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2016 -2017
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
GOVERNMENT PROCUREMENT (JUDICIAL REVIEW) BILL 2017
EXPLANATORY MEMORANDUM
(Circulated by authority of Senator the Hon Mathias Cormann, Minister for Finance)
GOVERNMENT PROCUREMENT (JUDICIAL REVIEW) BILL 2017
OUTLINE
The Government Procurement (Judicial Review) Bill 2017 (the Bill) will vest the
Federal Circuit Court of Australia (FCC) with jurisdiction (concurrently with the
Federal Court of Australia) to grant an injunction and/or order payment of
compensation in relation to a contravention of the relevant Commonwealth
Procurement Rules (CPRs), so far as those rules relate to a covered procurement.
Before a supplier takes a procurement complaint to the courts the supplier must first
complain to the accountable authority of the relevant Commonwealth entity. The
accountable authority must investigate the conduct of the subject of the complaint and
if no public interest certificate is in force in relation to the covered procurement, the
procurement must be suspended.
The Bill is consistent with recommendation 11 of the July 2014 Senate Finance and
Public Administration References Committee's report into the Commonwealth
procurement procedures, for the Department of Finance to establish an independent
and effective complaints mechanism for procurement processes.
The Bill will enable Australia to meet international obligations on government
procurement that require the Commonwealth to establish or designate an impartial and
independent body where suppliers can raise complaints about government
procurement processes and be awarded remedies/compensation.
These obligations are found in the World Trade Organization Agreement on
Government Procurement, to which Australia has submitted a bid to accede, and the
Trans-Pacific Partnership Agreement, which was signed on 4 February 2016.
The Bill will also ensure that regional suppliers and small and medium enterprises
have timely access to justice to raise complaints about procurement processes and
seek remedies. The FCC is the only court at the federal level which has a continuous
presence outside major capital cities. Suppliers in rural and regional Australia will
have easier access to have their complaints heard without the need to attend major
cities.
Financial impact statement
The Government has committed to providing $2.9 million over four years for the
Federal Circuit Court of Australia, with concurrent jurisdiction with the Federal Court
of Australia, to hear government procurement complaints.
Funding is provided on an ongoing basis, taking into account that it is an international
government procurement obligation for the Commonwealth to have a review authority
to hear government procurement complaints.
The courts will collect filing fees consistent with current practices, with the fees to be
returned to the Consolidated Revenue Fund. The fees will not be sufficient to provide
full cost recovery.
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Regulation impact statement
The Department of Foreign Affairs and Trade certified the Trans-Pacific Partnership
Analysis of Regulatory Impact on Australia as meeting the requirements of a
Regulation Impact Statement.
Under the Australian Government Guide to Regulation, the Office of Best Practice
Regulation (OBPR) does not assess independent reviews. The National Interest
Analysis was tabled in Parliament on 9 February 2016 which included the Analysis of
Regulatory Impact on Australia as an attachment. This included the consideration of
the supplier complaints mechanism and is available at
http://ris.dpmc.gov.au/2016/04/11/trans-pacific-partnership/
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GOVERNMENT PROCURMENT (JUDICIAL REVIEW) BILL 2017
NOTES ON CLAUSES
Part 1: Preliminary
Clause 1: Short title
Clause 1 provides for the short title of the Act to be the Government
Procurement (Judicial Review) Act 2017.
Clause 2: Commencement
Clause 2 is the commencement provision of the Bill. The whole of the Act will
commence on a date to be fixed by proclamation. However, if the Act does not
commence within six months of receiving Royal Assent, it will commence on the day
after the end of this six-month period. This will allow appropriate flexibility regarding
the commencement of the Act to facilitate Australia's accession to the World Trade
Organization Agreement on Government Procurement following the conclusion of
negotiations. It will also allow the Department of Finance to provide certainty to
relevant stakeholders, including procuring entities and suppliers, regarding the
commencement and operation of the legislation.
