Baker & McKenzie s Global Public Procurement Handbook 2012 Edition. With UNCITRAL s Model Law on Public Procurement with Commentary

Baker & McKenzie s Global Public Procurement Handbook 2012 Edition With UNCITRAL s Model Law on Public Procurement with Commentary

Baker & McKenzie s Global Public Procurement Handbook

2012 Baker & McKenzie All rights reserved. This publication is copyrighted. Apart from any fair dealing for the purposes of private study or research permitted under applicable copyright legislation, no part may be reproduced or transmitted by any process or means without the prior permission of the editors. The material in this guide is of the nature of general comment only. It is not offered as legal advice on any specific issue or matter and should not be taken as such. Readers should refrain from acting on the basis of any discussion contained in this publication without obtaining specific legal advice on the particular facts and circumstances at issue. While the authors have made every effort to provide accurate and up to date information on laws and regulations, these matters are continuously subject to change. Furthermore, the application of these laws depends on the particular facts and circumstances of each situation, and therefore readers should consult their attorney before taking any action. Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a partner means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an office means an office of any such law firm. This may qualify as Attorney Advertising requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.

Baker & McKenzie's Global Public Procurement Handbook Editors Note Baker & McKenzie is pleased to provide you with this complimentary inaugural 2012 Edition of our Global Public Procurement Handbook. While we have been working with our clients in public procurement for many years both private companies and public agencies the release of the Handbook is timely as it reflects the growing complexity of the laws and practices in most jurisdictions around the world. The basis of public procurement includes law, business, public policy and trade regulation. Because the area is grounded in so many disciplines, those who are involved in public procurement often start from different perspectives, and just as often tend to have widely differing views about ways to resolve issues. It is an area where those with a broad range of competencies stand a better chance of unraveling the complexities and achieving concrete results. Whether it is a U.S. products company looking to sell its technology to a public agency in China, a German engineering company proposing to build a bridge in neighboring France, a Singaporean telecommunications provider bidding on the provision of services to the U.S. Navy in Asia, or a public hospital in Canada planning to outsource most of its medical equipment to a private company through all of these cases and many others, we know by the evolving mix of inquiries received from our clients in recent years that the challenges in public procurement have grown exponentially. There are now more laws and regulations, which have increasingly become the subject of more stringent enforcement and oversight, whether directly by the courts or indirectly through state auditors. Bid protest mechanisms that provide expedited redress to disappointed bidders have also proliferated, as has the number of protests. The stakes are often high in public procurement. For the public sector, the procurement legal framework typically represents the means by which public agencies carry out their institutional mandate (their raison d être). For the private sector, public procurement is a path to the sale of goods, construction and services to what are often the biggest and most important clients in most jurisdictions around the world (i.e., in fiscal 2010, federal procurement spending in the United States topped US$535 billion). Because public procurement involves the acquisition by a public agency of goods and/or services or construction, it is by its nature transactional. Yet, to Baker & McKenzie i

prevent fraud, waste, corruption or local protectionism, the field has become heavily regulated. For instance, many of the concerns of global corporate executives in respect of enforcement under the U.S. Foreign Corrupt Practices Act ( FCPA ) relate directly to public agencies procurement activities. In fact, the United Nations Convention Against Corruption, which came into force in 2005, treats corruption as an integral part of procurement regulation and not as a separate regulatory area. We know from our clients that a conscientious approach to procurement whether on the public or private side often calls for a review of proposed practices to ensure full compliance with a fast-evolving regulatory framework. We are pleased to include in this edition of the Handbook the Model Law on Public Procurement revised by the United Nations Commission on International Trade Law ( UNCITRAL ) in 2011, preceded by a Commentary from a lawyer who was deeply engaged in the efforts to modernize the Model Law. The Model Law is a template available to national governments around the world seeking to introduce or to reform their existing internal public procurement legislation. It reflects new procurement practices, particularly as it relates to electronic procurement ( eprocurement ) and related aspects of electronic commerce. Because our objective in issuing the Handbook is to promote the development of best legal and business practices in public procurement, we welcome this collaboration with UNCITRAL, and commend the organization on its significant efforts to modernize the Model Law. This will help to realize the many benefits flowing from transparent and robust international public procurement practices. Baker & McKenzie s Global Public Procurement Team works with private and public organizations, and provides counseling, transactional, compliance and litigation support. Whether you are a public agency proposing to issue an RFP for a large project, or a private company selling internationally, we can help. To learn more about how we may be able to assist you and your organization, please reach out to any member of our Global Public Procurement Editorial Team (listed below) or Global Public Procurement Team in your jurisdiction. Denis Chamberland and Theo Ling Lead Editors ii Baker & McKenzie

