Federal Court scrutiny of Commonwealth procurement to bring significant change for agencies29 May 2017
The Commonwealth Government has introduced the Government Procurement (Judicial Review) Bill 2017 (the Bill) to the House of Representatives, signaling further significant changes to the way Commonwealth agencies procure goods and services.
The Bill, if passed, will implement recommendation 11 of the July 2014 Senate Finance and Public Administration References Committee's report into Commonwealth procurement procedures, by establishing an independent complaints mechanism for procurement processes. These changes will allow Australia to meet international obligations on government procurement, including the World Trade Organization Agreement on Government Procurement to which Australia has submitted a bid to accede and the Trans-Pacific Partnership.
What does this mean for Commonwealth agencies?
The Bill grants the Federal Court of Australia (concurrently with the Federal Circuit Court) jurisdiction to receive and review supplier and potential supplier complaints regarding contraventions of specified clauses of the Commonwealth Procurement Rules (CPRs), known as "relevant CPRs", which include all of Division 2 of the CPRs as well as the parts of Division 1 that the CPRs indicate should apply. The scope of the Bill is limited to procurements to which Divisions 1 and 2 of the CPRs apply—this does not include procurements that are below the relevant procurement threshold or which are subject to an exemption under paragraph 2.6 of the CPRs.
Significant features of the Bill that will impact agencies include the following:
- A requirement for agencies to investigate and record complaints lodged by suppliers in relation to their procurement processes and, subject to a public interest exemption, to suspend procurements that are being investigated.
- Provision for the grant of "restraining"' and "performance" injunctions by the courts, to ensure procuring agencies do not contravene the relevant CPRs, such as by incorrectly applying an exemption from parts of the CPRs. Courts will be unable to overturn awarded contracts.
- Powers for the courts to order compensation as a remedy for a valid supplier procurement complaint— limited to the reasonable expenditure incurred by the supplier in preparing its tender, in making a complaint, and in connection with the supplier's reasonable attempt to resolve its complaint.
These changes would see Commonwealth procurement moving closer to its United States (US) equivalent, where there is a large industry surrounding the "bid protest" process. In 2015 alone, the US Government Accountability Office received 2,639 such applications, which represented around 1-2% of total US federal government contracts.
Sparke Helmore has a dedicated team monitoring the changes closely. We will continue to update you on further developments.