GPJRA Update: Compliance and Risk Assessment Guide

When does a Commonwealth entity need to comply with the GPJRA?

Threshold question 1: Is a procurement subject to the GPJRA?

The GPJRA applies to contraventions of “relevant CPRs” relating to “covered procurements” by “relevant Commonwealth entities”.¹

A procurement is a “covered procurement” if:

1. the rules in Divisions 1 and 2 of the Commonwealth Procurement Rules 2020 (CPRs) apply to the procurement; and
   
   the procurement is not a “covered procurement” where the Commonwealth entity’s accountable authority has made a CPR 2.6 measure² that all or some of the relevant CPRs do not apply to a procurement or where an exemption prescribed by Appendix A to the CRPs applies.³
   
   
2. The procurement is not included in a class of procurements specified in a determination made under subsection 5(2) of the GPJRA.⁴

While a procurement may not be susceptible to GPJRA review, this does not mean that it is immune to challenge. Other avenues to raise complaints regarding a procurement include the Australian Government Procurement Coordinator and the Commonwealth Ombudsman. Many relevant entities also have dedicated complaints schemes under which suppliers can lodge complaints in respect of procurements which are not subject to the GPJRA such as the Department of Defence’s Defence Procurement Complaints Scheme.

Entities should be mindful that complaints made to the Australian Government Procurement Coordinator and the Commonwealth Ombudsman can be made from suppliers in relation to a range of matters which are not limited to covered procurements or complaints regarding alleged contraventions of relevant CPRs. A procurement process may also be the subject of detailed investigation by the ANAO in carrying out a Performance Audit – the ANAO concentrates on processes adopted by agencies to achieve value for money.

For these reasons, and to comply with the obligation in CPR 7.2, it is appropriate for accountable authorities and officials to maintain good record keeping practices to ensure preparedness to respond to complaints made outside the GPJRA framework.

Threshold question 2: What are the “relevant CPRs” and do they apply?

The GPJRA only applies to contraventions of “relevant CPRs” by Commonwealth entities. This means that suppliers can only make a complaint or take action under the GPJRA when a Commonwealth entity has contravened a relevant CPR in relation to a covered procurement.

Not all CPRs are relevant CPRs for the purposes of the GPJRA. Paragraph 6.9 of the CPRs declares certain rules contained in Division 1 of the CPRs are relevant CPRs for the purposes of the GPJRA. In addition, all rules contained in Division 2 of the CPRs are relevant CPRs (section 4 of the GPJRA).

Relevant CPRs in Division 1⁵

• A prohibition on using third-party arrangements to avoid the rules in the CPRs when procuring goods and services (CPR 4.18);
• Requirements to:

1. treat all potential suppliers to government equitably based on their commercial, legal, technical and financial abilities and not be discriminated against due to their size, degree of foreign affiliation or ownership, location, or the origin of their goods and services (CPR 5.4);
2. include criteria that will be used to select potential suppliers, and if applicable, any limitation on the number of potential suppliers that will be invited to make submissions (CPR 7.15) (when conducting an initial approach to market for a multi-stage procurement and in all subsequent stages);
3. maintain, for each procurement, a level of documentation commensurate with the scale, scope and risk of the procurement (CPR 7.2);
4. provide on request, promptly provide, to eligible potential suppliers, “request documentation” that includes all information necessary to permit the potential supplier to prepare and lodge submissions (CPR 7.16);
5. promptly inform unsuccessful tenderers that they have not been awarded a contract or their submission has been rejected. Debriefings must be made available, on request, to unsuccessful tenderers and to the successful supplier(s) (CPR 7.17);

• AusTender rules relating to tender publication requirements, availability of request documentation, notification requirements, contract reporting and amendments for contracts above at or in excess of reporting thresholds and standing office requirements (CPR 7.10, CPR 7.13, CPR 7.18, 7.20); and
• Rules in relation to assessing value of the procurement including that:

1. the maximum value of the goods and services being procured must include all forms of remuneration, including any premiums, fees, commissions, interest, allowances and other revenue streams that may be provided for in the proposed contract; the value of the goods and services being procured, including the value of any options in the proposed contract; and any taxes or charges (CPR 9.3);
2. when a procurement is to be conducted in multiple parts with contracts awarded either at the same time or over a period of time, with one or more suppliers, the expected value of the goods and services being procured must include the maximum value of all of the contracts (CPR 9.4);
3. a procurement must not be divided into separate parts solely for the purpose of avoiding a relevant procurement threshold (CPR 9.5); and
4. When the maximum value of a procurement over its entire duration cannot be estimated the procurement must be treated as being valued above the relevant procurement threshold (CPR 9.6).

Relevant CPRs in Division 2

All rules in Division 2 (CPR 10.3 – 10.36) are relevant CPRs. These include rules relating to:

• Conditions for limited tender (CPR 10.3 – 10.5). CPR 10.3 provides that a relevant entity must only conduct a procurement at or above the relevant procurement threshold through limited tender in certain circumstances;
• Request Documentation (CPR 10.6 – 10.8). CPR 10.6 provides that request documentation must include a complete description of certain matters;
• Specifications (CPR 10.9 – 10.13) CPR 10.10 provides that, in prescribing specifications for goods and services, a relevant entity must, where appropriate:

1. set out the specifications in terms of performance and functional requirements; and
2. base technical specifications on international standards, when they exist and apply to the relevant procurement, except when the use of international standards would fail to meet the relevant entity’s requirements;

