Judicial review of govt tenders more likely

New guidelines for government departments could open the floodgates for legal challenges

Under new government procurement guidelines, the possibility of legal challenges to contracts awarded may increase, says tech lawyer Michael Wigley.

The changes could mean IT tenders need to be more carefully written to avoid perceptions of bias, he says.

Prior to these new rules, “an optimally structured tender could effectively eliminate contract and tort risk and judicial review risk was minimal,” he says.

The new rules reduce flexibility in a number of areas; they apply consistent standards and implement an international agreement (the Trans-Pacific Free Trade Agreement). The rules apply to government departments, Police and the Defence Force, and to all purchases over $100,000.

The government has signalled that it would like them applied more widely, Wigley says. And even that it would like private companies to adopt them as part of a move to a common best-practice standard in tendering.

The stricter requirements mean there are more places where a purchaser could be called legally to account for not following the rules.

“Arguably … there is a greater prospect that procurement will attract the attention of the courts,” Wigley says.

Any tender that does not comply with the essential requirements and conditions of participation expressed in the tender documents must be rejected, say the rules. There is apparently no “wiggle room” to admit a tender which, while slightly at variance with one of these conditions, is otherwise excellent.

“This is a real danger for purchasing departments, which could lose the ability to have what would otherwise be their best choice, and for vendors,” Wigley says.

“Experience shows that tenders [in the past have often been] framed in a way that makes non-compliance by vendors close to inevitable,” he says.

“Vendors to date have often taken the risk on this and purchasers have had some latitude.”

This will now be more difficult to do, and, taken with the Ombudsman’s finding last year (in respect of a ship contract), issues of doubt must, in some instances, be clarified with the vendor rather than used as a reason to exclude them.

“We have quite a risk-laden area that needs careful management to minimise risk yet achieve best outcomes,” says Wigley.

One area of the new rules that could prove burdensome for computer purchasers is the stipulation that requirements descriptions must “be specified in terms of performance and functional requirements, rather than design or descriptive characteristics”.

In other words, over-technical specification should be avoided so as to eliminate any impression of bias towards a particular supplier’s equipment.

Genuine limitations can still be specified in the tender, Wigley says.

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