In mid-2017 we wrote about the proposed Government Procurement (Judicial Review) Bill 2017. It was finally passed in October 2018 with the key elements of the proposed bill remaining unchanged.
The Act is due to come into effect on 20 April 2019 or an earlier date by proclamation. It covers breaches that take place after the commencement of the Act – irrespective of when the procurement commenced.
The Act applies to all non-corporate Commonwealth entities and corporate Commonwealth entities who are required to comply with the Commonwealth Procurement Rules (CPRs) and are procuring goods/services above the threshold – also known as ‘covered procurements’ under the Commonwealth Procurement Rules. The Act will not apply to procurements exempted by the CPRs.
The Act enables “suppliers” to complain and take action in relation to breaches or potential breaches of the CPRs. “Suppliers” is defined to mean:
a person who supplies, or could supply, goods or services; or
a partnership (or other groups) of 2 or more persons that supplies, or could supply, goods or services.
Potential suppliers are required to make an application for an injunction within either 10 days of the contravention occurring, or within 10 days of the potential supplier becoming aware of the contravention. The Court may grant an extension to this timeframe in special circumstances considered within the context of the Act.
Under the Act, a potential supplier can seek either:
a restraining injunction – stopping the entity or official from engaging in particular conduct; or
a performance injunction – requiring the entity or official to do some act or thing.
Before granting the injunction, the Court is required to consider several matters, including whether it would result in a significant delay to the procurement and whether an order for compensation under the Act is a more appropriate remedy.
Compensation can also be sought as a remedy on its own where there has been non-compliance. Compensation can be for an amount not exceeding reasonable expenditure in:
preparing a tender;
making a complaint under section 18 of the Act; and
attempting to resolve a complaint under the Act.
Complaints and investigations
Suppliers can submit a written complaint where they believe an entity or official has engaged, is engaging or is proposing to engage in conduct that is in contravention of the CPRs and they are affected by the conduct.
The accountable authority of the relevant Commonwealth entity must then investigate the complaint, provided that the investigation must be suspended if Court action is taken by the supplier. During the investigation, the procurement must be suspended unless the accountable authority has issued a “public interest certificate” stating that it is not in the public interest for a procurement to be suspended.
Where a suspension is put in place under the Act, it remains in place until the earlier of:
resolution of the complaint with the supplier;
a supplier withdrawing their complaint;
a public interest certificate being issued;
an order being made by the Court that the conduct either was or was not in contravention of the CPRs.
Validity of contracts
Importantly, an order that there was a contravention of the CPRs does not invalidate any contract. It will simply mean that compensation is likely to be awarded to the supplier.
However, the ramifications to an entity for non-compliance are probably greater than a compensation order and in our view these ramifications include:
reputational damage and adverse publicity around integrity;
financial costs including increased legal costs and additional probity spend;
complaints to the Minister’s office;
compromising of the value for money principle; and
external review by the ANAO, Commonwealth Ombudsman, Auditor-General, Royal Commission.
Griffin Legal regularly provides probity advice to the Commonwealth. We can also assist those aggrieved by a procurement process that may be entitled to rely on the Act.
Griffin Legal is pre-qualified for the provision of consultancy and business services to Commonwealth Government.