Procurement complaints management guidelines - FAQ

Why were revised Complaint Management Guidelines issued?

The Public Works and Procurement Act 1912 (PW&P Act) has been amended to introduce a statutory right for a supplier to lodge a written complaint alleging that a government agency is contravening or proposes to contravene NSW Procurement Board Direction PBD 2019-05 Enforceable Procurement Provisions. Affected agencies must take specific actions when dealing with these complaints. The amendments to the PW&P Act come into effect on 29 November 2019.

The revised Complaint Management Guidelines (DOCX, 96 KB) update previous guidelines and include advice for NSW Government agencies on dealing with statutory complaints under the PW&P Act.

What is a covered complaint?

The Complaint Management Guidelines use the term covered complaint to refer to a complaint made under section 176A of the PW&P Act. A covered complaint is a complaint that:

  • is made in writing to the head of an agency or their nominated delegate
  • alleges that the conduct of the agency contravenes or proposes to contravene an enforceable provision in PBD 2019-05 Enforceable Procurement Provisions
  • is lodged by a supplier or potential supplier whose interests are affected by the alleged contravention.

The PW&P Act does not specify when a supplier’s interests are affected by an alleged contravention.

What is an enforceable procurement provision?

The PW&P Act authorises the NSW Procurement Board to specify provisions in Board Directions and policies relating to an international procurement agreement that are enforceable procurement provisions.

PBD 2019-05 Enforceable Procurement Provisions sets out requirements arising from international procurement agreements applying to the NSW Government. Clause 4 of PBD 2019-05 identifies the specific provisions in the direction which are enforceable procurement provisions.

What actions must an agency take when a covered complaint is received?

The head of an agency that receives a covered complaint (or their nominated delegate) must:

  • suspend all processes in the procurement that would adversely affect the complainant’s participation in the procurement
  • investigate the conduct that is the subject of the complaint
  • take reasonable action to resolve the complaint promptly
  • prepare a written report on the investigation.

Suspension of an affected procurement process must remain in place until the complainant takes one of the following actions:

  • withdraws the complaint
  • informs the head of the agency that their complaint is resolved
  • commences proceedings in the Supreme Court in relation to the complaint.

The head of the agency does not need to suspend a procurement process or continue a suspension that is in place if they certify that suspension of the process is not in the public interest.

What is a public interest certificate?

A public interest certificate is a written certificate issued by the head of an agency which states that it is not in the public interest to suspend a specified procurement while:

  • a covered complaint is being investigated or
  • the Supreme Court is considering an application for an injunction regarding conduct that was the subject of a complaint.
When can a public interest certificate be issued?

A public interest certificate can be issued at any time, including when an approach to market is approved.

In what circumstances can a public interest certificate be issued?

A Public Interest Certificate should only be issued where suspending the procurement would have an adverse impact on the public interest that exceeds the right of a supplier to have the procurement suspended.

It will be a matter of judgment for the agency head to weigh the relative merits of these competing interests, which will depend on a range of factors, including but not limited to:

  • the purpose of the goods or services being procured
  • the scope, scale and risk of the procurement
  • the criticality of timing for the procurement
  • linkages and interdependencies with other processes, including other non-procurement processes
  • the scale and scope of the alleged breach of the enforceable procurement provision and the potential materiality of that alleged breach on the interests of the aggrieved supplier
  • whether the supplier has responded to the agency’s findings about its investigation of a complaint.

If the agency head determines that it is appropriate to issue a public interest certificate, the agency should document the decision, including the reasons why a suspension would have an adverse impact on the public interest that outweighs the private interest of the aggrieved supplier to have the covered procurement suspended. This information may be required for legal proceedings.

What processes must be suspended when a covered complaint is lodged?

An agency must suspend all processes in the procurement that may adversely affect the capacity of the complainant to participate in the procurement. This would include any decision or process that would result in a contract being awarded and, depending upon the circumstances, potentially may include other actions such as:

  • issuing procurement documentation and providing information to potential suppliers
  • inviting suppliers to make submissions
  • eliminating suppliers who do not meet conditions for participating in the procurement
  • assessing suppliers' proposals against evaluation criteria.

An agency will need to determine what processes must be suspended based on the particular circumstances.

An agency that suspends a procurement process will also need to consider how the suspension affects other suppliers. If any change is made to the procurement process or documentation, the agency will need to ensure that all suppliers participating in the procurement are provided with any reissued documents and if relevant the notice inviting submissions should be republished.

Participating suppliers must all be provided with reasonable time to modify and re-lodge submissions if this is relevant.

How long do agencies have to investigate and resolve a covered complaint?

An agency must take reasonable action to resolve a covered complaint promptly.

A supplier who has lodged a complaint with an agency can apply to the Supreme Court for an injunction to remedy the alleged contravention at any time. This application must, however, be made within 10 calendar days of when the supplier became aware (or reasonably should have been aware) of the alleged contravention - unless the Court allows a longer time period.

To prevent an unnecessary escalation into legal proceedings an agency should investigate and, where appropriate, seek to resolve a complaint as soon as achievable within this 10 day period.

Can an agency discontinue an investigation of a covered complaint?

An agency can discontinue an investigation of a covered complaint if the complainant withdraws the complaint, advises the agency that they consider the complaint has been resolved, or commences proceedings in the Supreme Court.

An agency can also discontinue an investigation if the head of the agency considers it reasonable to do so in the circumstances. The Act does not specify the circumstances, but they may potentially include:

  • the alleged contravention has already been investigated in response to a complaint from another supplier
  • the complaint has no apparent basis and is determined to be vexatious.

