Tendering with the Commonwealth Government: what does the proposed new procurement legislation mean for you?

The Government Procurement (Judicial Review) Bill 2017 proposes legislation which is currently before a Senate Committee as it progresses through Parliament. It will give suppliers significantly greater recourse when dealing with Commonwealth entities’ contraventions of the Commonwealth Procurement Rules.

WHAT NEW SUPPLIER RIGHTS WOULD THE BILL CREATE?

The Bill creates new rights in relation to breaches of the Commonwealth Procurement Rules by Commonwealth entities. The Bill would allow suppliers to:

• complain to an accountable authority, after which the authority must report on its investigation into the complaint; and
• apply to the Federal Court for an injunction or compensation.

This applies to all procurement under the Commonwealth Procurement Rules by Commonwealth entities, unless the Minister declares that a certain class of procurement is exempted.

A supplier’s remedies are not restricted to when the Commonwealth entity has already breached the rules – the supplier may take steps in relation to an entity’s proposed conduct.

THE ACCOUNTABLE AUTHORITY’S INVESTIGATION

The Bill requires supplier complaints to be investigated by the Commonwealth entity’s accountable authority – in the case of a Department, the accountable authority is the Secretary.

While the accountable authority investigates a complaint, it must suspend the procurement process unless the accountable authority issues a written certificate declaring that it is not in the public interest for the procurement to be suspended while the complaint is being investigated. Interestingly, the accountable authority’s decision to issue such a certificate would likely be subject to judicial review. As such, if the issue of the certificate is particularly controversial, suppliers should consider whether the decision to issue such a certificate may be challenged.

The accountable authority is required to produce a report after conducting its investigations. Currently, there are no provisions or guidelines as to the content of that report. There are also no grounds for an accountable authority to refuse to provide a report if it considers the complaint to be vexatious or trivial.

APPLYING TO COURT FOR A REMEDY

The Bill creates rights of suppliers to apply to the Federal Court or Federal Circuit Court for a remedy provided that the supplier first:

• complains to the accountable authority about the contravention; and
• takes reasonable steps to resolve its complaint before commencing litigation.

The time limit for applying for an injunction is short – applications for injunctions must be made within 10 days of the day of contravention (or the day on which the applicant became aware or should have become aware of the contravention).

If the supplier is successful, the court is entitled to award an injunction (stopping the Commonwealth entity’s contravention conduct, which could include an injunction to stop the award of the contract) or compensation.

The grounds of compensation are fairly broad, including payment for reasonable expenditure incurred in preparing a tender, making an application, and attempting to resolve the complaint.

PART OF A BIGGER PICTURE

This legislation has been introduced as Australia continues its negotiations to accede to the WTO Agreement on Government Procurement (GPA). It also shines a light on the March 2017 updates to the Commonwealth Procurement Rules, including the new “economic benefit to the Australian economy” test for procurement over $4 million.

NEXT STEPS

The Bill is currently before the Finance and Public Administration Legislation Committee, who must report by 4 August 2017 on the interaction of the Bill with the new Commonwealth Procurement Rules, and the consequences of allowing judicial review.

In the meantime, the Joint Select Committee on Government Procurement will report its findings on the impact of Australia’s anticipated GPA accession on the Commonwealth Procurement Rules. The landscape and rules for government procurement is changing fast. We may even see changes at the Commonwealth level trickling down to State Government procurement.