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senate vote 2018-10-18#4
Edited by
mackay staff
on
2023-06-09 07:54:53
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Title
Bills — Government Procurement (Judicial Review) Bill 2017; in Committee- Government Procurement (Judicial Review) Bill 2017 - in Committee - Sunsetting
Description
<p class="speaker">Rex Patrick</p><p>I move amendment (1) on sheet 8521:</p>-
- The majority voted against amendments (1) to (4) on [sheet 8524](https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:legislation/billhome/display.w3p;query=Id%3A%22legislation%2Famend%2Fr5871_amend_ecbeadcd-43d8-47a6-9100-0c8698883cc4%22;rec=0), which were introduced by Centre Alliance.
- ### Amendment text
- > *(1) Clause 4, page 3 (after line 14), after the definition of accountable authority, insert:*
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- >> **Agreement** *means the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, done at Santiago, Chile on 8 March 2018, as amended and in force for Australia from time to time.*
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- >> *Note 1: The Agreement could in 2018 be viewed in the Australian Treaties Library on the AustLII website (http://www.austlii.edu.au).*
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- >> *Note 2: Under Article 1 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the Santiago Agreement), most of the provisions of the Trans-Pacific Partnership Agreement (the Auckland Agreement), done at Auckland on 4 February 2016, are incorporated, by reference, into and made part of the Santiago Agreement. This means, for example, that Chapters 1 and 3 of the Auckland Agreement are, because of that Article, Chapters 1 and 3 of the Santiago Agreement.*
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- > *(2) Clause 4, page 4 (after line 2), after the definition of official, insert:*
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- >> **Party** *has the meaning given by Article 1of Chapter 1 of the Agreement.*
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- > *(3) Clause 21, page 16 (after line 16), at the end of the clause, add:*
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- >> *This Act ceases to have effect on 1 January 2020 unless certain bilateral side letters to the Agreement are exchanged and come into force for Australia before that day.*
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- > *(4) Page 17 (after line 17), at the end of Part 5, add:*
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- >> *26 Cessation of effect of Act*
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- >> *7 This Act ceases to have effect on 1 January 2020 unless all of the following come into force for Australia before that day:*
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- >>> *(a) bilateral side letters exchanged between Australia and each other Party agreeing that Chapter 9 of the Agreement, which deals with investor-State disputes, does not apply in relation to an investment in Australia by an investor of the other Party;*
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- >>> *(b) bilateral side letters exchanged between Australia and each other Party agreeing that labour market testing must occur in relation to contractual service suppliers entering, or proposing to enter, Australia from the other Party.*
<p class="italic">(1) Clause 2, page 2 (cell at table item 1, column 2), omit the cell, substitute:</p><p class="italic"> <i>[commencement]</i></p><p>I've got some questions for the minister in relation to the Government Procurement (Judicial Review) Bill 2017. The judicial review bill brings about a right for companies to seek a review of a decision, or perhaps seek an injunction or compensation in respect of a procurement. I've got some questions in relation to the transitional arrangements from when the bill is passed, particularly in circumstances where there are procurements underway. I want to know whether or not the bill will cause an effect on current tenders that are in play—noting that there are requirements, for example, when deciding on whether a procurement ought to be a limited tender, an open tender or a sole source. Those sorts of decisions now have to be documented. If we now kick off with new laws, assuming they end up being passed, what does that do to the current tenders on foot?</p> <p class="speaker">Anne Ruston</p><p>My advice is that there are six months before this particular process starts, which we believe will give ample time for those matters on foot to be dealt with.</p> <p class="speaker">Rex Patrick</p><p>A company might be aggrieved by a tender process. One of the potential causes of an action may, in fact, be that first decision to go to a limited tender, to an open tender or to a sole source tender of some sort. The potentially aggrieved party may not have access to the decision reasoning and so may be blind as to whether or not they have a case. When the departments are making these decisions and writing their reasons, can you confirm whether those reasons will be made public? Alternatively, will they be accessible under FOI? Alternatively, does it require some sort of prediscovery in a court action to be able to get access to work out whether or not you have a bona fide case to bring in terms of a complaint?</p> <p class="speaker">Anne Ruston</p><p>My advice is that the conditions of a limited tender must be made public.</p> <p class="speaker">Rex Patrick</p><p>In the past what has happened is that, typically, tenders are made public. It is not always the case with limited tenders, but certainly it is the case with sole tenders because the way in which that is typically done is through AusTender. For example, in relation to the submarine project, the government made a decision to go to DCNS, the Japanese government and, indeed, to the Germans, the French and the Japanese. None of the tendering details appeared on AusTender. You might recall that, for example, I had to extract details of Future Frigate from the government like a dental surgeon by way of FOI. So when you say the documentation is available, I'm not exactly sure whether in fact it is. I'll just ask you to check.