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Reprisal Clause vs. Vendor Experience and Performance

Posted 1/9/2019

Many municipalities have a litigation or reprisal clause, sometimes known as the “Nanaimo Clause” in their tender or RFP document’s standard conditions. This clause gives notice to potential bidder’s that

the tendering organization will not accept tenders from bidders that have a history of a legal dispute with that organization subject to certain conditions as noted in the clause.

The use of this clause is being challenged and likely will not be resolved until mid 2019. Additional discussion of this can be found here and here. Readers will note that this discussion is not legal advice, every situation will have different facts and consultation with legal counsel is recommended concerning the use or non-use of any form of reprisal clause.

Let’s put this in perspective:

  • ·        A reprisal or litigation clause will address only one aspect of a vendor’s experience and performance;
  • ·        Evaluation of vendor proposals or tenders should include assessment of past performance including the experiences of self and others;
  • ·        Vendor experience and performance evaluation, particularly if negative, must be based on fact and not just opinion;
  • ·        Responding to disputes and legal action is expensive in time and resources whether you win or loose.

You will mitigate procurement risk and get better value procurements when:

  • ·        Vendor performance is measured, documented and assessment is shared with the vendor with a positive goal of continuous improvement;
  • ·        Procurement procedures and documents are reviewed regularly to ensure conformance to leading best practices and ever evolving case law;
  • ·        RFP evaluation processes are clearly stated in the request document and are exactly followed during the evaluation;

In summary, apply effort to creating positive vendor relationships, which if that becomes impossible the reasons are based on fact, documented and clearly understood by all concerned.