19/03/2015
Legal risk in procurement
Scott Alden
DLA Piper
19 March 2015
Overview
 Contract Formation in the Procurement Cycle
 Legal Risk In The Process
 Collective Buying and Competition Risk
In-House Counsel Day 2015
2
1
19/03/2015
Contract Formation
 Procurement Type
 Electronic
 What are the Contract Terms
 Incorporation by reference
 Legal issues with online formation
 Deeds
 Communication of Acceptance
 Consolidation / Finalisation of Contract
 Authority
 Traditional
 Battle of the Forms
 When is agreement reached
 Consolidation of Contract / Tender
 Authority
In-House Counsel Day 2015
3
Legal Risk in the Process
 The Process Contract
 What is the Process Contract





The Queen in Right of Ontario et al v Ron Engineering & Construction Eastern Ltd (1981) Canada
Blackpool and Fylde Aero Club v Blackpool Borough Council [1990] EWCA Civ 13
Hughes Aircraft Systems International and Airservices Australia (1997) 146 ALR 1
Ipex ITG Pty Ltd (in liq) v State of Victoria [2010] VSC 480
Ipex ITG Pty Ltd (in liq) (recs apptd) v State of Victoria [2012] VSCA 201
 Why is it significant
 What are the obligations of the Procurer / Responder
 Ron Engineering
 City Polytechnic of Hong Kong v Blue Cross (Asia Pacific) Insurance [1994] HK CFI 355
In-House Counsel Day 2015
4
2
19/03/2015
Legal Risk in the Process
 The Process Contract
 What are the legal and commercial issues if breached
 J&A Developments v Edina Manufacturer Ltd Amora Ltd & Ors [2008] NIQB 208
 Discovering the process
 Griffin Energy Pty Ltd v Western Power Corporation [2006]
 Telstra Corporation Limited v Minister for Communications, Information, Technology and the Arts (No. 3) [2007]
FCA 1567
 Avoiding the risks in the process contract
 Cubic Transportation Systems Inc & Anor v State of New South Wales & 2 Ors [2001] NSW SC 1195
 Tercon Contractors Ltd v British Columbia (Transportation and Highways) 2010 SCC4
In-House Counsel Day 2015
5
Legal Risk in the Process
 Other Legal Risks
 Misleading and Deceptive Conduct
 s18 Competition and Consumer Act (Cth) 2010
 JS McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337
 Hughes Aircraft
 Misrepresentation
 Equitable Estoppel
 LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd (unreported 10 April 2003)
 Negligence
 Injunctions
 Breach of Confidence / Restraint of Trade
 Administrative Law (Procedural Unfairness, Acting Unreasonably)
In-House Counsel Day 2015
6
3
19/03/2015
Legal Risk in the Process
1. Not following the stated process
2. Not all information to tenderers at the same time
(level playing field), uncontrolled site visits
3. Late tenders
4. Not disclosing criteria or using adopted criteria
5. Post Tender Negotiations
6. Using IP of losing tenderer to improve project
with contractor
7. Disclosure – not disclosing as required or not
giving post tender de-brief
In-House Counsel Day 2015
7
Legal Risk in the Process
7. Entering into projects contracts that are
significantly different to that
tendered/inappropriate variations
Pressetext Nachrichtenagentur GmbH v Republik Osterreich (Bund) 2008
Edenred (UK Group) Limited v HM Treasury and anor [2014] EWHC 3555 (QB)
8. Improperly managed Conflicts of interest eg use
of consultant in pre-Bid stage and allowing
consultant to bid
9. Confidential Information – Leaks
10.Tender period
In-House Counsel Day 2015
8
4
19/03/2015
International Trends in Procurement
United Kingdom
 Competitive dialogue
 10 day 'stand still' period before signing contract to allow
unsuccessful bidders to bring a legal challenge
 Procurement regulations in the UK correspond to the EU 'Directives'
 New Directives (came into force in April 2014)
 Purpose of the New Directives to simplify procurement – new texts
are approximately 30% longer than those they replace
 30 Day Limitation Period
In-House Counsel Day 2015
9
International Trends in Procurement
Canada
 'Contract A / Contract B' framework – allows government agencies a
significant amount of freedom to establish criteria that bidders must
satisfy to submit a compliant bid on a contract (which is basically the
terms and conditions in Contract A)
 Obligations on the bidder and government agency
In-House Counsel Day 2015
10
5
19/03/2015
International Trends in Procurement
United States
 Government Accountability Office – 'congressional watchdog'
 Ability to suspend contract signing until bid protests have been made.
 Ability to sustain protests eg Agency failure to follow stated
evaluation criteria.
In-House Counsel Day 2015
11
International Trends in Procurement
Trends
 Termination for Convenience / Abandoning Processes
 Good Faith
 Bid Challenges
In-House Counsel Day 2015
12
6
19/03/2015
Competition / Cartel Conduct
 Competition and Consumer Act 2010
 Making a contract containing a cartel provision (s 44
ZZRF)
 Penalty - $10m
 Collective buying – competing entities coming together to
buy at a set price for a period. The fixing of a price is a
'cartel provision'
 Collective buying exemption (s 44ZZRV)
 Seek authorisations from ACCC directly
In-House Counsel Day 2015
13
Key Contacts
Scott Alden
Partner
Sydney Location Head – Finance and Projects
T: 02 9286 8128
E: scott.alden@dlapiper.com
In-House Counsel Day 2015
14
7