By Phillip Weiss

Proposed legislation will give suppliers a more straightforward way to challenge a procurement process.

At first this legislation will only affect the Commonwealth, but similar legislation would also be required by the States and Territories to meet Australia’s international obligations.

Australia is negotiating entry to the World Trade Organization Agreement on Government Procurement. Under that agreement Australia will have to establish or designate an impartial and independent body where suppliers can raise complaints about government procurement processes and be awarded remedies or compensation. Under the Government Procurement (Judicial Review) Bill 2017 (the Bill) the Federal Court of Australia (FCA) and the Federal Circuit Court of Australia (FCC) would have jurisdiction to grant an injunction or order payment of compensation or both in relation to a contravention of the Commonwealth Procurement Rules (CPRs) for a covered procurement. In general a covered procurement is when the rules in Divisions 1 and 2 of the CPRs apply.

The FCC has a greater presence outside of the major cities and that would give suppliers in rural and regional Australia easier access to have their complaints heard.

An essential first step would be for a supplier to make a complaint to the procuring entity. If the complaint is not resolved they can then approach the Court for an injunction or other remedy, such as compensation. The compensation available would be limited to the supplier’s costs of making the complaint and tender preparation costs.

The Bill has been reviewed by the Finance and Public Administration Legislation Committee. The committee endorsed the bill in its current form.

In reply to submissions made to it the committee’s view was that:

• The 10 day time limit was not too short.
• Procurement entities will have to keep clear records of their interactions with suppliers.
• Using the FCA and FCC is appropriate as they are accessible and cost effective.

The committee pointed out that the legislation would be additional and not in substitution of existing mechanisms. The resources of the Office of Australian Small Business and Family Enterprise would continue to be available to small and medium businesses that may need help in lodging complaints relating to government procurement.

One issue the committee did not address was the uncertainty in the CPRs themselves. The CPRs are the basic rules for all Commonwealth procurements and govern the way in which entities undertake their own processes. The current CPRs came into effect on 1 March 2017.

The Joint Select Committee on Government Procurement had previously reported on the CPRs. That Committee stated that “[c]omprehensive guidelines are essential to address the current deficiencies [in the CPRs] and ensure that the implementation of the new clauses is successful.”

If the CPRs are not sufficiently clear the right course would be to amend and improve them to make them fit for purpose. It will be interesting to see how the Courts interpret the CPRs and what weight they will give to any guidance the Department of Finance may issue.

A concern for procurement professionals is that the legislation could:

• place a greater administrative burden on them
• potentially delay some procurement activities and
• increase costs as probity practitioners and lawyers will be required more often to deal with complaints and litigation.

In reality complaints and legal action should be rare if procurement teams have sound procurement processes in place and follow those processes.

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IMAGE used under licence from shutterstock.com: Offices of the World Trade Organization, Geneva.