As reported on in our recent update entitled 'A new dawn for bid challenges', on 25 May 2017, the Government Procurement (Judicial Review) Bill 2017 was introduced to the Parliament, seeking to ‘establish an independent and effective complaints mechanism for procurement processes’. The Bill, if passed, will enable suppliers to complain about breaches to the Commonwealth Procurement Rules (CPRs), thus providing the Federal Circuit Court (FCC) and the Federal Court of Australia (FCA) with the power to review complaints and order injunctions or compensation.
The Bill was subsequently referred to the Senate Finance and Public Administration Committee for inquiry and report. Taking into consideration the submissions made by various organisations and individuals, the committee tabled its report on 4 August 2017.
The report highlighted the following four key issues noted in the submissions.
1. Time limit on applications for an injunction
The bill provides that a supplier whose interests are affected by a breach of the CPRs is entitled to make a written complaint to an ‘accountable authority’. That authority must then undertake an investigation of the complaint. However the bill states that the FCC must not grant an injunction unless the application was made within 10 days of the contravention.
A number of submissions expressed concern over the 10 day limitation period, and the ability for suppliers to comply with the time restriction. It was argued that it often takes agencies longer than 10 days to investigate and address complaints prior to escalation of the matter to the courts.
It was suggested that the limit should, instead, commence from the time when it is clear that attempts to resolve a complaint have failed. There were also recommendations for the implementation of a timeframe within which procuring entities must respond to a complaint.
2. Legal standing to seek an injunction and/or compensation
The bill states that a ‘supplier whose interests are affected by the conduct’ is entitled to make an application to the FCC for an injunction or compensation.
One submission argued that the ground for legal standing was more stringent than required by international standards, which generally confers a legal standing upon any supplier that tendered for a procurement, without that supplier having been specifically affected by the breach of the CPRs.
It was also argued that the wording of the bill was unclear as to whether subcontractor suppliers were able to bring an injunction. However during the course of the inquiry, Finance advised that the new complaints mechanism was available to any supplier affected by the breach, therefore including both contractors and subcontractors.
3. Access to justice for small and medium size businesses
A number of submissions expressed concern over the ability for smaller businesses to access judicial review by using the FCC as a complaints mechanism. Concerns were noted over the additional cost associated with legal proceedings which may restrict access to the process for smaller businesses.
Submissions suggested that jurisdiction should be vested in a lower court or tribunal, such as the Administrative Appeals Tribunal. Alternatively, it was contended that suppliers should have access to intermediary mechanisms such as an ombudsman or an industry advocate.
4. The implementation and operational issues concerning the bill
The implementation and operation of the complaints mechanism was a point of concern in a number of submissions. The Department of Defence specifically noted its preference that consideration be given to enabling departments to issue blanket public interest certificates in certain categories of procurements where a suspension of the procurement process would be contrary to public interest. Finance responded to this by stating that a procurement will only remain suspended while the complaint is being considered by the FCC. It explained that the purpose of suspension is merely to maintain the supplier’s ability to engage in the procurement if the outcome of the complaint is in their favour.
Defence also questioned the impact on departmental budgets of successful claims for compensation in circumstances where the courts find a contravention of the CPRs. In response, Finance noted that compensation will be limited only to the “reasonable costs” incurred by the supplier in connection with the preparation of their tender.
The committee has recommended that the Senate pass the bill. It viewed the legislation as a necessary step towards meeting Australia’s international law obligations in relation to the World Trade Organisation Agreement on Government Procurement and the Trans-Pacific Partnership Agreement.
In summary the committee:
- was satisfied that the 10 day time limit is appropriate to ensure that complaints are lodged and responded to in a timely manner. In circumstances where suppliers have a genuine reason which precluded them from lodging their complaint within the specified time period of the alleged contravention, the court has a wide discretionary power to grant exemptions
- concluded that the legal test for standing outlined in the bill was appropriate to the circumstances. The bill aims to avoid spurious applications by limiting judicial review applications only to suppliers who have a genuine and direct interest in a procurement. The committee noted that both primary contractors and subcontractors are able to lodge complaints with the procuring entity as part of an application to the FCC
- agreed with Finance that the FCA and FCC provide an “accessible, cost effective and timely mechanism for procurement complaint resolution”. The bill provides for a mechanism of judicial review which is to be seen as an addition to, and not a substitute for, existing mechanisms. It supported Finance’s observation that suppliers can access support through the Australian Small Business and Family Enterprise Ombudsman
- noted that there are implementation issues which will require further consultation, however it recommended that these be addresses after the passage of the bill
- recommended that Finance consult with the public service in determining details of the implementation and operation of the complaints mechanism.
The bill currently remains before the House of Representatives.
Authors: Scott Alden and Rebecca Kazzi
Scott Alden, Partner
T: +61 2 8083 0419
Stephen Natoli, Partner
T: +61 3 9321 9796
Suzy Cairney, Partner
T: +61 7 3135 0684
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