Tender Contract Disputes
Tender Contract Disputes
What are your legal rights or options if you wish to dispute the integrity of the tender process?
In Australia, it is not uncommon for Government departments or larger private organisations to procure goods and/or services utilising the tender process. This is because the tender process, when conducted properly, can produce the best quality products and/or services, at the most competitive prices, that the market has to offer. On the other hand, it is also an exceptional opportunity for private goods and/or services providers to secure potentially lucrative, secure, and at times, long term, contracts, which can immensely improve the sustainability and profitability of the business, as well as contribute to the rapid growth of the organisation. But, the tender process is often a demanding, technical and highly competitive bidding process, requiring the private contractors to invest large quantities of time, resources and money, to comply with various and strict criteria requirements of the tender process.
A private contractor may have to submit large volumes of documents just to be tabled for consideration by the approval panel. However, what if, as a bidder in the tender process, you have reasonable grounds to believe that the tender process was not conducted with integrity? What if, as a bidder, you have spent tens of thousands of dollars, if not more, in preparing and submitting your tender proposal, only to lose to a knowingly, if not indisputably, inferior goods and/or services provider in the marketplace? You may well have been beaten honestly, on the merits, but is there anything that you can do if you have reasonable grounds to suspect that the tender process, objectively assessed, could not have been conducted fairly, whether procedurally or on the substance of the tender submissions. This article will seek to highlight some of your legal options to probe the tender process.
A Request for Feedback or Written Reasons
As part of the Tender Policy or Tender Documentation, governing the Tender Process, the Government department or [less often] the private sector body may allow an unsuccessful bidder [in the tendering process] to make a written request for feedback (often given verbally at a meeting), or written reasons, as to why they were unsuccessful in the tendering process. As an unsuccessful bidder, it is important to be able to identify, invoke and comply with (especially any time requirements) the specific provisions of the Tender Policy, or Tender Documentation, that would allow such a request to be made of the Government or the private sector body.
Applying for an Internal Review of the Tender Process
As part of the Tender Policy or Tender Documentation, governing the Tender Process, the Government department or [less often] the private sector body may allow an unsuccessful bidder [in the tendering process] to apply for an internal review of any assessments made or scores determined against the assessment criteria in relation to the unsuccessful bidder. As an unsuccessful bidder, you may have received surprisingly low values or scores in areas where you believe to be very strongly placed in the marketplace (for example, but without limitation, on considerations of your overall price, cost of goods, size of organisation, experience, resources, competencies, track record etc).
Further, or in the alternative, you may believe that procedurally you were denied a fair opportunity to overcome any perceived issues or gaps in the information prior to the tender process closing. Again, it is important to be able to identify, invoke and comply with (especially any time requirements) the specific provisions of the Tender Policy, or Tender Documentation, that would allow such an internal review to be initiated with the Government department or the private sector body.
Applying for an External Government Review of the Tender Process
As part of the Tender Policy, Tender Documentation, or wider Government Procurement Guidelines, governing a Government Tender, the Government department may allow an unsuccessful bidder [in the tendering process] to apply for an external review (by another Government arm) of any assessments made or scores determined against the assessment criteria in relation to the unsuccessful bidder, or in relation to any procedural issues.
Additionally, what you often find is that a Government Tender may in fact be conducted by a private organisation. In circumstances where the unsuccessful bidder has issues with the integrity of the tender process [as conducted by the private organisation on behalf of the Government], the Government department funding the procurement contract may allow a complaint in respect of the tender process to be made directly with them for further investigation.
Applying for a Judicial Review of the Tender Process
A judicial review is basically a review of the Government decision by a Judge to determine whether the decision is affected by error.
A judicial review is a Court process governed by complex judicial review legislation at the Federal and State levels.
At times, especially if the stakes are high (as your potential financial losses, as an unsuccessful bidder, may not simply extend to the tender contract that you lost during that particular year, or on that particular occasion, but may extend to all future such tender contracts that you may lose if any issues concerning integrity are allowed to continue without investigation and rectification), you may see the value in commencing Court action to judicially review the Government tender decision, provided this course of action is available to you, whether at the Federal or State level.
There are time limitations that apply to commencing judicial review action, so it is usually imperative to act promptly, and strategically, on the advice of a lawyer.
Suing for a Breach of Contract
In certain circumstances, it may be possible to legally classify the tender process as giving rise to an actual and enforceable contract between the Government department or private organisation and the unsuccessful bidder. If the unsuccessful bidder can show that the Government department or the private organisation has failed to comply with a term of the tender process, the unsuccessful bidder may be able to sue the Government department or the private organisation for a breach of contract and seek an award of damages (extending to, for example, any losses sustained in preparing the tender as well as, in some circumstances, for a loss of profits).
Suing for Misleading or Deceptive Conduct
Section 18 of the Australian Consumer Law (the reach of which has been significantly expanded in recent times and now affords rights to many businesses) provides that a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Accordingly, if a private corporation is, for example, but without limitation, found to have used a different assessment criteria in the tender process to the one communicated to the bidders or has not used the assessment criteria at all or correctly in the assessment of the bidders in the tender process, the private corporation may be found to have breached section 18 of the Australian Consumer Law (entitling the unsuccessful bidder to a potential award of damages, amongst other potential remedies).
If you need legal advice or assistance with tender process disputes, please contact ADVIILAW today to speak to one of our experienced commercial litigation lawyers. Contact us on 07 3088 7937 or email us at [email protected].
This commentary is of a general nature only, containing some general information for the reader.
It is not intended to be legal advice, nor can it be relied upon as legal advice, as each case will depend upon its own specific facts, matters and circumstances.
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