Australia: Procurement: Year in review and year ahead: unfair contract terms, market-led proposals and the Government Procurement (Judicial Review) Bill

Last Updated: 8 February 2017
Article by Scott Alden, Victoria Gordon, Daniella Ivanoska and Lauren Stables

Procurement has always been an ever changing and evolving area and last year saw the introduction of some new legislation and processes that will ensure that it continues to evolve and develop throughout 2017. These are:

  • Unfair Contract Terms legislation and the impact this will have on procurement
  • The growing use of Market Led Proposals for projects
  • The introduction of the Government Procurement (Judicial Review) Bill into the Commonwealth in late 2016 which will no doubt be further debated and finalised this year

Unfair Contract Terms (small business)

The Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth) ('SBUCTA') commenced on 12 November 2016. SBUCTA extends the existing unfair standard form contract term regime so that it applies not only to consumers (as was previously the case), but now also to a new category of 'small business contracts.'

This law makes unfair terms in small business contracts void. In order for the law to apply, and in general terms:

  • At least one of the parties needs to be a small business
  • The up-front ascertainable contract price must be an amount less than $300,000, or less than $1m if the contract is for a period in excess of 12 months
  • The contract must be a standard form contract (i.e. drafted by one party and put to the other with little opportunity to negotiate)
  • The contract must contain an unfair term

Where these factors are in place the unfair contract term will be declared unlawful and severed from the contract on application of one of the parties, with compensation also being available to the aggrieved party.

It is easy to see how this law will be particularly relevant to those engaged in procurement. In summary, the following issues are particularly relevant to the procurement process and procurement documents:

  • The process of procurement, which involves the development of an RFT by the Principal (including the Contract) and the issuing of the RFT to proponents on a 'take it or leave it' basis means that the law will apply and the contract will be tested if the successful contractor (or principal) is a small business and the contract value is under the thresholds. This means the new laws will need to be considered early in respect of all procurements prior to them going to market.
  • An organisation does not know whether the law will apply until it has selected the contractor (i.e. it will only apply where of the parties is a small business).
  • Finding out whether an organisation is a small business or not may not be that easy as the test is based on head count (and so includes Part Time staff and also 'regular and systematic' casuals). Asking the organisation through the tender process, such as a question in a response schedule, is one way of trying to address this but where an organisation provides incorrect information, whether deliberately or not, there is no 'due diligence' defence so such information cannot be relied on in any proceedings commenced under this new law.
  • Procurers need to be careful not to discriminate (or be seen to discriminate) against a business based on its size by not selecting a small business to avoid this new law.
  • Procurers that develop two standard contracts (i.e. one for small business which complies with the new law and removes any unfair terms, and one for other businesses where the laws will not apply) will not know which one to use in the RFT and for the procurement exercise until the preferred tenderer is known and the contractor selected. This may mean putting both in with a statement that the final contract used will depend on the successful contractor.

Other procurement issues arising as a result of this legislation will include whether a procurer extends or varies existing contracts, or decides not to and allows it to terminate. The reason for this is that, whilst the new law does not have retrospective application (i.e. it only applies to new contract), it will apply to existing contract that are varied (in respect of the varied terms), and extended (in respect of the entire contract). Where an organisation currently has a contract with a small business, and that contract contains what would be considered 'unfair terms', if that contract is extended without removing or amending those unfair terms, then the procurer risks breaching the law under the new regime in relation to the previously valid and lawful contract.

Finally, the process contract itself will be subject to these laws and it may be that discretions and exclusions of liability as part of the procurement process itself will be voidable by an unhappy small business bidder.

It is clear that this new law raises significant issues not just in respect of the contract and its terms, but also in relation to the procurement process itself and the future management of existing contracts.

Market-led proposals

Market-led proposals, or unsolicited proposals have continued to be effectively utilised as an alternative approach to bringing unique and innovative ideas from industry to be considered by the Governments. Market-led proposals allow private organisations to propose new projects without any formal request or tender for information being issued, removing the public consultation and tender processes involved in procurement.

All Australian state governments, with the exception of Western Australia, have adopted market-led proposal guidelines to ensure transparency and fairness in the assessment process of market-led proposals from industry. The NSW Guide for Submission and Assessment of Unsolicited Proposals (August 2012) (the NSW Guide) have in place a three stage assessment to ensure transparency and that the evaluations of the proposals are streamlined. The first stage of the assessment process involves a preliminary assessment of the proposal to determine whether it meets the criteria of a market-led proposal. The second stage of the processes requires the proponent and government to work together and develop a detailed proposal. If the government then wishes to proceed with the proposal, stage three negotiation of the final and binding offer will take place.

