The recent introduction of the Government Procurement (Judicial Review) Bill 2017 (the Bill) into Federal Parliament is part of a number of measures being taken by the Government to implement reforms ensuring consistency of approach and redress to its suppliers.

Why is it significant?

The Bill, if passed, will permit the Federal Court (or the Federal Circuit Court) to grant injunctions or order compensation for contravention of the Commonwealth Procurement Rules 2017, together with providing a mechanism for making complaints to the relevant accountable authority. Such complaints must be investigated, and if appropriate, suspension of the procurement process may follow.

Which procurements are covered?

The Bill applies to procurements for most goods and services that are covered by the Commonwealth Procurement Rules (CPR) [1]. In effect, this means all procurements by non-exempt, non-corporate Government entities over the threshold values will be covered by the legislation. The current threshold values are:

  1. for non-corporate Commonwealth entities, other than for procurements of construction services, the procurement threshold is $80,000 (inc GST);
  2. for prescribed corporate Commonwealth entities, other than for procurements of construction services, the procurement threshold is $400,000 (inc GST); and
  3. for procurements of construction services by relevant entities, the procurement threshold is $7.5 million (inc GST) [2].

The CPR do not apply to measures determined as necessary for the maintenance of security, human health or the protection of national treasures.

Who can make a complaint?

A “supplier” can make a complaint. A “supplier” is defined as a person or partnership that supplies, or could supply, goods or services to the Commonwealth. With the scope of supplier being so broad, it’s likely to encompass any party that may be in the business of supplying goods and services, despite not being invited to tender.

Complaints

Where a written complaint is received from a supplier, the accountable authority must suspend the procurement while an investigation is conducted, unless a public interest certificate is in force.

A public interest certificate may be issued by the relevant Commonwealth entity where it is not in the public interest for a procurement to be suspended pending the outcome of an investigation. Procuring entities will receive guidance on the circumstance in which a certificate can be issued, however such a decision is not intended to be subject to a merits review [3].

The complaint process has received little attention in recent commentary in respect of the Bill, but at the very least signifies an important procedural step, as the initiation and attempted resolution of a complaint is required before a court can grant an injunction.

Injunctions

The Bill enables a supplier, whose interest is affected by contravention of the CPR by the relevant Commonwealth entity, to apply for an injunction restraining such conduct or requiring the entity or official to do a particular act. It’s worth bearing in mind that the purpose of such an injunction is to “preserve a supplier’s opportunity to participate in a current procurement” [4] and presumably not to have the courts compel a final outcome by way of a performance based injunction.

To make a successful application, the supplier must have an interest that is affected by the contravening conduct of the entity, however the extent to which that interest must be affected is not set out. Time limits operate to restrict the grant of an injunction to applications made within 10 days of the complainant becoming aware of the contravention or proposed contravention, or when they ought to have become aware. As set out above, the court cannot grant an injunction unless satisfied that the applicant has lodged a written complaint to the accountable authority, and where appropriate, made a reasonable attempt to resolve the complaint.

Compensation

In addition, the Bill permits court ordered compensation to a supplier that has been affected by conduct in contravention of the CPR. This type of order would cover the reasonable expenditure incurred by the supplier in preparing its response to the procurement, and any associated costs incurred in making a complaint or application to the court. The Bill does not extend compensation to include consequential loss or other “indirect” loss.

We will follow the progress of the Bill and update you if it is passed.