Clause 3: Simplified outline of this Act
Clause 3 provides a simplified outline of this Bill. The outline is intended to
provide assistance in understanding the substantive provisions and it is not intended to
be comprehensive. It is intended that the reader should rely on the substantive
provisions.
Clause 4: Definitions
Clause 4 sets out the definitions of terms used within this Bill.
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Clause 5: Covered procurement
Clause 5 sets out the definition of a covered procurement in relation to this
Bill.
For the Commonwealth, a covered procurement is a procurement:
o by an entity that is subject to the relevant CPRs
o estimated at or above the relevant threshold of the CPRs at which
additional rules apply
o not exempt from rules that apply at or above the relevant threshold
(refer to paragraph 2.6, Appendix A of the CPRs and specific defence
exemptions)
o that is otherwise not exempted by Australia's free trade agreements.
Paragraph 2.6 of the CPRs relates to procurements where the CPRs cannot be
followed in their entirety due to reasons such as protecting essential security.
Procurements that rely on CPR 2.6 are out of scope for supplier complaints and
applications.
Australia's free trade agreements list specific areas of Department of Defence
related procurement that are exempted from government procurement obligations.
Subsection 1(a) sets out that Divisions 1 and 2 of the CPRs must apply to the
procurement for it to be a covered procurement for the purpose of this Bill. Division 2
of the CPRs implement specific rules from the Commonwealth's free trade agreement
obligations. Division 1, while having some rules, mostly contains principles and
guidance. For example, Division 1 includes the principle that the Commonwealth's
procurement framework is non-discriminatory.
Where Division 2 of the CPRs applies, procuring entities must also comply
with Division 1. However, not all parts of Division 1 are for the purpose of
implementing international government procurement obligations. Hence, the Bill
allows for a statement within Division 1 to indicate which parts of Division 1 are
relevant for the purpose of the Bill. If there is no such statement in Division 1, then no
parts of Division 1 are relevant for the purpose of the Bill.
Subsection 1(a) sets out that a procurement is considered a covered
procurement if the rules in Division 1 and Division 2 of the CPRs apply to the
procurement. For clarification, the rules of Division 1 and/or Division 2 do not apply
where:
o an official applies measures determined by their accountable authority to be
necessary for the maintenance or restoration of international peace and
security, to protect human health, for the protection of essential security
interests, or to protect national treasures of artistic, historical or archaeological
value, or
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o the type of procurement is listed in the CPRs Appendix A: Exemptions from
Division 2, or
o the type of procurement is listed as a defence exemption in the Department of
Defence's Defence Procurement Policy Manual, which is derived from
defence exemptions listed in Australia's free trade agreements.
Subsection 1(b) provides that additional procurements may be exempted from
the CPRs if there are such provisions in Australia's free trade agreements.
Subsection 2 support subsection 1(b) by providing the Finance Minister with
the power to issue a determination that a type of procurement is not a covered
procurement. For clarification, the Finance Minister means the Minister administering
the Public Governance, Performance and Accountability Act 2013.
Clause 6: Crown to be bound
Clause 6 provides that this Bill applies to the Commonwealth and to its
government procurement matters.
Clause 7: Application of this Act
Clause 7 provides the extent of the application of this Bill.
Subsection 1 provides that this Bill extends to every external Australian
Territory. The intent of subsection 1is that if a procurement is a covered procurement
it will be within the jurisdiction of the courts regardless of the location of the
procurement.
Subsection 2 provides that proceedings may be transferred from the Federal
Circuit Court to the Federal Court under Part 5 of the Federal Circuit Court of
Australia Act 1999. Proceedings may also be transferred from the Federal Court to the
Federal Circuit Court under section 32AB of the Federal Court of Australia Act 1976.
Part 2: Injunctions
Clause 8: Simplified outline of this Part
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Clause 8 is a simplified outline for Part 2. Part 2 sets out how the courts may
grant an injunction in relation to a contravention of the Commonwealth Procurement
Rules (CPRs) so far as those rules relate to a covered procurement. The intent on
granting an injunction is to preserve a supplier's opportunity to participate in a current
procurement.