When evaluating market-led proposals, the NSW Guide provides the following criteria:

  • Uniqueness
  • Value for money
  • Whole of government impact
  • Capability and capacity
  • Affordability
  • Risk allocation

While the guidelines have effectively provided clarity on the assessment process, proponents are still faced with risks and issues that will need to be addressed. One of the risks associated with market-led proposals is the protection of the proponent's ideas and concepts if the Government does not choose to go ahead with the proposal. The NSW Guide provides that the proponents and the Government are to agree on the approach to managing intellectual property during the first stage of the assessment process to avoid such risks.

The proponents also face a high threshold when demonstrating the uniqueness of their proposal. All proponents need to demonstrate that their proposal offers unique benefits, a unique ability to deliver the proposal, as well as the ability to deliver value for money to the NSW Government. In the 2015-16 financial year, the NSW Government received 21 market-led proposals of which 18 were assessed. None of the proposals proceeded to stage two of the assessment process, with the main reason being lack of uniqueness and inability to provide value for money.

However, provided that the appropriate framework and guideline are in place to address such risks, market-led proposals will continue to play an important role in bringing proactive and innovative thinking in procurement that could potentially benefit the economy.

Government Procurement (Judicial Review) Bill

Last year, the Commonwealth announced that the Government Procurement (Judicial Review) Bill (the Bill) would be introduced in the 2016 Spring sittings of Parliament. With the text of the Bill still yet to be made publically available, speculation is beginning to bubble in the procurement space as to its contents and implications.

Most likely, the Bill will provide the Federal Court, and the Federal Circuit Court, the power to deal with certain procurement disputes and grant injunctions or order compensation to dissatisfied tenderers for a breach of the Commonwealth Procurement Rules (CPRs).

The Bill has been drafted partly in response to the 2014 recommendation by the Senate Finance and Public Administration Committee for the need for an independent dispute mechanism for the Commonwealth procurement processes, and partly to bring Australia into line with our international obligations under the Trans-Pacific Partnership Agreement (TTP) to provide suppliers with an impartial authority to review disputes under the Government Procurement Chapter.

The Bill would also better position Australia for our likely accession to the World Trade Organisation's Agreement on Government Procurement (GPA), which, like the TTP, requires a transparent dispute review process.

Although the Bill would significantly alter the current legal landscape in Australia concerning tender challenges by introducing a statutory mechanism for suppliers to challenge government tenders for breach of the CPRs, such a regime is not novel. For example, in the U.S., the Government Accountability Office (the GAO) first published a bid protest decision that a solicitation was unlawful in 19261.

U.S. Government Accountability Office

In the U.S., a bidder or other interested party may file a challenge with the GAO regarding the terms of a federal government tender or an award of a government contract. The GAO Bid Protest Regulations govern the particular issues the GAO may review and the parties who may lodge a protest.

The GAO may hear complaints alleging violations of federal procurement law in federal acquisitions, however challenges to small business size certifications are statutorily barred. Any interested party (an actual or prospective bidder whose direct economic interest would be affected by the award of, or failure to award, a contract) may file a protest.

Filing a bid protest with the GAO may trigger an automatic stay of a contract award, or performance of a contract, until the GAO makes a determination either dismissing, denying or sustaining the protest.

If a protest is dismissed or denied, the procuring agency can commonly proceed with the bid. However, when a protest is sustained, the GAO can recommend specific actions, for example amending the tender, or requiring the government to re-evaluate the proposals. Although these recommendations are not legally binding (due to the separation of powers doctrine in the U.S. precluding legislative branch agencies from governing the actions of executive branch agencies), the procuring agency is required by statute to notify the GAO if GAO's recommendations are not fully implemented - and, the GAO must in turn, notify Congress.

Further, a party who is not satisfied with the GAO's decision can request the GAO to reconsider their determination, and can also effectively appeal the GAO's decision by filing a bid protest with the Court of Federal Claims.

Wrap Up

In conclusion, we expect it to be a busy and interesting year this year in the procurement sector with:

  1. a new law relating to commercial contracts and terms to consider as part of our processes and documents
  2. the continuation and expanded use of the market led proposals process in the successful conception and delivery of projects
  3. a new legislative regime government challenges to tender processes in the Commonwealth


1 D Gordon, 'Bid Protests: The Costs are Real, but the benefits Outweigh Them' (2013) 42 George Washington University Law School 3, 4.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Scott Alden
Lauren Stables
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions