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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

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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

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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

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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

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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)

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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

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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

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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

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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

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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.

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International Trends in Procurement

Trends

Termination for Convenience / Abandoning Processes

Good Faith

Bid Challenges

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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

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Key Contacts

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Scott Alden

Partner

Sydney Location Head – Finance and Projects

T: 02 9286 8128

E: scott.alden@dlapiper.com