The Government Procurement (Judicial Review) Act 2018 (Cth) (the Act) establishes a regime under which the conduct of Commonwealth agencies in procurement processes may be challenged in the Federal Court of Australia and the Federal Circuit Court, on the basis of failures to comply with the Commonwealth Procurement Rules (CPRs) or proposed conduct that would breach the CPRs. The Bill received Royal Assent on 19 October 2018’

What procurements will the Act apply to?

The Act applies to ‘covered procurements’, being procurements that are subject to both Division 1 and Division 2 of the CPRs, and which are undertaken by non-corporate Commonwealth entities and corporate Commonwealth entities which are designated under rule 30 of the Public Governance, Performance and Accountability Rule 2014 (Cth). This includes corporate Commonwealth entities such as the National Gallery of Australia, Comcare and CSIRO.

A procurement will be subject to both Division 1 and Division 2 of the CPRs if it exceeds the relevant procurement threshold ($80,000 for a non-construction procurement by a non-corporate Commonwealth entity), and does not fall within the exemptions under Appendix A to the CPRs. Those exemptions include leasing land, procurement of motor vehicles, engaging legal counsel and procurements for certain national security agencies such as the Defence Intelligence Organisation.

The Act only provides for review of alleged breaches of the CPRs that occur after it enters into force, which will occur on a date to be set by proclamation (or on 20 April 2019, if no proclamation is issued by that date). The proclamation is likely to be issued on or before the date when the Trans-Pacific Partnership (TPP) takes effect, being 60 days after the sixth country (of 11) ratifies the agreement (Australia being the fifth country to do so).

It should be noted, however, that the Act will apply to procurements that commenced before the commencement date if the alleged breach of the CPRs occurs after that date

Redress

The Act provides for two types of redress for breaches of the CPRs, namely injunctions and compensation. We have discussed the process for these actions below.

Injunctions

Suppliers whose interests are affected by a contravention, or proposed contravention, of the CPRs will be able to seek an injunction regarding the contravention. This would involve following the following steps:

Step 1 – Complaint to the agency

First, the supplier must make a complaint to the relevant agency. This complaint will suspend the procurement until the complaint (or any subsequent legal claim) is resolved, unless the accountable authority of the relevant Commonwealth entity issues a public interest certificate stating that it is not in the public interest for the procurement to be suspended. The agency is required to investigate the conduct of the subject of the complaint.

Step 2 – Application for injunction

Provided that the supplier has made a complaint, they will be able to seek an injunction in the Federal Court or Federal Circuit Court. The court must not grant an injunction unless the supplier:

• has made a complaint to the relevant entity
• has made a ‘reasonable attempt to resolve the complaint’ if it would be reasonable for the supplier to do so
• either:
  • applied within 10 days of the alleged contravention of the CPRs, or the day on which they became aware, or ought reasonably have become aware of the contravention
  • obtained an extension of time to make the application on the basis that their delay was attributable to their reasonable attempt to resolve their complaint concerning the alleged contravention, or there are special circumstances warranting a greater period.

The Act provides for injunctions both to compel the relevant agency to cease doing something (or not to do something) that would breach the CPRs, and injunctions requiring the agency to positively do something or take a course of action so as to comply with the CPRs. It should be noted, however, the court will not have the power to overturn a contract once it has been awarded.

If a public interest certificate has not been issued regarding the procurement, the procurement will remain suspended until the Court makes its findings.

Compensation

The Act also permits suppliers to make claims for compensation where their interests are affected by a contravention or proposed contravention of the CPRs. Such claims can seek an amount not exceeding the supplier’s reasonable expenditure in preparing their tender, making a complaint in relation to the alleged contravention of the CPRs and seeking to resolve the complaint.

In contrast to the injunction process, the Act allows suppliers to claim compensation without having made a complaint to the relevant Commonwealth agency first and does not provide any limitation period within which claims for compensation need to be made.

Summary

As procurement decisions were previously only subject to change in a narrow range of circumstances, the Act may have significant consequences for Commonwealth agencies undertaking tender processes, by:

• freezing procurement processes, in the absence of a public interest certificate, if a complaint or an application for an injunction is made, which could significantly delay procurement processes
• providing a process for suppliers to challenge procurements, including by seeking injunctions requiring an agency to do something required by the CPRs, or omit from doing something prohibited by the CPRs
• allowing tenderers to seek compensation where their interests are affected by a contravention or proposed contravention of the CPRs.