Procurement
| Author | Julian Bailey |
| Pages | 251-341 |
251
CHAPTER 4
PROCUREMENT
Introduction 252
An overview of the tendering process 254
(i) Generally 254
(ii) Pre-qualication 254
(iii) Tender list 255
(iv) Design contest 255
(v) Tender submission 256
(vi) Two-stage tendering 256
(vii) Contract award 257
Public procurement laws – England 257
Domestic public procurement laws in England 258
(i) Generally 258
(ii) Criteria for awarding contracts 259
(iii) Remedies 259
European public procurement laws (England) 260
(i) Introduction 260
(ii) Application of the Public Contracts Regulationsand the Utilities
Contracts Regulations 261
(iii) Terms of the proposed contract 264
(iv) e tender process 265
(v) Award of contract 277
(vi) Remedies for irregularities in the tendering process 280
Public procurement laws in Australia 291
(i) Generally 291
(ii) Overview of each jurisdiction 292
(iii) Legal eect of procurement regimes 295
Public procurement laws in Hong Kong 296
(i) Introduction 296
(ii) e Stores and Procurement Regulations 296
(iii) Review of procurement decisions 299
Public procurement laws in Singapore 299
(i) Introduction 299
(ii) Application 299
(iii) Procurement requirements 300
Contractual rights in tendering 300
(i) Introduction 300
(ii) Contract to govern the tendering process 301
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252
(iii) Form of tender 306
(iv) Damages and other remedies 306
(v) No tendering contract 307
(vi) Withdrawal of tender 307
(vii) Bid deposits or bonds 308
(viii) Agreement to negotiate 308
(ix) Agreement to agree 309
Tendering costs 310
(i) Legal relationships in tendering 310
(ii) Tendering at the contractor’s risk 310
(iii) Contemplation of nancial reward 311
(iv) Unjust enrichment 313
Letter of intent 314
(i) Generally 314
(ii) Further agreement entered into 316
(iii) No further agreement executed 317
(iv) Scope of works contemplated 319
(v) Duty of consultant to advise owner 319
Pre-contractual representations 319
(i) Introduction 319
(ii) Misrepresentation 320
(iii) Innocent misrepresentation 320
(iv) Fraudulent misrepresentation 323
(v) Reliance 326
(vi) Estoppel by representation 327
(vii) Contractual warranty of accuracy of information 327
(viii) Site conditions: allocation of risk 327
(ix) “No reliance” clause 329
(x) Provision of information by a consultant engaged by the owner 331
(xi) Competition and Consumer Act 2010 (Cth) 332
Competition law 338
(i) Generally 338
(ii) Bid rigging 339
(iii) Economic torts 340
Introduction
4.01 Procurement refers to the mechanism by which resources are marshalled and
deployed, and contracts agreed, for the purpose of implementing a project.1 e concept
of procurement embraces not only consideration of the process and means by which
contracts are to be let, but also the choice of contractual arrangement for the particular
1 e Government Procurement Act 2001 (ACT) section 2A denes “procurement” as “the process of acquiring
goods, services, works or property by purchase, lease, rental or exchange”. Other denitions could equally be given.
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project; for example, whether a project is let on a “traditional” basis, a design and build
basis, or some other basis.2 In government infrastructure projects, it is common in the
United Kingdom and increasingly common in Australia for a PFI/PPP procurement
route to be used, so as to shift risks and responsibilities to the private sector for the
delivery of what would otherwise be a government-provided asset or service.3 is is to
be contrasted with more traditional forms of government procurement of public works,
where the work is either undertaken in house, or a contractor is engaged to perform
certain works that, when completed, are proered for public use and maintained by the
government itself.
4.02 At its simplest level, procurement may involve little more than a person nding a
builder or a tradesperson from the telephone book or the Internet, and arranging for that
person to perform certain work based on an oral agreement, or a short written quote.
At the other extreme, particularly for the procurement of large, public sector contracts,
where probity and transparency are of the utmost importance, the process of arranging
contractors to perform works may be intensely time consuming (for all involved), docu-
ment heavy, and subject to strict controls as to how the contract may be let.4
4.03 In all cases, no matter which procurement route is used, the elements of the
procurement process will be such that they can be grouped into one of three broad
categories: (a) individual negotiation; (b) tendering; and (c) other hybrid versions involv-
ing elements of tendering and individual negotiation. Contracts that are individually
negotiated, such as where an owner and a contractor meet and agree on terms, without
any kind of tendering process, are relatively simple in this context, in that the existence
and formation of a contract usually comes down to the application of elementary prin-
ciples, such as oer, acceptance, consideration, the parties having agreed upon essential
terms, and there being a mutual intention to enter into a contract. ese principles were
discussed in Chapter 2. e same principles are also relevant where a tendering process
is used, or elements of a tendering process are introduced. But the introduction of a
tendering element may carry with it legal consequences to the parties involved which
go beyond those that may exist in the case of a straightforward negotiation. It is these
2 Procurement routes were discussed in Chapter 1. A lead consultant may be under an obligation to recommend to
the proprietor the most advantageous procurement route to adopt, at least where it is apparent that the proprietor
requires such input from the lead consultant: see, eg, Vranicki v Architects Registration Board [2007] EWHC 506
(Admin); cf Karalis v Archonstruct Pty Ltd [2008] SASC 368 at [41] and [107], per Kourakis J. See also Jones, “e
Increasing Trend Towards Negligence Claims in the Construction Industry” (1989) 5 Building and Construction
Law 175 at 192–193.
3 By contrast, PFI/PPP procurement is not an established force in either Hong Kong or Singapore, although PPPs
are being used in Singapore.
4 Although probity and fairness are two of the mainstays of public procurement in both England and Australia,
further considerations may come into play, particularly where there are other governmental objectives: see, eg, Lane
and Moll, “Legislated Economic Equality” [2005] ICLR 379, which considers the preference system introduced
into South African public procurement to address social and economic inequality. See also Lee, “A case for fairness
in public works contracting”, 65 Fordham Law Review 1075 at 1090–1093 (1996). As yet a further observation,
it is sometimes apparent, in jurisdictions in which the nancial probity of the particular government is not a
strong point, that there is a marked dierence between the terms of a country’s public procurement laws, and their
implementation in practice: cf Hugh Verrier, “Government Procurement in Indonesia” [1989] ICLR 345, which
considers public procurement under the Soeharto regime.
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