New rights for tenderers to challenge NSW Government procurement processes

As of 29 November 2019, a new statutory regime is available for tenderers to challenge certain NSW Government tender processes.

The new regime mirrors the Commonwealth regime under the Government Procurement (Judicial Review) Act 2018 (Cth) which has been in force since April this year, as reported here.

Overview

The Public Works and Procurement Amendment (Enforcement) Act 2018 (NSW) (Act), which commenced on 29 November 2019, allows “affected applicants” to make a written complaint about the conduct of a government agency for an alleged contravention or proposed contravention of an “enforceable procurement provision.”

Under the Procurement (Enforceable Procurement Provisions) Direction 2019 (Direction) issued by the NSW Procurement Board, the “enforceable procurement provisions” include a broad range of provisions in relation to non-discrimination, exclusion of suppliers, requirements to use open approaches to market, circumstances where limited tendering is permitted, conditions for participation and awarding contracts based on evaluation criteria.

The relevant procurement thresholds for the “enforceable procurement provisions” are (subject to some exceptions):

• $9.247 million for a procurement of construction services
• $657,000 for a procurement of goods or any other services.

Process

The process under the new regime is as follows:

• a complaint must be made to the government agency head of the agency concerned
• the government agency head must then:
  • investigate the conduct that is the subject of the complaint
  • attempt to resolve the complaint
  • prepare a written report of the investigation.
• a government agency head must suspend the procurement unless:
  • a public interest certificate has already been issued in respect of the procurement; or
  • a contract for the procurement has already been entered into.
• the procurement must remain suspended until:
  • the complainant withdraws the complaint, or notifies the government agency that it considers the complaint to be resolved
  • a public interest certificate is issued in respect of the procurement after the complaint is made
  • proceedings are commenced in the Supreme Court.

Similar to the Commonwealth regime, this may prove problematic for agencies where a suspended procurement are effectively in limbo until one of the above three things happen, only one of which is in the agencies control – issuing a public interest certificate.

Public interest certificates

A public interest certificate is a written certificate issued by the government agency stating that it is not in the public interest for a specified procurement to be suspended while:

• a complaint is being investigated; or
• an application for an injunction is being considered.

The NSW Procurement Board has published the Complaint Management Guidelines (Guidelines), which include guidance for agencies on when to issue a public interest certificate.

The Guidelines state a Public Interest Certificate should only be issued where suspending the procurement would have an adverse impact on the public interest that exceeds the right of a supplier to have the procurement suspended, and recommends agencies obtain legal advice before issuing a public interest certificate.

Injunctions and compensation

If the complaint is not resolved to the satisfaction of the affected applicant, the affected applicant can apply to the Supreme Court.

The Supreme Court can:

• grant injunctions to stop the government agency from contravening an enforceable procurement provision, unless a contract has already been entered into
• order compensation to the applicant if a government agency is found to have contravened an enforceable procurement provision.

In line with the Commonwealth regime, compensation under the Act is limited to reasonable costs in preparing a tender, lodging a complaint, or attempting to resolve the complaint, and does not include loss of profit.

Importantly, existing remedies are not limited by the Act (e.g. damages for a breach of ‘process contract’ claim) and a contravention of an enforceable procurement provision will not affect the validity of any contract that is already on foot.

Conclusion

To prepare for the commencement of the “enforceable procurement provisions” under the Act, NSW Government procurement entities need to:

• review all current and upcoming procurements to determine if they are caught by the Direction and the Act
• review internal processes and tender documentation to ensure compliance with the NSW Government Procurement Policy Framework
• review internal processes for dealing with tenderer complaints
• consider where a public interest certificate may be required for current or upcoming procurements
• consider the validity period under relevant procurements and consider extending them, or triggering an extension, where a complaint is made.