</p> <p class="speaker">Anne Ruston</p><p>I'm advised that, under item 2.6 of the tender rules, matters of national security are exempt from the requirement for disclosure.</p> <p class="speaker">Rex Patrick</p><p>Clearly, some of those tenders are really big tenders. They're for significant value contracts, often ranging into the billions. In fact, one would imagine that the companies that are tendering for those sorts of contracts would have capabilities to bring quite serious actions. What happens in that instance, noting that there is, in some sense, a carve-out here? I'm thinking of circumstances where an Australian company is tendering for a job and an overseas company is tendering for a job. The overseas company wins. The Australian company suspects there's a problem but doesn't have access to this information. How would the Australian company get around that, or would they simply be disadvantaged in those circumstances?</p> <p class="speaker">Anne Ruston</p><p>Obviously, we're talking about a specific area of carve-out for a specific reason in terms of national security, and often those carve-outs are part of international agreements. However, voluntarily, the Australian government will provide information where they don't believe that it is contrary to the national interest or national security.</p> <p class="speaker">Rex Patrick</p><p>Defence has a whole range of contracts. They might have contracts for fighter jets, but, equally, they have contracts for cleaning services and so forth. Do you say that you distinguish those contracts?</p> <p class="speaker">Anne Ruston</p><p>The international rules will distinguish between which types of contracts would sit underneath the exclusions or the carve-out on the basis of national security and those that wouldn't.</p> <p class="speaker">Rex Patrick</p><p>I understand that, whilst this legislation is an enabling piece of legislation for the TPP, it is Australian legislation in its own right. So, for an Australian company, there are no impacts from an international treaty perspective. It is simply Australian law. In that context, I don't understand why you mention international treaties. This is Australian legislation litigated in Australian courts with no connection to the TPP, other than it enables that agreement to enter into force.</p> <p class="speaker">Anne Ruston</p><p>My apologies. I thought I was responding to your question in relation to the Defence examples that you were raising. If that's not what you were talking about, perhaps you might be a little clearer about what the actual question is, because we were talking about Defence carve-out.</p> <p class="speaker">Rex Patrick</p><p>Okay; I'll move on. Currently this bill deals with covered procurements, and those procurements are typically procurements above $80,000. At this point in time it is possible for someone to be given a contract by way of sole source under $80,000. It's not a covered procurement in the context of this bill. But then what happens is, if I get into contract for $79,999 with the Department of Defence—and they can do that quite lawfully just by way of sole source—they can then give me another $200,000 contract on the basis that I am already in contract with them. I'm just wondering how that is handled in the context of someone who perhaps wanted to provide those services and now sees a contract that's got a value of $279,000, which would normally give cause for invoking this legislation. Does it allow them to invoke the legislation or is that a loophole in the arrangements?</p> <p class="speaker">Anne Ruston</p><p>I'm advised that you couldn't use this mechanism to bring the matter before the court. You cannot use the mechanism contained in this legislation to bring a matter in relation to something over the amount of $80,000 to court.</p> <p class="speaker">Rex Patrick</p><p>Some time ago, by way of a question on notice—I think it might have actually been former Senator Xenophon who asked the question—the department was asked to give examples of where there had been a contract let for under $80,000 and then a subsequent contract awarded to the same company using the fact that the procurement rules allow that to occur without tender. The response from the department was that it would take up so much time. That indicates to me that there are lots and lots of businesses that are working with Defence in those circumstances—that is, a small contract followed by a larger contract—and this is mostly in the small-business space. You're saying that this legislation does not give them a remedy in circumstances where they feel that the procurement decision is flawed?</p> <p class="speaker">Anne Ruston</p><p>I'm advised that the circumstance you described is one the agency believes is highly unlikely to exist. There is absolutely no incentive in public sector procurement for the public sector to be breaking down contracts into small amounts to try to avoid a level of scrutiny or legislative assessment. So the advice is that that situation is highly unlikely to ever occur.</p> <p class="speaker">Rex Patrick</p><p>Again, I will state that I have an answer from the department that says that it occurs so often that they are unable to provide the answer to the FADT committee. I, in a previous life, worked in this space, and it was very common that you would bring someone on. Whether properly or improperly, you would bring them on as a specialist service under $80,000, and once you were initially employed, quite lawfully, without tender, they simply extended the contract. That is common practice, I put to you.</p> <p class="speaker">Anne Ruston</p><p>Certainly there are circumstances where it obviously makes good economic and business sense for contracts to be handed out in a certain and particular way, but the suggestion that this is a mechanism that is used to evade scrutiny, I think, is contested.