The Government Procurement (Judicial Review) Bill, which was originally planned to be introduced to the Commonwealth Parliament in its 2016 Spring sittings, has been introduced into the House of Representatives this morning.

If passed, the Bill will effect a significant change to the law concerning tender challenges. Suppliers will have a statutory basis to challenge a tender decision for non-compliance with the Commonwealth Procurement Rules (CPRs), rather than having to overcome the current difficulties and processes to making such a challenge.

In summary

The Bill will enable the Federal Court of Australia and Federal Circuit Court to grant injunctions or order compensation in relation to a contravention of the 'relevant CPRs' by Commonwealth entities, so far as the CPRs relate to 'covered procurements'. The 'relevant CPRs' are Division 2 of the CPRs and a provision of Division 1 that is declared by the CPRs to be relevant. Broadly, a 'covered procurement' is a procurement to which Divisions 1 and 2 of the CPRs apply.

Compensation

The compensation payable is limited to reasonable expenditure incurred by a supplier in preparing a tender for the relevant procurement, in making the complaint and in connection with a reasonable attempt to resolve such a complaint. The compensation payable under the Bill does not extend to loss of profit or loss of opportunity; however, a supplier's reasonable expenditure in preparing a tender could be significant for a major procurement.

Injunctions

The Bill gives the Federal Court or Federal Circuit Court the power to grant two new forms of statutory injunction: a restraining injunction and a performance injunction. A restraining injunction can either restrain a relevant Commonwealth entity or an official of such an entity from engaging in conduct or require the entity or official to do something. A performance injunction can require an entity or official to do an act or thing that is required to comply with the relevant CPRs (eg, conduct an open approach to market in accordance with Division 2 of the CPRs).

The Bill allows for circumstances where the grant of an injunction may result in a significant delay to a procurement. If a public interest certificate is in force in relation to a procurement, and the grant of an injunction would result in a significant delay to the procurement and the court is satisfied that compensation would be a more appropriate remedy, the court may refuse to grant an injunction.

The obligation to investigate complaints

Where a complaint is made by a supplier about a contravention of the relevant CPRs (as far as those rules relate to a covered procurement), the accountable authority must investigate the conduct which is the subject of the complaint and if no public interest certificate is in force in relation to the procurement—suspend the procurement.

The accountable authority of a relevant Commonwealth entity may issue a public interest certificate stating that it is not in the public interest for a specified procurement by the entity to be suspended while applications for injunctions are being considered or a complaint made by a supplier is being investigated.

Validity of contracts

Under the Bill, a contravention of the CPRs does not affect the validity of a contract.

Next steps

It is likely that, at minimum, the following issues will need to be addressed:

  • changes to tender terms and conditions to integrate with the legislation including the amendment of 'no process contract' clauses (it is likely that 'no process contract clauses' will still be necessary to deal with the separate contractual basis for a claim);
  • procurement process timing issues, including around signing of contracts with preferred tenderers to accommodate the potential for a challenge and suspension;
  • amendments to procurement policies and procedures including processes for managing and investigating complaints;
  • when it may be appropriate to issue a public interest certificate in relation to a procurement;
  • informing delegates of the potential for challenges under the legislation; and
  • implications for other laws.

If passed, this legislation will necessitate changes to the CPRs. The MinterEllison Procurement Practice Team will keep you updated.