Bid forfeit after closing

A bid forfeit is the buyer keeping (or cashing) a bidder's bid security because the bidder walked away after the tender closed — typically by refusing to enter into the contract when called upon to do so. After closing there is no unilateral right to withdraw; the security exists precisely to price that exit.

What it is

At closing, the bid locks in. PSPC's Supply Manual (section 4.95) allows a bid to be withdrawn without compensation to Canada only where there is a significant error on the face of the bid — a determination that requires approval at the director level — and requires Legal Services to be consulted for any other withdrawal request. A bid withdrawn after solicitation closing cannot be resubmitted.

If the winning bidder refuses to enter into the contract, the standard federal General Instructions to Tenderers for construction solicitations provide that the bidder's security deposit "shall be forfeited" — while adding that the Minister may, if it is in the public interest, waive the right of Her Majesty to forfeit the security deposit. CanadaBuys' guidance to buyers frames offer financial security the same way: it exists to protect Canada against loss if an offeror fails to enter into a contract, and the solicitation must state that failure to provide the required contract security will result in forfeiture of the offer security or a demand for payment under the letter of credit.

How much can be forfeited

CanadaBuys caps it: the forfeited amount must not exceed the difference between the offer price and the value of the contract with Canada. Buyers must also not require offer financial security at all for procurements valued at or below CAD 500,000, so on many smaller competitions there is nothing to forfeit — the remedy is reputational and administrative (rejection of the bid, possible ineligibility for future processes) rather than financial.

What it means for vendors

Treat your bid as a binding commitment for the full validity period, not just until closing day. If you cannot proceed after closing, notify the contracting authority in writing immediately and explain the reason — a demonstrable significant error on the face of the bid is the one recognized path to a penalty-free exit under PSPC policy, and even then director-level approval is required. Never sign the bid forms assuming you can renegotiate after winning: the forfeiture clause and the irrevocable offer / validity period clause are designed to close that door.

Common questions

Is the whole bid security always taken?

No. Where offer financial security is required, CanadaBuys instructs buyers to cap the forfeited amount at the difference between the offer price and the contract value — the buyer's actual exposure if you had signed. And the Minister can waive forfeiture in the public interest, which federal construction tender documents expressly preserve.

Can I get my security back after forfeiture is threatened?

Only from the buyer or the Minister — there is no automatic entitlement. Waiver is discretionary, which is why vendors who genuinely cannot proceed should raise the error or issue with the contracting authority before an award letter forces the forfeiture question.

Is forfeiting security my only risk?

No. A bidder who walks away from an award can also face suspension or debarment from future federal contracting, and the buyer may keep the securities of the next-ranked compliant bids while it decides whether to proceed with them.

Related definitions

Bid withdrawal before closing · Bid security · Bid deposit · Supplier suspension and debarment