</p> <p class="speaker">Rex Patrick</p><p>Nonetheless—and I understand where you're coming from, Minister—you would appreciate that another company, sitting beside watching and thinking that they have an opportunity to provide the services perhaps at a better price or perhaps with greater knowledge or some quite genuine reason, may disagree with your characterisation and would normally have the choice to seek a remedy and even to test the proposition that you say is not the case. The whole point of this legislation is to give those small companies the right to say, 'I don't think that was done correctly, and I want it examined.'</p> <p class="speaker">Anne Ruston</p><p>The rules that the public sector has to operate under for these particular types of contracts are very overt in their statement that they are not allowed to use this rule in order to be able to do anything apart from something that would be in the benefit of the contract on the basis that it's a small-sized tender. So I think we may be arguing at cross purposes to some degree here. Your suggestion, we're saying, is that there is a balance being determined here, on the basis of good business sense, speed and efficiency but with a set of rules around it that overtly say you cannot do this in order to evade any level of scrutiny. So I suppose we can discuss this for some time, but I think we may have to agree to disagree, on the basis that we believe that the rules put in place the kinds of protections that we think are appropriate and relevant for the type of contract that we're talking about. I suppose that's the position of the government in relation to this particular matter.</p> <p class="speaker">Rex Patrick</p><p>I'm in agreement. I understand the government takes a strong position that that is not what happens. But I'd ask you to respect the view that other companies who are generally competing with entities where they see this occurring may be concerned about it. It causes a controversy, and this bill is designed to solve those controversies. As you would be well aware, when you have a department that is subject to judicial review, in some sense it tightens it down further and gives much more rigour to the processes. So my concern is that you're carving these out. I'm just wondering—because this does occur commonly—if there's any way in which we could have a situation where this bill could cover those circumstances in some way.</p> <p class="speaker">Anne Ruston</p><p>Thank you, Senator. I accept your comments, but we believe this is the appropriate way to do it. The vast bulk of procurement operates under this particular mechanism, and I draw your attention—without belabouring a point—to paragraph 9.5 of the Procurement Rules:</p><p class="italic">A <i>procurement</i>must not be divided into separate parts solely for the purpose of avoiding a relevant <i>procurement threshold</i>.</p> <p class="speaker">Rex Patrick</p><p>Again I suspect someone may challenge that and claim that they have done that, but I'll leave it at that. The next question I have is: how do these rules interact with services panels? Once again, there's a requirement in here to allow review of contracts that may be awarded by our services panels. Indeed, there might be a circumstance where you have a company that is a participant in a panel and a company that's not a participant—an international company, even—which may cause rise to a controversy in that a company may say that they were not given a fair opportunity. So my first question is: does this bill apply to service panels as they are currently constructed? Indeed, can the fact that someone is not on a service panel give rise to an action under this bill?</p> <p class="speaker">Anne Ruston</p><p>Yes, it does apply to the panel. Action can be taken by someone in the process of trying to get onto the panel until the panel is operational. However, once the process of the establishment of the panel has been concluded and the panel is operational, at that point a non-panel member's opportunity to take action ceases.</p> <p class="speaker">Rex Patrick</p><p>I'm just trying to work out the mechanism, how this works, because there are many instances where someone becomes aware of a contract being awarded post facto—because it might not be the case that the tender is on AusTender. I'm wondering what the process is for a company that believes there's an action to be taken.</p><p>You've said clearly to me that tender documents are available on AusTender, except for the circumstances that you've mentioned, and I accept that. But there is a requirement now to document the actual decision to pick a particular type of procurement. You might say, 'I want to have a limited tender because I believe there are only three companies in the world that provide encryption and are trusted by our security agencies,' for example. How does someone who's outside of that—once again, it could be an international company—get access to the decision-making around that call for a limited tender that the department made? Can they do it via FOI, or is it simply made available as part of the tender package? Encryption might be a bad example, because that could be affected by security concerns. Maybe it's a company that has three specialised widgets. There are only three companies that can do that, and a limited tender goes out. But actually there's a fourth company, and they want to see how that decision-making was done.</p> <p class="speaker">Anne Ruston</p><p>My understanding is that any company, even if they're outside a limited tender, does have the opportunity to appeal to the department, to put forward their case that they should have been included in that tender. So they do have a remedy with the actual procuring department.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>-
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