Government Procurement (Judicial Review) Bill 2017

The Government Procurement (Judicial Review) Bill 2017 (the Bill), which was initially proposed for the Spring sittings of Parliament last year, was introduced into Parliament on 25 May 2017.

As predicted, (see our Government Bulletin - summer edition here) the Bill (if passed) will significantly alter the legal landscape for tender challenges by providing suppliers a statutory platform to challenge government tenders for breach of the Commonwealth Procurement Rules (CPRs).

Overview of the Bill

The Bill (if passed) will grant the Federal Circuit Court of Australia (FCCA) and the Federal Court of Australia (FCA) the power to grant an injunction or order compensation for a contravention of the relevant CPRs, where the procurement is deemed a ‘covered procurement.’ A procurement is a ‘covered procurement’ if Division 1 (to the extent it is declared applicable for the purposes of the Bill) and Division 2 of the CPRs apply. The exemptions of Division 2 of the CPRs will remain in full effect, as will the relevant threshold amounts.

What remedies will be available?

The Bill will permit an aggrieved tenderer to apply to the FCCA or the FCA for an injunction or compensation for breach of the CPRs. These remedies will only be available under the Bill where the tenderer has first made a reasonable attempt to resolve the complaint through the procuring entity’s internal dispute process. Thereafter, the FFCA and the FCA may grant either:

  • a restraining injunction – which will apply to prohibit conduct that contravenes the CPRs, or require the contravening entity to do something as a corrective measure; or
  • a performance injunction – which will apply where a procuring entity proposes to, refuses to, or fails to, act in compliance with the relevant CPRs, and an entity is ordered to do something to ensure such compliance.

Where an injunction would cause significant delay to a procurement process, the procuring entity may issue a ‘public interest certificate.’ If a ‘public interest certificate’ is validly in force, and a contract has not yet been awarded, the Court may refuse the injunction if it considers that the injunction would cause significant delay and an order of compensation is more appropriate.

The compensation available to tenderers under the Bill is limited to ‘reasonable expenditure incurred by the supplier’ in preparing a tender, lodging a complaint, or attempting to resolve the complaint, and does not include compensation for loss of profit.

Implications for procuring agencies – how to prepare

Apart from the statutory remedies available to tenderers, procuring entities should be aware of their obligations under the Bill to investigate complaints, and suspend a procurement (if there is no public interest certificate in force) whilst an investigation is on foot. Procuring entities should also note that contravention of the CPRs does not invalidate a contract for the purposes of the Bill.

Finally, procuring entities must be mindful that the current remedies available to disgruntled tenderers will not be limited by the Bill, as the Bill expressly states that the powers of the FCCA and the FCA to grant injunctions are additional to, not instead of, any other powers of the Court.

Prudent procuring agencies can start preparing for the implications of the Bill, which, if passed, will likely come into force late this year or early next, by:

  • reviewing their internal processes regarding complaints, investigation of complaints and dispute resolution, as a fair and robust complaint procedure may limit the agencies exposure to applications under the Bill. This could be as simple as incorporating a right for unsuccessful tenderers to seek a debrief at the end of the tender process;
  • reviewing their tender processes to ensure they allow for potential time delays which may be caused by a suspension to investigate a complaint or a Court ordered injunction;
  • considering their current tender conditions for any non-compliance issues that may arise once the Bill is in force;
  • being astute to circumstances where the agency can issue a ‘public interest certificate’, and the consequences for the failure to issue one in appropriate circumstances; and
  • gaining a thorough understanding of the application of the Bill, including the meaning of a ‘covered procurement’ and the incorporation of the relevant CPRs (including any amendments to the CPRs that may be on the horizon).