Australia: The Public Interest Certificate under the Government Procurement (Judicial Review) Act 2018 (Cth): What agencies need to know

Last Updated: 22 May 2019
Article by Catherine Whitby

With the Easter Bunny delivering the new Commonwealth procurement judicial review framework this long weekend,1 many agencies are making last-minute adjustments to their procurement complaints handling procedures.

About GPJRA

The Government Procurement (Judicial Review) Act 2018 (Cth) (GPJRA) will offer suppliers, whose interests are affected, the opportunity for judicial review of conduct (or proposed conduct) in contravention of "relevant Commonwealth Procurement Rules" (CPRs), so far as those rules relate to a "covered procurement".2

Section 4 of GPRA defines "relevant CPRs" as meaning:

  1. a provision of Division 1 of the CPRs that is declared by the CPRs to be a relevant provision for the purposes of this paragraph; or
  2. Division 2 of the CPRs.3

Paragraph 6.9 of the CPRs declares specified paragraphs of Division 1 to be relevant for the purposes of paragraph (a).

A procurement will be a "covered procurement" for the purposes of section 5 of the GPJRA if:

  1. the rules in Divisions 1 and 2 of the CPRs apply to the procurement;4 and
  2. the procurement is not included in a class of procurements specified in a determination under subsection (2) of section 5.

(As at 16 April 2019, there are no determinations under this section.)

Under GPJRA, a court may grant an injunction preventing an official from engaging in conduct and/or require specified action to be taken. It may also order compensation.5

The GPJRA will also offer suppliers the ability to make a written complaint about such conduct. Complaints must be investigated and a report prepared. As well, the procurement must be "suspended" unless, when the complaint is made, a public interest certificate (PIC) is in force.

The advent of GPJRA has been accompanied by limited guidance. Given PICs' potential importance to maintenance of a procurement process, a key aspect on which further agency specific guidance may be required is when "accountable authorities" – Secretaries in the case of non-corporate Commonwealth entities and governing boards in the case of corporate Commonwealth entities – or their delegates may issue PICs under section 22.

What is a PIC?

A PIC is a written certificate, the primary effect of which is to displace an agency's obligation, set out at section 20, to "suspend" a procurement while complaints under section 18 are being investigated.

GPJRA does not provide any indication of what "suspension" of a procurement involves. While suspension is clearly intended to prevent the award of a contract where there is a complaint or challenge on foot, it is not clear whether "suspension" requires an agency to "down tools" completely. Certainly, it could be expected to require an agency to not take any further step in the procurement process as outlined in the request documentation (eg Request for Tender).

Why is a PIC needed?

The assumption underpinning section 20 (the suspension provision) is that suspension of a procurement during the investigation of a complaint, or the making of an application for an injunction in respect of a proposed contravention or contravention of the CPRs, will usually be in the public interest.

That may not always be the case; the purpose of the PIC, as explained by the Explanatory Memorandum for the GPJR Bill, is that it is necessary to prevent "real adverse consequences" to the public interest if a procurement is suspended.6

Although the Explanatory Memorandum indicates that Commonwealth agencies will receive guidance on the circumstances in which a PIC can be issued, no guidance has been issued.7 Accordingly, agencies will need to develop their own interpretation as to what is required.

When can a PIC be issued?

A PIC may be issued at any point in the procurement process.

In practice, we think it is likely that the decision to issue a PIC will become relevant at two points:

  • during the planning phase of the procurement, prior to issuing request documentation. Sections 20 and 22 appear to contemplate that an agency may wish to issue a pre-emptive PIC, to protect it from complaints or an application for injunctive relief.8 An agency does not, therefore, have to have received a complaint or be the subject of an application for injunctive relief in order to issue a PIC.
  • following receipt of a complaint, to put an end to the suspension of the procurement. Under section 20, a suspension lasts until the earliest of the following times:
    • if the supplier informs the accountable authority that the supplier considers the complaint to be resolved – the time when the supplier so informs the accountable authority;
    • if the supplier withdraws the complaint – the time when the supplier withdraws the complaint;
    • if the supplier issues a PIC in relation to the procurement – the time when the accountable authority issues the certificate;
    • if in proceedings instituted in a court under GPJRA in relation to the conduct, the court makes either of the following findings:
      • that the conduct was in contravention of the relevant CPRs (so far as those rules relate to a covered procurement);
      • that the conduct was not in contravention of the relevant CPRs (so far as those rules relate to a covered procurement),
      • the time when the court makes the finding concerned.

Importantly, the issuing of a PIC does not:

  • top a complaint being made under section 18;
  • excuse the procuring agency from investigating a complaint under section 19; or
  • stop an application for injunction in relation to a contravention or proposed contravention of the CPRs being made under section 9.9 The PIC may, however, have an impact on the court's consideration as to whether to grant an injunction, at least in circumstances in which the supplier has made an application for both an injunction and compensation in relation to a contravention or proposed contravention.
  • In those circumstances, the court must, pursuant to section 10(1)(e) and (f) of the GPJRA, consider:

    • whether the grant of the injunction would result in a significant delay to the procurement concerned; and
    • if so, whether the making of an order under section 16 (compensation) would be a more appropriate remedy for the contravention or proposed contravention than the grant of the injunction; and
    • If the court is satisfied that:
      • the grant of the injunction would result in a significant delay to the procurement concerned; and
      • the making of an order under section 16 would be a more appropriate remedy for the contravention or proposed contravention than the grant of the injunction,
      • the court may refuse to grant the injunction.

Does the accountable authority have to be satisfied of anything prior to issuing a PIC?

While section 22 does not explicitly require an accountable authority to be satisfied of any particular matters prior to issuing a PIC, it prescribes the content and language of the PIC. The PIC is to state that it is not in the public interest for the procurement to be suspended while applications for injunctions are being considered or complaints are being investigated.

It would be prudent for an agency's accountable authority (or his, her or its delegate) to form the view that this is the case, prior to issuing the certificate.

"Public interest" has not been definitively defined, either in legislation or by the court. The High Court has previously noted that the concept, "imports a discretionary value judgement to be made by reference to undefined factual matters", constrained by context (that is, the relevant legislation).10

Key considerations may include:

  • the nature and purpose of the procurement;
  • the urgency of the need for the goods or services that are the subject of the procurement;
  • the potential impact of a failure to deliver the goods or services on schedule; and
  • the purpose for which GPJRA has been enacted by Parliament (to enable Australia to meet its international obligations government procurement which require the establishment or designation of an impartial and independent complaints mechanism).11

The impact of a suspension on the timeliness of a procurement is, in our view, likely to be a relevant consideration, having regard to GPJRA as a whole. Section 10(1)(e) of GPJRA, for example, requires the court – where an injunction and compensation is being sought and there is a PIC in effect - to consider whether an injunction would result in a "significant delay" to the procurement in deciding on the appropriate remedy.

If the PIC is being considered following receipt of a complaint, the nature of the complaint may also be relevant, noting that the supplier is entitled to make a complaint under section 18 where it "has reason to believe" the agency, or one of its officials "has engaged, is engaging or is proposing to engage, in any conduct in contravention of the relevant CPRs (so far as those rules relate to a covered procurement)".

Complaint-related considerations may include:

  • whether the complaint is frivolous or serious;
  • the nature of the contravention and the potential impact of the conduct that is the subject of the complaint (eg restricted to the complaining supplier or potentially broader); and
  • the potential duration of any investigation into the alleged conduct.

The cost of the procurement may also be a factor to be weighed against other considerations.

Consideration of factors at a later stage of the procurement process may result in a different decision from that which would have been reached had a PIC been contemplated earlier, as a consequence of changes to the circumstances of the procurement (eg increasing urgency in the need for goods or services arising from delays in the process).

Because the factors to be taken into account in determining the impact of a suspension on the public interest will differ for each procurement, agencies contemplating issuing PICs as a matter of routine procurement practice will, in our view, expose themselves to the risk of challenge, as discussed below.

