This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its December 2018 decision in Crown Sydney Property v. Barangaroo Delivery Authority, Australia’s New South Wales Supreme Court decided that a public institution improperly exceeded the scope of the tendered contract during contract award negotiations. The case dealt with a tendering process for the award of a land development project in Barangaroo, a suburb of Sydney Australia across the waterfront from the Sydney Opera House. The tender call contained sight-line restrictions that controlled the height of any proposed buildings. The selected proponent (referred to in the decision as Grocon), along with the public institution responsible for land development in the area (the Barangaroo Delivery Authority), entered into contract award negotiations to finalize the proposed development details.
The Court found that the Authority selected Grocon for detailed contract award negotiations notwithstanding the fact that Grocon’s proposal contained building heights that exceeded the sight-line restrictions in the initial solicitation, and that the Authority also entered into parallel negotiations with the Crown to obtain the required ministerial approval to make changes to the height restrictions. While the Authority took the view that the height restrictions remained negotiable, others challenged that position, arguing that the final design had to stay within the limits of the site-line restrictions. The Court agreed, concluding that the site-line restrictions were non-negotiable at that stage of the process:
The plaintiffs submitted, in my view correctly, that the state of affairs that is constituted by retention of the sight lines is absolute and unqualified. There are no doubt many ways in which development on Central Barangaroo may be undertaken. But the limiting condition is absolute. Retention of sight lines means just that. That can only be achieved by undertaking the development in such a way that it does not infringe on – does not diminish, or restrict, or limit, or impede – those sight lines.
It must follow, in my view, from the contrasting nature of the factors to be balanced in the good faith discussions and negotiations and from the absolute quality of the first of them, that the parties should at least start with the proposition that the sight lines are to be retained.
The Court therefore concluded that any further negotiations would have to be anchored by the requirement to preserve the site-line restrictions since failing to adhere to those restrictions would be contrary to the established contracting process and to the statutory restrictions that applied to any resulting contract award. As this case illustrates, purchasing institutions should stay within the scope of their original solicitations since contracts awarded pursuant to a competitive bidding process should be consistent with the parameters established in the originating tendering documents.
