Challenges ahead: government procurement judicial review law passes Parliament

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This article was written by Stephen Mason and Elliott Dunn.

The Government Procurement (Judicial Review) Bill 2017 passed the Senate on 18 October 2018. It creates significant new rights for suppliers to the Commonweath government. If agencies don't comply with the procurement rules, they can be ordered to pay compensation and their procurements can be suspended, forced to restart or stopped altogether.

The terms of the new Act are the same as when the Bill was introduced in May 2017 (see our earlier alert).

The new Act is intended in part to give effect to aspects of Australia's obligations under the new Comprehensive and Progressive Agreement for TransPacific Partnership (TPP-11) – which, among other things, sets standards for government procurement and requires member States to provide an impartial administrative or judicial authority to hear challenges or complaints – and under the WTO Agreement on Government Procurement (to which Australia is in the process of acceding).

The new Act will commence 6 months after Royal Assent – or earlier by Proclamation. This timing is intended to facilitate the TPP-11 to commence for Australia as soon as possible.

The new Act applies to procurements by Commonwealth agencies. It does not apply to procurements by State or Territory agencies.

The new Act will significantly change the way Commonwealth agencies plan and carry out many of their procurements. Our Government & Public sector team has already been advising agencies on the implications for their policies, procedures and resources, and how to best prepare for the changes.

Most significantly for agencies, the Act will introduce a range of new remedies for suppliers "whose interests are affected" where a relevant Commonwealth entity has breached Division 2 of the Commonwealth Procurement Rules (CPRs) in relation to a "covered procurement" (that is, a procurement in relation to which the rules in Divisions 1 and 2 of the CPRs apply and that is not in a class of procurements excluded by Ministerial determination). 

These remedies include the right to:

  • complain about a breach - If this happens, the agency will have to suspend the procurement, and investigate and report on the complaint (unless a 'public interest certificate' is issued by the procuring agency, certifying that it is not in the public interest to suspend the procurement). This can have a significant impact on procurement activity, given the extensive definition of "procurement" in the CPRs – which applies to the whole of life, including disposal, of the procured items;

  • obtain an injunction or other court order against the agency, requiring it to take action to remedy a breach (e.g. restart a procurement) or to refrain from taking action (e.g. stopping a procurement); and

  • obtain compensation for the breach for an amount reflecting the reasonable expenditure incurred by the supplier in preparing its tender response and making its complaint. 

What should you be doing now?

Agencies should now be reviewing their procurement processes to minimise the risks to procurement from the new Act. For example, agencies should consider processes that encourage tenderers to discuss and resolve issues with the agency, before a formal complaint is made. They should also have contingency plans for managing cases where procurements have to be suspended because of a complaint or court order. If you would like to know more about how the Act will affect your procurements, and how you can better manage its impacts, please get in touch.

A customer under an IT contract may want the supplier to pay a pre-determined amount for certain types of breaches, such as a service credit where they fail to meet an agreed service level or an amount of liquidated damages if they fail to achieve an important project milestone by the due date.

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