Can the decision to issue a PIC be challenged?

The Explanatory Memorandum has indicated that the decision to issue a PIC "is not intended to be subject to merits review".12 GPJRA does not include any provision enabling review by the Administrative Appeals Tribunal.

However, the decision appears open to judicial review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act), on the basis that it is "a decision of an administrative character made....under an enactment"13.

In addition, a supplier, as a person:

  • aggrieved by the decision to issue a PIC; and therefore
  • entitled to make application for review of a decision to issue a PIC under section 5 of the AJDR Act, may also request reasons for that decision under section 13(1) of the ADJR Act.

Unless an exception applies, the accountable authority will have 28 days in which to provide those reasons to the supplier.

Lessons for agencies

While the power to issue a PIC provides agencies with a degree of flexibility in managing actual and potential procurement complaints and responding to applications for injunction, the reviewability of the decision to issue a PIC may undermine the purpose for which the power has been granted under GPJRA – to protect the public interest in the continuation of the procurement process. It has the potential to provide aggrieved suppliers with the opportunity – whether or not there is any substance to the application for review of the decision to issue a PIC - to create a "side show" from the main game (continuation of the procurement process) and require diversion of resources.

Given the fact that the decision to issue a PIC is open to judicial review, agencies (and their accountable authorities) should:

  • view the power to issue a PIC as a power to be used with caution, having regard to what the public interest requires (vis a vis suspension) with respect to a particular procurement;
  • recognise that the decision to issue a PIC will give rise to risks, including the risk of challenge;
  • apply good decision making principles in contemplating whether to issue a PIC. These include the need to act reasonably and for a proper purpose, to consider relevant considerations, to apply policy appropriately, and to apply fair procedures; and
  • ensure they document their reasons for deciding that suspension of the procurement is not in the public interest, since it is likely that these will be disseminated outside the agency.

Footnotes

1 Section 2 of the GPJRA provides that the Act commences on a day fixed by Proclamation, but if the provisions on not commence within the period of 6 months beginning on the day the Act receives Royal Assent, the commence on the day after the end of that period. Commencement has not been proclaimed; GPJRA received Royal Assent on 19 October 2018, meaning that the commencement day is 19 April 2019 (being the day after the end of the 6 month period after Royal Assent).

2 O'Sullivan v Farrer (1989) 89 ALR 71 at 75

3 Above n5, introduction

4 Above n5 at 10

5 Judicial review may also be available under section 39B of the Judiciary Act and section 75(v) of the Constitution, but the ADJR Act is likely to be the primary avenue for challenge.

6 New Commonwealth Procurement Rules commence 20 April 2019.

7 Paragraphs 4.18 5.4, 7.2, 7.10, 7.13-7.18, 7.20 and 9.3-9.6 of Division 1

8 The footnote to paragraph 2.6 of the CPRs notes that where measures described in paragraph 2.6 are applied by an official, Divisions 1 and 2 will not apply in full to the procurement, with the effect that the procurement will not be a covered procurement for the purposes of GPJRA

9 See Parts 2 and 3, GPJRA.

10 Government Procurement (Judicial Review) Bill 2017 Explanatory Memorandum, page 10.

11 Above n5 at 10.

12 Section 22 refers to the issue of a PIC in respect of applications for injunctions or investigation of complaints – that is, in the indefinite plural - rather than in respect of specific injunction(s) or complaint(s). In addition, section 20 envisages that a PIC may already be in force at the time a complaint is made. There is nothing in that section to indicate that the references to "complaint" should be interpreted as referring the second and subsequent complaint received in relation to a procurement. Such an interpretation would prevent the section from operating in respect of the first complaint received in relation to a procurement; this cannot have been what Parliament intended.

13 Note that section 11(1)(c) and (d) provides that the court must not grant an injunction unless a complaint has first been made and the court is satisfied that the applicant has made a reasonable attempt to resolve it.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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