Clause 9: Injunctions
Clause 9 provides a mechanism for the courts to grant injunctions as a
corrective measure to ensure that the procuring entity complies with the relevant
CPRs.
Subsection 1 provides that the courts may grant an injunction to prevent
conduct by a procuring entity that contravenes the relevant CPRs. The intention of
this clause is that by granting an injunction, or requiring a procuring entity to do
something as a corrective measure, a supplier's right to participate in the procurement
may be preserved.
Subsection 2 provides that where a procuring entity proposes to, refuses or
fails to act in compliance with the relevant CPRs then the courts may grant an
injunction which requires the procuring entity to do an act or thing which would
preserve the supplier's right to participate in the procurement.
Clause 10: Availability of alternative remedy of compensation
Clause 10 provides for the balance of interests being in favour of
compensatory remedies rather than disruption to the procurement process where a
public interest certificate is issued.
The intent of the balance on interest being in favour of compensatory remedies
is to be expressly confined to situations where the procurement is still ongoing.
Following the issuing of a public interest certificate, the procuring entity should be
able to continue the procurement process, subject only to court orders.
Clause 11: Limits on power to grant an injunction
Clause 11 sets out the limitations on the courts to grant an injunction in
relation to a contravention or proposed contravention of the relevant CPRs.
Paragraph 1(c) provides that in an attempt to resolve a complaint, in the first
instance, the supplier must make a written complaint to the relevant procuring entity.
Paragraph 1(d) provides that the supplier must make a reasonable attempt to
resolve the complaint before seeking an injunction from the courts. For example, for
completed procurements, this may include the supplier seeking to resolve their
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complaint through a debrief with the procuring entity - the CPRs provide suppliers
who lodge a tender the right to seek a debrief.
The intent of subsections 2, 3 and 4 is to ensure that complaints regarding
covered procurements are made in a timely manner. The supplier should seek to raise
the complaint with the courts within 10 days on which the contravention of the
relevant CPRs occurred, is occurring or will occur or when the supplier became aware
or should have reasonably become aware of the contravention. In the first instance the
supplier should seek to resolve the complaint with the procuring entity and if the
supplier has not been able to resolve the complaint, they may approach the courts for
an injunction.
Subsection 5 provides clarification that the courts must not accept a supplier's
complaint which occurred outside of the 10 day period, unless the reason for the delay
relates to the supplier taking genuine steps to resolve the complaint with the procuring
in the first instance. The supplier should raise the complaint with the procuring entity
as soon as the supplier became aware, or should have reasonably become aware of the
contravention of the relevant CPRs.
Paragraph 5(b) provides that special circumstances, at the discretion of the
court, may warrant the court allowing a longer period in which to lodge a complaint.
Clause 12: Discharge or variation of an injunction
Clause 12 provides the courts with flexibility to stop or vary an injunction as it
deems necessary.
Clause 13: Certain limits on granting injunctions not to apply
Clause 13 provides that the courts may grant an injunction if it is satisfied an
injunction is required to prevent a procuring entity or official from engaging in
conduct that is in breach of the CPRs.
Clause 14: Other powers of a court unaffected
Clause 14 provides that the injunction powers under this Part are additional
to, not in replacement of, any other powers of the courts.
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Part 3 - Compensation
Clause 15: Simplified outline of this Part
Clause 15 is a simplified outline for Part 3. Part 3 sets out how the courts
may order the payment of compensation for contravention of the relevant
Commonwealth Procurement Rules (CPRs) so far as those rules relate to a covered
procurement.
Clause 16: Compensation for a contravention of the Commonwealth
Procurement Rules
Clause 16 provides the courts with the authority to order the payment of
compensation as a remedy to a valid supplier procurement complaint. Compensation
should be reasonable expenditure incurred by the supplier in preparing to respond to a
procurement, in preparing to make a complaint to the courts and the attempt to resolve
such a complaint.