• Modification of evaluation criteria or specifications (CPR 10.14). This rule provides that when a relevant entity modifies the evaluation criteria or specifications set out in an approach to market or in request documentation, or amends or reissues an approach to market or request documentation, the relevant entity must transmit all modifications or amended or reissued documents affected potential supplies;
• Conditions for participation (CPR 10.15 – 10.19). CPR 10.15 provides that relevant entities may specify conditions for participation that potential suppliers must be able to demonstrate compliance with in order to participate in a procurement or, if applicable, class of procurement. Conditions for participation must be limited to those that will ensure that a potential supplier has the legal, commercial, technical and financial abilities to fulfil the requirements of the procurement;
• Handling submissions including minimum time limits, late submissions and receipt of submissions (CPR 10.20 – 10.34). This includes the rule that potential suppliers must be required to lodge submissions in accordance with a common deadline (CPR 10.20), and that relevant entities must provide sufficient time for potential suppliers to prepare and lodge submissions in response to an approach to market (CPR 10.21);
• Awarding contracts (CPR 10.35 – 10.36). CPR 10.35 includes the rule that, unless a relevant entity determines that it is not in the public interest to award a contract, it must award a contract to the tenderer that the relevant entity has determined:

1. satisfies the conditions for participation;
2. is fully capable of undertaking the contract; and
3. will provide the best value for money, in accordance with the essential requirements and evaluation criteria specified in the approach to market and request documentation (CPR 10.35).

What are the potential practical implications of the procurement falling within the ambit of the GPJRA?

How might the procurement process be impacted?

If the procurement is subject to the GPJRA, suppliers may make a written complaint to the accountable authority of the relevant entity if:

1. the supplier has reason to believe a relevant Commonwealth entity or an official of the relevant Commonwealth entity has engaged, is engaging or is proposing to engage, in any conduct in contravention of the “relevant CPRs”⁶ (as detailed above), and
2. the interests of the supplier are affected by the conduct⁷.

If a supplier makes a complaint under section 18 of the GPJRA, the accountable authority must investigate the conduct which is the subject of the complaint and prepare a report of that investigation⁸.

During this period of investigation, if the procurement does not have a public interest certificate (PIC) in force relating to the procurement, then the procurement must be suspended until the earlier of:

1. the time when the supplier informs the accountable authority that it considers the complaint to be resolved⁹;
2. the time when the supplier withdraws the complaint¹⁰; or
3. the time when the accountable authority issues a PIC in relation to the procurement¹¹.

For a detailed explanation on the PIC, please see “The Public Interest Certificate under the Government Procurement (Judicial Review) Act 2018 (Cth): What agencies need to know”.

Affected suppliers may also apply to the Federal Court or the Federal Circuit Court for a restraining or performance injunction, preventing the Commonwealth agency from engaging in conduct and/or require specified action to be taken. Prior to granting an injunction, the court must be satisfied that the applicant for the injunction has made a section 18 complaint to the accountable authority about the contravention, and that the supplier has made “reasonable attempt to resolve the complaint”.¹²

Similarly, if the procurement does not have a PIC in force relating to the procurement, the procurement must be suspended during the period an application for an injunction is being considered by the court.

The supplier can also make an application to the court for an order directing the relevant Commonwealth entity to compensate the supplier in relation to the contravention.

Where the supplier has made an application for an injunction and compensation, a PIC is in force in relation to the procurement, and no contract has been entered into, the court must consider whether the injunction would result in significant delay to the procurement and whether compensation would be a more appropriate remedy than the grant of an injunction.

How can Commonwealth entities mitigate risks of challenge and associated delay to procurement?

If a Commonwealth entity receives a complaint under the GPJRA in respect of a covered procurement then, unless a PIC is in force, that procurement will need to be suspended. That is, no further steps can be taken in the procurement process.

In order to mitigate the risk of challenge and associated delays and to place entities in the best possible position to ensure compliance with the GRPJA, entities that are running procurements which might be subject to the GPJRA should be mindful to:

• ensure all tender documentation is clear, concise and compliant with the CPRs to ensure that industry understands the procurement process and evaluation criteria;
• develop internal policies and procedures for the handling of complaints, including investigation procedures and have regard to GPJRA policies of general application to Commonwealth entities;¹³
• publish a GPJRA complaints-handling policy to ensure transparency and consistency in the handling of GPJRA complaints;¹⁴
• determine at the commencement of the procurement, whether the procurement is a covered procurement for the purposes of the GPJRA- this will help shape the risk strategy throughout the course of the procurement activity;
• keep accurate and adequate records¹⁵ which document the decisions and reasoning made throughout the course of the procurement;¹⁶
• be mindful of correspondence or records generated outside of the above, noting that if those records are not subject to privilege (legal or otherwise) then those documents may be discoverable in any GPJRA proceeding or in an investigation;
• if the procurement is time critical, ensure that a PIC is obtained so that, if an investigation is required, the procurement process can continue on foot; and
• ensure compliance with all CPRs and if this is not possible, consider whether the project team should arrange for a measure to be made under CPR 2.6 which will cause certain CPRs to not apply to the procurement.

It is important that entities, throughout the life of their procurements, treat suppliers and potential suppliers ethically and equitably.

If a complaint about a procurement is received, relevant entities must apply timely equitable and non discriminatory complaint handling procedures. And relevant entities should aim to manage the complaint process internally, when possible, through communication and conciliation.¹⁷ Various agencies will have internal processes applicable upon receipt of complaints. These also need to be observed.