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LSB March 2018_Web

MILITARY LAW Proposed

MILITARY LAW Proposed Changes to the Government Procurement Complaints Mechanism & the Potential Effect on Defence Procurement DR COLETTE LANGOS, SENIOR LECTURER, ADELAIDE LAW SCHOOL; & ALEX EDGAR, CONTRACTING OFFICER, MATERIAL PROCUREMENT BRANCH, CAPABILITY ACQUISITION & SUSTAINMENT GROUP, DEPARTMENT OF DEFENCE The Commonwealth Procurement Rules (“CPRs”) lie at the core of the policy framework governing government procurement (the process by which a government acquires goods or services from a supplier for governmental purposes using public money). 1 They are a legislative instrument which forms part of the Public Governance, Performance and Accountability Act 2013 (Cth) (“PGPA Act”) rules issued by the Minister of Finance under s 105B of the PGPA Act to “ensure accountability and transparency, and reduce the costs and complexity of conducting business with the Government”. 2 The CPRs require procurements to achieve a ‘value for money’ outcome; encourage competition (non-discrimination and a competitive procurement process); promote efficient, effective, economical and ethical procurement; and ensure accountability and transparency in procurement related activities. 3 Commonwealth entities (including departments of State e.g. Department of Defence) must comply with the CPRs when carrying out procurement related activities. Where a breach of the CPRs is alleged, a potential supplier may wish to challenge a procurement decision to: • Remain competitive in a tender process (open, prequalified or limited); • Be compensated for costs associated with the tender (preparation) and resolution of the complaint; • Reverse the contract award. 4 Given the long-term relationships that form Defence procurements, particularly with prime contractors (Capital works – i.e. Ships), it is essential to have a review mechanism for procurement which facilitates the maintenance of long-term commercial partnerships between Defence and industry (suppliers). Importantly also, the review process ought not impact negatively on Defence’s ability to deliver capability to the Australian Defence Force. EXISTING COMPLAINTS MECHANISM Presently, potential suppliers who have an interest in a covered procurement can, in the first instance, complain of an alleged breach of the CPRs to the procuring entity, the Procurement Coordinator within the Department of Finance or the Commonwealth Ombudsman and, subsequently, appeal the initial decision to the Federal Court (“FC”). Large Commonwealth agencies, such as Defence, have internal review arrangements in place at the agency level to accommodate challenges to procurement decisions. Should the outcome of the internal review process be unsuccessful, a potential supplier may challenge the procurement decision in the FC. There are numerous hurdles complainants may face when seeking independent external review under this current arrangement. Notably, absence of a specific legal basis for challenging a government procurement decision has been described as a critical limitation to the efficacy of the complaints mechanism. 5 High costs associated with litigation, limited accessibility to the FC (no presence in regional locations) and the FC’s high workload (affecting the timeliness of decision making) further impede the practical workability for potential suppliers to mount successful challenges. The existing review mechanism is sufficient to meet Australia’s international obligations defined in bilateral trade agreements between Australia and the United States, Chile, Japan, Korea and Singapore. 6 However, the Department of Foreign Affairs and Trade has indicated that the existing appeal mechanism would not enable Australia to fulfil prospective obligations under the World Trade Organisation Agreement on Government Procurement (“GPA”) or the Trans Pacific Partnership Agreement (“TPP”). 7 PROPOSED COMPLAINTS MECHANISM The Government Procurement (Judicial Review) Bill establishes a new external review process. 8 Local or foreign suppliers whose interests are affected 9 by an alleged breach of the CPRs relating to a covered procurement can raise a complaint in the Federal Circuit Court (“FCC”). 10 This judicial body has a presence outside major capital cities and can hear complaints with greater timeliness at a lower cost (than the FC)—features which support the efficacy of the proposed arrangement. 11 The Bill provides that the court may 18 THE BULLETIN March 2018

MILITARY LAW issue an injunction which either restrains a procuring entity from engaging in conduct contravening the CPRs or requires the procuring entity do an act which ensures compliance with the CPRs. 12 Ultimately, the effect of issuing an injunction is to preserve the supplier’s right to participate (remain competitive) in the procurement process. Before the court can issue an injunction, it must be satisfied that the potential supplier has raised the complaint at the agency level (internal review). 13 Once the complaint is received, the Commonwealth entity must investigate and try to resolve the matter with the supplier. 14 During the period of investigation, the procurement must be suspended unless a public interest certificate is in force in relation to that procurement. 15 In a Defence context, it is likely that a public interest certificate would be granted where, for example, a delay would materially affect the delivery of capability to the ADF. Notably, the Bill provides that a potential supplier must initiate court action within 10 days of when the contravention occurred/is occurring/is proposed or the day on which the applicant became aware of the contravention/proposed contravention. 16 This seemingly tight timeframe for initiating court action has raised some concerns. 17 The Department of Defence has commented that “this gives agencies little opportunity to investigate and address the complaint prior to escalation to the courts, driving an adversarial rather than collaborative relationship with industry”. 18 Importantly, however, a court has wide discretion to allow a period longer than 10 days where it Computer Forensics Ferrier Hodgson provides comprehensive computer forensic investigation services and is recognised as one of Australia’s leading computer forensics consultancies. ▪ ▪ ▪ ▪ Social media investigations Computer forensics Expert witness evidence Cloud forensics For more information visit our website www.ferrierhodgson.com or contact: ▪ ▪ ▪ ▪ Mobile phone forensics Data recovery and analysis Electronic discovery solutions Back-up tape restoration Our investigations will piece together the who, what, when, where and how of computer-related conduct and give that all-important edge in litigation and investigations. Peter Holmes Partner +61 8 8100 7663 peter.holmes@fh.com.au Jean-Pierre du Plessis Partner +61 8 8100 7696 Jean-Pierre.DuPlessis@fh.com.au Ferrier Hodgson offer: clarity and objectivity; expertise and experience; attention to detail; and local and national resources.

Platform July 2018