Part 4 - Complaints
Clause 17: Simplified outline of this Part
Clause 17 is a simplified outline for Part 4. Part 4 allows a supplier to
complain to the accountable authority of a relevant Commonwealth entity about a
breach of the Commonwealth Procurement Rules (CPRs). Once the complaint is
received the accountable authority must investigate and attempt to resolve the
complaint with the supplier. The procurement must be suspended if no public interest
certificate is in force in relation to the procurement.
Clause 18: Complaint made by supplier
Clause 18 allows a supplier to make a written complaint to the accountable
authority of a relevant Commonwealth entity where they have reason to believe that
the CPRs have been breached or it has been proposed to be breached. When a supplier
complains to the accountable authority the intent is to resolve the complaint with the
procuring entity.
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Clause 19: Investigation by accountable authority
Clause 19 requires accountable authorities to investigate complaints made by
suppliers or potential suppliers. The intent of the investigation is to resolve the
complaint with the supplier and to keep a record of the attempt to resolve the
complaint and any agreement reached.
Subsection 2 provides that the accountable authority may discontinue the
investigation into the complaint if the supplier chooses to withdraw the complaint or
the supplier considers the complaint to be resolved.
Subsection 3 requires the accountable authority to stop the investigation if the
complaint is taken to court and the continuation of the investigation would prejudice
the outcome of the court action.
Clause 20: Suspension of procurement
Clause 20 provides that the accountable authority must suspend a procurement
where there is no public interest certificate in force in relation to that procurement.
Part 5 - Miscellaneous
Clause 21: Simplified outline of this Part
Clause 21 is a simplified outline of Part 5. Part 5 sets out that an accountable
authority may issue a public interest certificate where a delay to the procurement
would be contrary to the public interest. Public interest certificates are issued by the
accountable authority as part of an administrative process when conducting
procurements. Part 5 also sets out that a contract remains valid even if the court
determines that the Commonwealth Procurement Rules (CPRs) were contravened.
Further, an injunction or compensation cannot be sought where a contravention of the
CPRs occurred prior to the commencement of the Bill.
Clause 22: Public interest certificate
Subsection 1 provides that the accountable authority of the procuring entity
may issue a certificate stating that it is not in the public interest for the procurement to
be delayed. A public interest certificate should only be written where a suspension
would result in real adverse consequences. The court's decision regarding an
injunction does not prevent applications or complaints being made or limit the courts
ability to consider the procurement matter or to award compensation as an additional
remedy to an injunction, or as the only remedy. The intended effect of the certificate
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is simply that the procurement would not be suspended while the application or
complaint was being considered.
While the public interest certificate is an administrative decision it is not
intended that the decision would be subject to a merits review. The consideration of
whether it would not be in the public interest to suspend a procurement is a
preliminary decision that does not prevent a supplier from applying for an injunction
and/or compensation.
The public interest certificate is a necessary feature of the procurement
complaint mechanism to prevent real adverse consequences to the public interest if a
particular procurement was suspended. Procuring entities will receive guidance on the
circumstances where a public interest certificate can be issued.
Where a procuring entity issues a public interest certificate, the procuring
entity will be required to promptly publish the certificate on its website.
Clause 23: Contravention of the Commonwealth Procurement Rules does not
affect the validity of a contract
Clause 23 subsection 1 sets out that the court is not able to overturn the
awarded contract where it is found by the court that the CPRs have been contravened.
Subsection 2 sets out that that subsection 1 applies for contracts awarded both
prior and after the commencement of this Act.
Clause 24: Delegation by accountable authority
For clarification, the delegation powers in Section 110 of the Public
Governance, Performance and Accountability Act 2013 (PGPA Act) do not apply to
Corporate Commonwealth Entities as their accountable authorities use common law
authorisations to direct officials to undertake certain functions.
Clause 25: Transitional
Clause 25 sets out that where a contravention, or proposed contravention occurred
before the commencement of this Bill, compensation or an injunction will not be
granted.
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