Legal risk in procurement
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1 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 2 1
2 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 3 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
3 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 5 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) 6 3
4 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 7 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 8 4
5 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 9 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 10 5
6 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. 11 Trends Termination for Convenience / Abandoning Processes Good Faith Bid Challenges 12 6
7 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 13 Key Contacts Scott Alden Partner Sydney Location Head Finance and Projects T: E: scott.alden@dlapiper.com 14 7
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Current reporting period: Half-year ended 31 December 2013 Previous reporting period: Half-year ended 31 December 2012 Appendix 4D Half-Yearly Report (formerly IMF (Australia) Ltd) ("IMF") Half-Year ended