An agency that discontinues an investigation must still prepare a written report of the investigation that has been undertaken.

An agency is required to discontinue an investigation if the Supreme Court makes findings in relation to the conduct that was the subject of the complaint, and in any other circumstance where continuing the investigation would be likely to result in prejudice to the proper administration of justice.

What information should an investigation report contain?

An investigation report should provide sufficient information to demonstrate that the agency has fully considered the complaint and the conduct that is the subject of the complaint. The agency may need to rely on the content of the report in legal proceedings.

It would be prudent for the report to at least include the following:

  • details of the complaint, including the alleged conduct that is the subject of the complaint and the EPP that was allegedly contravened
  • information about the conduct of the investigation, including any interviews with officers involved in the procurement, procurement documentation that has been reviewed, and any additional information sought from the complainant
  • details of any steps taken to resolve the complaint with the complainant
  • a summary of the findings of the investigation
  • where the investigation finds that contraventions have or may have occurred, details of the proposed remedial action.
What should an agency do if a complainant has not provided enough information to enable an adequate investigation?

The agency should engage with the complainant at the earliest opportunity to ensure sufficient information is available to enable a proper investigation.

What should an agency do if a covered complaint includes other matters?

The agency should ensure that any alleged contravention of an enforceable provision is managed as a covered complaint. The agency should determine the most appropriate way to consider other matters raised in the complaint.

What should an agency do if an investigation finds evidence of some potentially corrupt conduct?

The principal officer of an agency has a duty under the Independent Commission Against Corruption Act 1988 (s.11) to report to the ICAC any matter that the officer suspects on reasonable grounds concerns or may concern corrupt conduct.

Any further action on the investigation or the procurement affected by the report should be informed by advice from the ICAC.

Can a supplier complain about not being included in a prequalification scheme or procurement list?

A supplier can complain about not being included in a pre-qualification scheme or a procurement list.

A complaint about not being included in a pre-qualification scheme should be managed in accordance with the rules for the relevant scheme. A complaint relating to an existing pre-qualification scheme is not a covered complaint. The new requirements for covered complaints in the PW&P Act do not apply.

A procurement list is defined in the PW&P Act as a list of suitable suppliers (including suppliers selected using a prequalification scheme) intended to be used more than once for procurements by or for one or more government agencies, but does not include a procurement panel. A procurement list can be set up under PBD 2019-05 Enforceable Procurement Provisions for procurement that is covered by the Direction.

A supplier will be able to lodge a covered complaint about not being included in a procurement list if they allege that the grounds for not being included contravene provisions in the Direction. An example of a potential covered complaint may be where the criteria used for assessing applicants discriminate against a supplier that is located outside of Australia.

What should an agency do if the Minister refers a complaint about conduct by the agency that may potentially be a contravention of an enforceable procurement provision?

The agency should notify the complainant that they have received the complaint and then manage the complaint as a covered procurement complaint.

What action can the Supreme Court take regarding a covered complaint?

The Supreme Court can take any action consistent with its powers to provide remedies for contraventions or proposed contraventions of enforceable procurement provisions.

This includes powers under the PW&P Act to:

  • grant an injunction restraining an agency from contravening an enforceable procurement provision or requiring an agency to take any action or do anything necessary to avoid or remedy a contravention or proposed contravention
  • grant an interim injunction pending determination of an application for an injunction
  • make an order for the payment of compensation to the supplier.

The PW&P Act specifically provides that contravention of an enforceable procurement provision does not affect the validity of any contract.

When can the Supreme Court issue an injunction?

The Supreme Court can issue an injunction under the PW&P Act where a supplier has:

  • lodged a complaint with the agency head
  • made an attempt to resolve the complaint to the extent that the Court considers reasonable, and
  • applied to the Supreme Court for an injunction within 10 days of the supplier becoming aware (or should reasonably have become aware) of the alleged contravention.

The Court can allow a longer period than 10 days if the supplier failed to lodge an application with the Court due to the supplier’s reasonable attempt to resolve the complaint, or the Court considers that there are other special circumstances.

An agency should investigate a covered complaint and attempt to resolve the matter as a high priority to minimise the risk that a complaint will escalate into unnecessary legal proceedings.

When can the Supreme Court issue an interim injunction?

The Supreme Court can issue an interim injunction under the PW&P Act at any time on application by a supplier.

However, the Court must be satisfied that it is in the public interest to issue an interim injunction, if the head of the agency has issued a public interest certificate with respect to the procurement.

An agency head that issues a public interest certificate should ensure that the agency has adequate documented reasons to satisfy the Court that suspension of the procurement is not in the public interest.

What compensation can the Supreme Court order an agency to pay?

The Supreme Court can make any order for compensation consistent with its powers to provide remedies for contraventions or proposed contraventions of enforceable procurement provisions.

The amount of a compensation order made under the PW&P Act is limited to the reasonable expenditure incurred by the supplier in:

  • making a complaint
  • making a reasonable attempt to resolve the complaint
  • preparing a tender or expression of interest
  • applying for inclusion on a procurement list (pre-qualification scheme)
  • applying for inclusion on a panel.
When can the Supreme Court order an agency to pay compensation?

The Supreme Court can make a compensation order under the PW&P Act:

  • on application by a supplier whose interests are affected by a contravention or proposed contravention of an enforceable procurement provision
  • in place of an injunction where the Court considers that compensation would be a more appropriate remedy in the circumstances.

A supplier can apply to the Supreme Court for a compensation order at any time.

The PW&P Act does not require that a supplier lodge a complaint with the agency before applying for compensation or require that the application be lodged within any specified time period.