Legal risks in the tender
process – An analysis through
the cases
Procurement and Supply Australasia - Premier ConfeX 2013
José de Ponte
Crown Conference Centre. Melbourne
16 October 2013
Overview
1. The Tender Process
2. Risks with a Poorly Run Tender Process
3. Compliance
4. Probity
1.
The Tender Process
A. What is a Tender Process?
Expression of Interest (EOI)
Request for Information (RFI)
Invitation to Tender
Request for Tender (RFT)
Request for Proposal (RFP)
Request for Quotation (RFQ)
1.
The Tender Process
B. Methods of Procurement
•
Sole Source/Direct Negotiation
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Open Public
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Panel
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Selective Tender
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2 Stage – EOI
RFT
2.
Risks with a Poorly Run Tender
Process
A. Legal Risks
i.
The Process Contract
One Contract (before Hughes Aircraft)
(i) Invitation to Tender (Invitation to Treat)
(ii) Tender (Offer) – Validity Period
(iii) Letter of Acceptance (Acceptance)
2. Risks with a Poorly Run Tender
Process
Two Contracts (after Hughes Aircraft)
(A) The Queen in Right of Ontario et al v Ron
Engineering & Construction Eastern Ltd
(1981) Canada
(B) Hughes Aircraft Systems International
and Airservices Australia (1997) 146 ALR 1
(C) IPEX ITG Pty Ltd (in liq) v State of Victoria
[2010] VSC 480
2.
Risks with a Poorly Run Tender
Process
Can You Exclude the Process Contract?
ƒ Cubic Transportation Systems Inc & Anor v State of New South
Wales & 2 Ors (2002)
ƒ Amber Contracting Limited v Halifax (Regional Municipality) 2009
NSCA 103
2.
Risks with a Poorly Run Tender
Process
Should You Exclude the Process Contract?
ƒ Ron Engineering & Construction Eastern Ltd [1981] 1 SCR 111
Canada
ƒ City Polytechnic of Hong Kong v Blue Cross (Asia Pacific) Insurance
[1994] HK CFI 355
2.
Risks with a Poorly Run Tender
Process
Excluding Liability under a Process Contract
ƒ Tercon Contractors Ltd v British Columbia (Transportation and
Highways) 2010 SCC4
2.
Risks with a Poorly Run Tender
Process
Consequences of Breach of the Process Contract
ƒ Damages for a breach of the Process Contract
ƒ Loss of Profit
ƒ Loss of Chance
ƒ J&A Developments v Edina Manufacturer Ltd, Amoura Ltd Ors [2006]
NIQB 208
ƒ Amber Contracting Limited v Halifax (Regional Municipality) 2008
NSSC 208
ƒ Amber Contracting Ltd v Halifax (Regional Municipality) 2009 NSCA
103
2. Risks with a Poorly Run Tender
Process
Disclosure & Preliminary Discovery
ƒ Griffin Energy Pty Ltd v Western Power Corporation [2006]FCA 1242
ƒ Telstra Corporation Limited v Minister for Communications,
Information Technology and the Arts (No.3)[2007] FCA 1567
2. Risks with a Poorly Run Tender
Process
ii.
Avoid Risks
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Careful drafting of the RFT
Comply with the Process Contract
Adequate Planning
Internal Training
Proper Processes
Compliance Program
Contracting out of the Process Contract?
2. Risks with a Poorly Run Tender
Process
iii. General
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Misleading and Deceptive Conduct
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Section 18, Schedule 2 Competition and Consumer Act
2010
ƒ Equitable Estoppel
ƒ LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd
(unreported 10 April 2003)
3.
Compliance
A. What do I have to comply with?
The Private Sector
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Corporate Delegations (internal)
Corporations Act 2001
• Conflicts of Interest and Disclosure
• Duties to shareholders generally
Competition and Consumer Act 2010
The Public Sector
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Local Government
State Government (Departments, Statutory Authorities, State
owned corporations, Government Trusts)
Commonwealth Government
3.
Compliance
Case Study - NSW Procurement Framework
ƒ NSW Government is overhauling its system for purchasing goods
and Services
ƒ Interim Procurement Policy Framework
ƒ Applies to government agencies – Chapter 7 of the Public Sector
Employment and Management Act 2002 (NSW)
ƒ Does not apply to certain procurements
ƒ Accredited Agencies v Unaccredited Agencies
3.
Compliance
B. Compliance Procedures
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Manuals
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Flowcharts
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Training
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Internal Documents
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Delegations Manual
Code of Conduct
4.
Probity
a) What is Probity?
b) Probity Fundamentals
i.
Best value for money
ii.
Impartiality
iii.
Dealing with conflicting interest
iv.
Accountability & Transparency
v.
Confidentiality
4.
Probity
When to use a Probity Adviser?
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Incumbent Provider (Particularly Long Term)
High Cost Acquisition / Disposal
Political Risk (e.g. privatisation / environmental issues)
History of Controversy or Litigation
If You Know There Will be a Complaint
Changes to Scope After Bid Process Commences
Significant Meetings / Presentations Expected
Small / Closed Market (Collusion / Anti Competitive Behaviour)
Involvement of Consultant Bidder in Pre-Bid Stage
JOSE DE PONTE
Senior Associate
DLA Piper
Phone: 02 9286 8120
Email: jose.deponte@dlapiper.com