Commonwealth procurement teams advised to prepare now for judicial review scheme

By Stephen Easton

Tuesday May 30, 2017

Companies that believe they have been hard done by in Commonwealth procurement processes will be able to take their complaints to court and could receive compensation, possibly from later this year, under new legislation introduced to federal Parliament last week.

Complaints brought against agencies would have to go first to the relevant accountable authority within the public service and — unless a relevant public interest certificate had already been issued — would effectively put a halt to the procurement process in question.

Judicial reviews would be handled by the Federal Circuit Court or the Federal Court, either of which could order an injunction or award compensation where the Commonwealth Procurement Rules are found to have been breached.

“Any compensation ordered would be limited to the supplier’s reasonable costs incurred in preparing the tender and/or seeking to resolve their complaint,” said Small Business Minister Michael McCormack in Parliament. “The FCC will not be able to overturn awarded contracts.”

The legislation will not have retroactive effect, but has been drafted in order to meet obligations under international trade agreements — “the World Trade Organization Agreement on Government Procurement, to which Australia has submitted a bid to accede, and the Trans Pacific Partnership Agreement, which was signed on 4 February 2016” according to the explanatory memo.

These agreements left it up to Australian legislators to decide whether the independent complaints handling role should be given to a government agency, a new tribunal or left with the existing court system.

According to the EM, the Federal Circuit Court will give rural/regional suppliers and small to medium enterprises easy access to the new complaints system because the FCC is the only court at the federal level with a “continuous presence” outside the big cities.

Law firm Clayton Utz suggests the legislation might go to committee and predicts the new scheme it creates might take effect from late this year or early 2018. Its blog post (emphasis from original) suggests agencies should start preparing now:

“The most immediate impact will be on any procurement process which have either commenced, or are about to. The potential for delay must be factored into any procurement that could still be on foot at the commencement date and therefore potentially subject to the Act.

“In addition, agencies should be reviewing their internal procurement complaints handling and investigation practices (including any related accountable authority instructions). Ensuring that an agency’s complaints handling practices support both thorough and transparent investigation and timely and collaborative resolution of supplier complaints will, in our view, be crucial to limiting the number of applications made under the Act for injunctive relief and/or compensation.”

The new complaints scheme will cover any procurement by bodies subject to the Commonwealth Procurement Rules which exceeds or is estimated to exceed the relevant threshold where the “additional rules” apply and is not subject to existing exemptions in Australia’s trade agreements.

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