As at May 2017, there is no specific legislation granting rights to challenge procurement decisions. There is also no specific standalone court system in Australia for addressing procurement grievances (as noted above, Australia is not a member of the WTO Agreement on Government Procurement).
At a federal level, the CPRs require government agencies to have a fair, equitable and non-discriminatory procurement complaint handling procedure. Legislation also allows a complaint about procurement to be made to the Commonwealth Ombudsman. The Ombudsman has powers to investigate and make a recommendation, but no power to change a decision.
The position is substantially the same at the state/territory and local government levels.
As part of Australia’s accession to the WTO Agreement on Government Procurement, the Government Procurement (Judicial Review) Bill 2017 ("Judicial Review Bill") was introduced into the Federal Parliament in May 2017. The Bill if passed will provide suppliers with a statutory basis to challenge alleged non-compliance with the CPRs. Initiation of proceedings could result in a procurement being put on hold until the matter is heard (unless contrary to the public interest). If a supplier bringing a complaint is successful it could result in an injunction against entering a contract or compensation to the supplier.
In theory, a number of government processes and legal actions may be available to challenge a procurement decision. In practice, challenging procurement decisions can be difficult.
There are government processes for handling procurement complaints. There is no charge to use them. They are purely administrative and the complainant has no legal rights. However, they can provide a quick solution. Each jurisdiction will typically require the agency conducting the procurement to have in place a complaints handling process. There is usually also a central body to whom complaints can be escalated.
Administrative and private law actions may also be available to provide a remedy for a procurement complaint.
Administrative law may allow a claim based on:
- denial of natural justice, a lack of procedural fairness or on the legitimate expectation doctrine; or
- legislation allowing review of administrative decisions made under an enactment. However, these cases are rare as procurement decisions are not usually found to have been made under an enactment.
Procurement complaints may also be referred to the Ombudsman in that jurisdiction or an anticorruption body (established in some jurisdictions).
Different private law remedies may be available depending on the jurisdiction, which government agency conducted the procurement and whether there was a “process contract” for conduct of the procurement. For example:
- some procurements (particularly for large-scale projects) will be conducted under a process contract. Where a process contract has been created, an action in breach of contract may be available if the agency fails to follow the procurement process;
- if the agency has acted in a misleading manner in conducting the procurement, it may be liable for misleading conduct in breach of the CCA or under corresponding state and territory fair trading legislation. However, there are differences between jurisdictions in whether the government can be liable under the legislation; or
- the doctrine of estoppel may also be available to provide redress for a tendering complaint where representation, reliance and detriment can be shown to have occurred.
There is currently no standalone court system in Australia for addressing procurement grievances. However, if passed, the Judicial Review Bill would confer jurisdiction on the Federal Circuit Court and the Federal Court of Australia to deal with certain procurement disputes.
There are government processes for handling procurement complaints. The Judicial Review Bill contemplates that these should be used before an aggrieved supplier would be entitled to bring a complaint before the Court.
The jurisdiction for an administrative law case against a federal government body will be the federal court. The jurisdiction for an administrative law case against a local government or state/territory body will be the relevant state court (for a claim against a local government body or state body) or territory court.
The jurisdiction for a breach of contract case against a government body will ordinarily be that of the state or territory law governing the contract.
The jurisdiction for a case for breach of legislation against a government body will be the courts with jurisdiction over the legislation.
A party’s right to bring any legal action will be subject to the relevant limitation period in legislation prescribing the period in which a party must bring any action.
As a practical matter, procurement decisions are highly unlikely to be undone unless the complainant acts quickly (and usually before a contract is entered into).
The pre-conditions differ according to the basis for the cause of action (eg, administrative law remedy which as a threshold issue will require the complainant to have standing or contract dispute which as a threshold issue will require a contract).
There is no established list of admissible grounds for review. Rather, an aggrieved tenderer will need to establish that the act or omission of the procuring agency founds a claim in law.
Unless it relates to an allegation of serious misconduct, the mere commencement of a review proceeding is unlikely to affect an on-going tender procedure or an awarded contract. It is possible for an aggrieved tenderer to seek urgent interlocutory relief (e.g. to seek an urgent order to stop a contract from being signed).
The consequences of a successful review will depend on the cause of action founding the review. For private law causes of action, the consequences can include injunctions, the setting aside of contracts, the ordering of new tenders and the awarding of damages for breach of tender process contracts. In practice, contracts are rarely undone, and the most likely remedy for a tenderer who obtains a favourable court decision regarding a procurement process is damages.
Remedies under administrative law will generally be quite limited. For example, powers to review an administrative law decision may only grant the court the power to require that the decision be remade (which may not change the outcome). There are some rare examples of contracts made in contravention of administrative law being declared void. Damages are also not available for all administrative law remedies.
The timescale will be determined by the rules applying to the court to which the application is made.
The CPRs require that after the rejection of a bid, officials must promptly inform affected bidders of the decision. An agency must debriefings an unsuccessful bidder on request, outlining the reasons why the submission was unsuccessful. Tender terms usually provide bidders the opportunity for a debriefing.
Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 is the leading Australian authority involving a procurement dispute. The case established that under Australian law a public tender could be governed by a “process contract”. The case further established that the process contract which was found to exist not only contained the express terms of how the tender process would be conducted but also the implied term that a government body is to evaluate all tenders fairly and in good faith.
JS McMillan Pty Ltd v Commonwealth (1997) 147 ALR 419 is the leading Australian authority for procurement disputes based on breach of trade practices or fair trading legislation, such as misleading or deceptive conduct. The decision examined when the federal government could be treated as carrying on a business. This was important as the legislative prohibition on engaging in misleading or deceptive conduct or conduct that is likely to mislead or deceive under what is now the CCA, only applies to the federal government to the extent it is carrying on a business. In McMillian, the federal government outsourcing its printing operations was not held to be carrying on a business.