This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In April 2019, Australia updated its Commonwealth Procurement Rules to reflect its new commitments under the World Trade Organization’s Agreement on Government Procurement. The new edition of the rules carries forward content from the prior editions while introducing new judicial review procedures that allow suppliers to challenge government procurement decisions. This discussion provides an overview of the updated Commonwealth Procurement Rules and its new bid protest procedures, summarizing the key points for Australian entities that are subject to the new regime, while also providing useful benchmarks for public institutions in other jurisdictions that are interested in implementing or updating their own bid protest procedures.
As stated in the “Forward” section, the core objective of the Commonwealth Procurement Rules is to achieve value-for-money to ensure that “public resources are used in the most efficient, effective, ethical and economic manner.” Recognizing that “price is not the only factor when assessing value-for-money” the rules direct public officials to “consider all relevant financial and non-financial costs and benefits associated with a procurement”. The rules also “provide opportunities for innovation and for officials to design processes that appropriately reflect the size, scope and risk of the procurement.”
The Commonwealth Procurement Rules include provisions requiring open non-discriminatory competition for the award of government contracts valued over the prescribed contract value thresholds. The rules also recognize the importance of transparency in the procurement process, requiring public officials to maintain proper records to demonstrate that due process was followed and value-for-money was achieved in their contracting decisions, while also calling on public institutions to prepare annual procurement plans to provide advanced notice to the market of potential procurement opportunities. The rules also call for the publishing of bid opportunities on the government’s central AusTender website and require the disclosure of all “relevant evaluation criteria in request documentation to enable the proper identification, assessment and comparison of submissions on a fair, common and appropriately transparent basis.”
These new rules also call for the protection of confidential supplier information and for the use of neutral specifications that avoid unnecessary obstacles to trade. They also setting out minimum time limits for responding to bid opportunities and require that contracts be awarded to the best bid unless there is a justifiable reason for cancelling a bidding process.
The Commonwealth Procurement Rules also incorporate Australia’s new judicial review procedures, which were promulgated under the Government Procurement (Judicial Review) Act 2018. The new statute empowers the Federal Court and the Federal Circuit Court to grant both restraining and performance injunctions in relation to contraventions of the Commonwealth Procurement Rules, and authorizes those courts to grant financial compensation to successful protestors for their bidding costs and complaint costs. However, the statute also clarifies that a contravention of the Commonwealth Procurement Rules will not affect the validity of an awarded contract. The statute further establishes a strict ten-day limitation period for bringing a bid protest and requires that suppliers seek to resolve their issues directly with the purchasing institution prior to initiating legal proceedings.
The statute gives suppliers the right to file written complaints with a procuring entity where they have reason to believe that the entity or one of its officials “has engaged, is engaging or is proposing to engage, in any conduct in contravention of the relevant Commonwealth Procurement Rules”. The statute requires public entities to temporarily suspend a challenged procurement process pending the resolution of the challenge, but gives the entity the ability to override the temporary suspension by issuing a public interest certificate declaring that a suspension of the procurement would run contrary to the greater public interest. That temporary public interest override remains subject to future judicial review since the court may still grant an injunction even if the entity previously issued a public interest certificate to avoid a temporary suspension of its challenged process.
The Government Procurement (Judicial Review) Act 2018 statutory framework is operationalized through Australia’s Handling complaints under the Government Procurement (Judicial Review) Act 2018 Resource Management Guide No. 422, which was released in August 2019. The new guide sets a series of procedural standards for dealing with procurement related protests. It encourages impacted public institutions to reduce the risk of bid protests by conducting their procurements in compliance with the Commonwealth Procurement Rules, by ensuring that their internal procedures are in alignment with those rules, and that their “procurement processes are well planned and the processes are followed”. The guide also recommends that purchasing institutions ensure “that procurement documentation clearly outlines the process for dealing with complaints and issues”, and that when complaints are initially raised, “entities engage positively, openly and collaboratively to resolve these issues to avoid them becoming formal complaints.” The guide also calls for providing comprehensive debriefings and “properly documenting all procurement processes and keeping accurate records, including documenting all substantive decisions in relation to the procurement.”
The judicial review guide also sets out detailed protocols for handling procurement complaints and using public interest certificates, calling on public institutions to publish their complaint procedures on their websites and to “suspend the covered procurement while the complaint is being resolved unless a public interest certificate is in force.” As the guide notes, “a public interest certificate should only be issued where suspending the covered procurement would have an adverse impact on the public interest that exceeds the right of the aggrieved supplier to have the covered procurement suspended.” The guide directs public entities to “weigh the relative merits of these competing interests, which will depend on a range of factors” that include the purpose of the goods and services being procured, the scope, scale and risk of the covered procurement, the criticality of timing for the covered procurement, linkages and interdependencies with other processes, and the scale, scope, and materiality of any alleged contravention of the relevant Commonwealth Procurement Rules. The guide also states that “if the accountable authority determines that it is appropriate to issue a public interest certificate, the relevant Commonwealth entity should document the decision, including the reasons that a suspension would have an adverse impact on the public interest that outweighs the private interest of the aggrieved supplier to have the covered procurement suspended.”
As the judicial review guide notes, the judicial review statute “does not establish specific requirements regarding how the investigation should be conducted.” The guide therefore recommends that authorities “follow their internal review processes” and that “investigations should be progressed in a timely manner” so that “the supplier is provided with the opportunity to resolve the complaint”, given the ten-day limitation period for filing a formal legal action. As the guide states, “while there is no legal requirement to resolve the matter within [ten] days of the accountable authority receiving the complaint, the accountable authority should try to resolve the matter promptly, or otherwise communicate with the supplier an expected timeframe for resolution.”
As these rules illustrate, public institutions worldwide are becoming increasingly subject to bid protest procedures and remain increasingly accountable for their contracting decisions. While the details of implementing procurement challenge regimes will vary across jurisdictions, the need to follow due process and make defensible award decisions is an increasingly common global standard in all jurisdictions governed by the rule of law.
