5 June, 2017
In brief
On 25 May 2017, the Government Procurement (Judicial Review) Bill (Bill) was introduced into Parliament.
If passed, the Bill will provide the Federal Circuit Court and the Federal Court of Australia (Courts) with the power to grant injunctions and order payment of compensation for a contravention of the Commonwealth Procurement Rules (CPRs) as the CPRs relate to "covered procurements".
Importantly, before a supplier may bring a complaint before the Courts, the supplier will need to refer the complaint for investigating by the accountable authority for the relevant Commonwealth entity.
The accountable authority must suspend the procurement while the complaint is investigated unless it has issued a "public interest certificate" for that procurement.
Key aspects of the Bill
Injunctions and damages
Under the proposed regime, the Courts will have the ability to grant injunctions as a means of ensuring that a procuring entity complies with the CPRs, and to preserve a supplier's right to participate in a current procurement.
Specifically, the Courts may grant an injunction to prevent conduct by a procuring entity that contravenes the relevant CPRs (a "restraining injunction") or to require a procuring entity to do an act or thing when it proposes to, refuses or fails to act in compliance with the relevant CPRs (a "performance injunction").
The Courts will also be able to award damages to a supplier for a procuring entity's breach of the CPRs. The Bill limits the amount of compensation to the supplier's reasonable expenditure in preparing a tender, in preparing to make a complaint to the Courts, and the attempt to resolve such a complaint.
Importantly, the Bill makes it clear that the Courts cannot overturn an awarded contract due to a contravention of the CPRs by a procuring entity.
Complaint process
Before making a review application to the Courts, a supplier that has reason to believe a procuring entity is or is proposing to engage in conduct that contravenes the CPRs, and that such conduct affects the supplier's interests, must first make a written complaint to the accountable authority of the entity. The accountable authority will then be required to investigate the complaint, and the procurement must be suspended unless a "public interest certificate" has been issued by the accountable authority in relation to that procurement. A public interest certificate is a certificate stating that delay of the procurement is not in the public interest.
Covered procurements
The new procurement complaints regime will apply to "covered procurements", which the Bill identifies as a procurement to which the rules in Division 1 and 2 of the CPRs apply excluding procurements listed in a Ministerial Determination. The notes in the Bill and Explanatory Memorandum provide further guidance on procurements that fall outside those covered. For example, essential security and defence related procurements will often fall outside the meaning of a covered procurement. As a practical matter, as an initial step before bringing a complaint a supplier will need to ascertain if the procurement concerned is a "covered procurement".
Assessing the Bill
The establishment of a statutory right to challenge alleged non-compliance with the CPRs represents a fundamental change to the way Australia's procurement laws are enforced. However, the current version of the Bill is lacking detail, and leaves open a number of questions as to how the new regime will operate in practice.
For example, the Bill contains no criteria in relation to when the delay of a procurement will not be in the public interest, leaving an accountable authority broad discretion to decide whether a procurement will be suspended. Further, there is no restriction on the type of contravention for which a supplier may complain to the procuring entity. Given that (in the absence of a public interest certificate) a procurement must be suspended while a complaint is investigated, there appears to be potential for unnecessary delay due to immaterial or unfounded complaints.
We expect that these and other issues will be explored further as the Bill makes its way through Parliament.
For further information, please contact:
Anne Petterd, Partner, Baker & McKenzie
anne.petterd@bakermckenzie.com
