Additionally, the language appeared to create a guarantee of services and work which is outside of the care and control of Consultants.
  
• CEO also pointed out to the Region that the requirement, as originally worded, transferred a considerable amount of liability to Consultants and was inconsistent with the purpose of a Quality Assurance inspection. The implied guarantee would compromise a Consultant’s professional liability coverage and therefore represented an uninsurable risk.
  

In accordance with CEO’s recommendations, the Region replaced the language in the RFP as follows:

Record of Engineer

The Record of Engineer shall be a Professional Engineer who shall, upon completion of construction, provide written and signed confirmation that the Construction Project has been completed in general conformance with the Project Plans and approved amendments.

Municipalities like York Region that have actively worked with the industry to achieve mutually beneficial terms are catalysts for positive change in a market that is becoming increasingly challenging to navigate. CEO’s efforts to develop balanced and reasonable professional services agreements becomes most effective when working with productive actors, such as York Region. CEO and its member firms appreciate the steps taken by York Region to address our concerns and improve this RFP.

BULLETIN: TOWN OF COLLINGWOOD REQUEST FOR PROPOSAL NO. FIN 2019-019P

Apr. 24, 2019

No. 19/002 – April 24, 2019

Issue:

CEO is bringing to members attention the Town of Collingwood’s Request for Proposal No. FIN 2019-019P- Engineering Services to complete an Amendment to the Class Environmental Assessment for the Expansion of the R.A. Barker Water Treatment Plant. While this RFP has closed, CEO’s Rapid Response service has brought to the Town’s attention some particular issues of concern.

Background:

In its letter issued to the Town on April 10th, 2019, CEO highlighted some concern with Section 37. Injunctive and Other Relief and Section 45. Supplier Indemnity within the RFP.

In their response, Town staff informed CEO that this specific bid document is a non-binding negotiable RFP which allows for a period of negotiation prior to award of the contract. During negotiations, the highest ranked bidder can negotiate and discuss the clauses of concern.

CEO’s Position:

CEO has highlighted the following issues of concern in the identified clauses:

Section 37. Injunctive and Other Relief

It is CEO’s position that the requirement for the Consultant to abide by the Town’s ability to arbitrarily “obtain” injunctive relief without any proof of damage is unreasonable and unacceptable. CEO requested that this clause be amended to state that “…the Town is entitled to seek injunctive relief…” upon the basis of proven damage.

Section 45. Supplier Indemnity

It is CEO’s position that the broad nature of this clause creates a challenge to the professional liability insurance coverage that CEO member firms are required to carry.

The current clause includes a list of indemnified parties including “independent contractors” who, in many circumstances, may not be under the control of the Consultant. In addition, the term “or otherwise in connection with, the Contract” creates a vaguely defined liability that could include parties that are not under the Consultant’s control or responsibility. CEO recommended that the Town omits both of the aforementioned terms in order to accurately capture the parties of whom Consultants are responsible over as per their insurance policies.

The clause also required Consultants to “…indemnify and hold harmless the Indemnified Parties for any incidental, indirect, special or consequential damages…”. CEO informed the Town that damages such as these, including consequential damages, very often cannot be accurately quantified, and are disproportionate to the liability of the Consultant.

CEO proposed that the Town replace its current indemnification provisions with the clause found in the current version of the MEA/CEO Client/Engineer Agreement for Professional Consulting Services.

Conclusion:

Members who have bid on RFP No. FIN 2019-019P- Engineering Services to complete an Amendment to the Class Environmental Assessment for the Expansion of the R.A. Barker Water Treatment Plant should be aware that the Town will be open to negotiations going forward on this specific bid document. CEO encourages members to refer to the commentary above when negotiating with the Town of Collingwood and continues to advise all members to thoroughly review all RFP and contract documents for their projects, even in instances where there are multiple projects with the same client.

COMMUNIQUE: MUNICIPALITY OF CHATHAM-KENT AMENDS ITS STANDARD RFP DOCUMENT BASED ON CEO’S RECOMMENDATIONS

Jan. 29, 2019

No. 19/001 – January 25^th, 2019

Issue Background:

CEO is pleased to announce that the Municipality of Chatham-Kent has revised their standard Request for Proposals document based on CEO’s recommendations.

CEO, supported by its Rapid Response Team, wrote to the Municipality on November 8^th, 2018 detailing our concerns and subsequently issued an advisory to members on January 21^st, 2019. The Municipality responded to CEO on January 22^nd, 2019 advising that they have reviewed and updated their standard RFP document to incorporate our recommended amendments. CEO appreciates the Municipality’s prompt action.

The Municipality of Chatham-Kent’s Revisions:

On January 22^nd, the Municipality of Chatham-Kent’s Solicitor, David Taylor, wrote that the Municipality has removed specific CGL (Commercial General Liability) terms, revised language regarding lapsing insurance policies, and modified the previous indemnity wording in their standard RFP contract, as per CEO’s recommendations.

The Municipality updated its standard RFP document to specifically address CEO’s following concerns:

• Section 6.8.1, Sub-Section b., included a detailed list of specific items for which the Municipality is requiring the Consultant to provide insurance.

• Section 6.8.4 of the clause stated “The policies shall be endorsed to provide that the policy or policies will not be altered, cancelled or allowed to lapse” however, insurers will not provide notice of policies that are altered or allowed to lapse.
  
• The obligations imposed by Section 6.9 Indemnification further compromised professional liability insurance coverage.

Municipalities such as Chatham-Kent that actively work with the industry to achieve mutually beneficial terms are catalysts for change in a market that is becoming increasingly difficult to navigate. CEO’s efforts to develop balanced and reasonable professional services agreements becomes most effective when working with productive actors, such as the Municipality of Chatham-Kent.