The new Commonwealth Procurement Act – better rights for suppliers?

Following the passing of the Government Procurement (Judicial Review) Act 2018 (Cth) (GPJRA) on 17 October 2018, Australian businesses now have greater access to an independent complaints process in relation to Commonwealth procurement.[1]

This development is a significant one for suppliers (being a person, partnership or group who does or could supply goods or services) when you consider that more than 64,000 contracts with a total value of more than A$47 billion were awarded by the Australian Government in 2016-17 Financial Year.

Given the steps suppliers will need to take and the exemptions that exist, however, it remains to be seen how often the new process will be pursued by those affected.

PREVIOUS REMEDIES

Although it was possible for administrative law remedies (i.e. judicial review) to apply to a public procurement process before the introduction of the GPJRA, the weight of opinion has been that courts are reluctant to allow administrative law challenges to the award of contracts by government authorities. The GPJRA provides another avenue for recourse where there has been a contravention of Commonwealth government procurement rules.

Historically, the application of judicial review of a government decision has been difficult.

In the Acquista Investments case (which involved an unsolicited proposal or market-led proposal process involving the granting of options to purchase certain land),[2] the court held that whilst the decision to enter into the contract was in breach of the relevant legislation, there was no basis for the court to interfere with that arrangement.

GPJRA REMEDIES 

To the extent that the GPJRA applies, a supplier may now be able 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.[3]

LIMITED APPLICATION 

Whilst heralded as a welcome addition to the legal framework with the potential to give suppliers rights that they don’t have access to already, there are a number of hurdles that aggrieved suppliers have to overcome to access the remedies provided for in the GPJRA. These include:

1. Covered procurements

The GPJRA is limited to ‘covered procurements’, being those to which both Division 1 and Division 2 of the Commonwealth Procurement Rules (CPRs) apply. The CPRs are the basic rules set for all Commonwealth procurement and govern the different Commonwealth entities’ procurement processes.[4] However, the relevant Minister may exempt certain procurements by legislative instrument. There are also various exemptions under Division 2 of the CPRs. As a result, a number of the high profile procurements are likely to be excluded from the application of the GPJRA.

2. Market-led proposals or unsolicited proposals

Another example of the limited application of the GPJRA is in the case of market-led proposals or unsolicited proposals. Most states and territories —and some Commonwealth government agencies—have now published guidelines, but for the most part the procedures set out in these guidelines are not subject to legislation.[5]

In light of the Acquista Investments case referred to above, it would appear that decisions made in relation to unsolicited proposals will unlikely be subject to challenge by judicial review. As unsolicited proposals are governed by separate guidelines and are not dealt with by the CPRs, it is unlikely that the GPJRA will apply to market-led or unsolicited proposals submitted to the Commonwealth government.

COMPENSATORY REMEDIES FIRST

Under section 10 of the GPJRA, there is a balance of favour for compensatory remedies, allowing the Commonwealth to continue with the procurement where a public interest certificate has been issued (more detail below). Injunctions are likely to be granted in only a very narrow set of limited circumstances. Given that a supplier must make a reasonable attempt to resolve the complaint before seeking an injunction, a debrief with the procuring entity is likely to be the first course of action.

Compensation is limited to the reasonable expenditure incurred by the aggrieved supplier in:

• responding to the procurement process;
• preparing to make the compliant to the courts; and
• attempting to resolve the compliant.

PUBLIC INTEREST CERTIFICATES

Where a complaint is made, the procurement process will be suspended unless an accountable authority has issued a ‘public interest certificate’. A public interest certificate is issued only where suspension of the procurement process is not in the public interest. As the decision to issue the certificate is preliminary, it is not intended to be subject to a merits review.

TIGHT TIMEFRAMES

Aggrieved suppliers have to work very swiftly – they need to raise a complaint with the courts within 10 days of the contravention of the CPRs occurring (or when the aggrieved supplier ought to be reasonably become aware of the contravention).

Even if the court finds that the CPRs have been contravened, the court is not able to overturn the awarded contract.

LOOKING FORWARD

The GPJRA certainly provides an avenue for recourse where there has been a contravention of the procurement rules for ‘covered procurements’. However, given the hurdles to be overcome, exemptions that exist and inapplicability to market-led or unsolicited proposals, it remains to be seen how often this recourse will be pursued by those affected.