Legal tips for Government procurement

The new Queensland Procurement Policy came into effect on 1 July 2013. It is a timely reminder of the important role that procurement plays in the business of government agencies.

In addition to the six principles outlined in the new policy, consideration should also be given to legal issues that arise during the planning and implementation stages of a procurement process. Some important legal issues to consider if you are planning a formal tender process are:

1. Clarity of scope in the Invitation to Offer

Care should be taken when drafting the Invitation to Offer to ensure that your requirements are adequately described. A failure to define the required goods or services can lead to confusion and create difficulties when it comes time to evaluate offers. For example, if offerors do not understand what is required, they may submit offers for something different and that would make it difficult to compare prices.

Of course, some tender processes are complex and provide offerors greater flexibility in the products or services they may offer. In those circumstances, it is still important to clearly identify the outcomes that must be delivered and to have a clear strategy on how to evaluate the different offers.

2. Familiarity with the market

Defining scope with sufficient clarity requires familiarity with the relevant market from which you are seeking offers. Taking time to carefully research the market to identify current trends and potential products can often assist in adequately defining scope in the Invitation to Offer. It may also highlight a need to obtain professional advice in relation to identifying and expressing your requirements.

Where a closed tender process is used (i.e. one in which offers are sought from a limited number of providers) market research becomes even more important as it is vital to ensure that offers are sought from capable and appropriate providers.

Finally, market research should help you form an understanding of the likely cost and timeframes to deliver the goods or services you require. In turn, this allows you to evaluate offers in a well informed and knowledgeable way.

3. Appropriate conditions of contract

It is good practice to include the proposed contractual terms in the Invitation to Offer document. This gives offerors the opportunity to comment on the draft contract and allows for the early identification of any potential sticking points in contract negotiation. Even when using the standard government conditions of offer and conditions of contract, consideration should be given to whether any special conditions are required.

If an offeror proposes additional special conditions or different conditions of contract as part of its offer, legal advice should be obtained during the evaluation process to ensure that the legal effect of the proposed conditions is understood. The conditions of contract proposed by an offeror may contain terms that are unacceptable or highly onerous and that may drastically affect their offer’s suitability or value.

4. Management of conflicts of interest

It is important to ensure that any conflicts of interest that arise in relation to members of the evaluation panel, or others involved in the tender process, are appropriately managed. Conflict of interest declarations should be obtained from all members of the evaluation panel before the process begins and relevant information recorded in a formal conflicts register.

It is also important to remember that identifying and recording potential or actual conflicts of interest is not sufficient. Consideration also needs to be given to management of any conflicts, including whether a conflicted individual should participate in the tender process at all. A failure to appropriately manage conflicts may expose the evaluation team’s decision to criticism. A formal record should be made regarding decisions about conflicts of interest during the tender process.

Significant procurements may warrant the appointment of a probity advisor whose role is to ensure probity throughout the tender process, including by managing conflicts of interest.

5. Fair treatment of offerors

All offerors must be treated equally. A failure to do so may lead to allegations of bias that compromise the tender process and any resultant contract. Any information provided to one offeror in relation to a clarification question should always be provided to all other offerors. Private meetings with individual offerors are also risky, unless the meetings occur within a clear framework for pre-offer presentations or information sessions that is prescribed under the Invitation for Offer document.

The information in this publication is provided for general purposes only. It is not to be relied on as a substitute for legal advice. Crown Law and the Department of Justice and Attorney-General accept no liability for losses caused by reliance on the material in this publication. Formal legal advice should be obtained for particular matters.

Published: 17 December 2013

Author: Catherine Jackson