Baker & McKenzie's Global Public Procurement Handbook Editorial Team Anne-Marie Allgrove (Sydney) Tel: +61 2 8922 5274 anne-marie.allgrove@bakermckenzie.com Arnaud Cabanes (Paris) Tel: +33 144175362 arnaud.cabanes@bakermckenzie.com Denis Chamberland (Toronto) Tel: +1 416 865 2333 denis.chamberland@bakermckenzie.com Marc Gabriel (Berlin) Tel: +49 (0) 30 2 20 02 81 720 marc.gabriel@bakermckenzie.com Barbara Li (Beijing) Tel: +86 10 6535 3824 barbara.li@bakermckenzie.com Theo Ling (Toronto) Tel: +1 416 865 6954 theodore.ling@bakermckenzie.com John P. Rowley III (Washington, DC) Tel: +1 202 835 6151 john.rowley@bakermckenzie.com Heloisa Uelze (Sao Paulo) Tel: +55 11 3048 6818 heloisa.uelze@bakermckenzie.com Baker & McKenzie iii

Contributing Lawyers Argentina Guillermo Cervio Buenos Aires Tel: +54 11 4310 2223 guillermo.cervio@bakermckenzie.com Luis Dates Buenos Aires Tel: +54 11 5776 2367 luis.dates@bakermckenzie.com Belgium Daniel Fesler Brussels Tel: +32 2 639 36 58 daniel.fesler@bakermckenzie.com Gregory Lebrun Brussels Tel: +32 2 639 37 15 gregory.lebrun@bakernermckenzie.com Esteban Ropolo Buenos Aires Tel: +54 11 4310 2263 esteban.ropolo@bakermckenzie.com Australia Anne-Marie Allgrove Sydney Tel: +61 2 8922 5274 anne-marie.allgrove@bakermckenzie.com Brazil Maria Cristina Machado Cortez Sao Paulo Tel.: +55 11 3048 6793 m.cristina.cortez@bakermckenzie.com Heloisa Uelze Sao Paulo Tel: +55 11 3048 6818 heloisa.uelze@bakermckenzie.com Patrick Fair Sydney Tel: +61 2 8922 5534 patrick.fair@bakermckenzie.com Anne Petterd Sydney Tel: +61 2 89225221 anne.petterd@bakermckenzie.com Robert Walker Melbourne Tel: + 61 3 96174445 robert.walker@bakermckenzie.com Canada Denis Chamberland Toronto Tel: +1 416 865 2333 denis.chamberland@bakermckenzie.com Lisa Douglas Toronto Tel: +1 416 865 6972 lisa.douglas@bakermckenzie.com Theo Ling Toronto Tel: +1 416 865 6954 theodore.ling@bakermckenzie.com iv Baker & McKenzie

Baker & McKenzie's Global Public Procurement Handbook Craig Logie Toronto Tel: +1 416 865 6960 craig.logie@bakermckenzie.com China (PRC) Nancy Leigh Hong Kong Tel: +852 2846 1787 nancy.leigh@bakermckenzie.com Barbara Li Beijing Tel: +86 10 6535 3824 barbara.li@bakermckenzie.com Howard Wu Shanghai Tel: +86 21 6105 8538 howard.wu@bakermckenzie.com Colombia Daniel Bayona Bogotá Tel: +571 6446516 daniel.bayona@bakermckenzie.com Carolina Pardo Cuellar Bogotá Tel: +571 6446516 carolina.pardo@bakermckenzie.com Ricardo Trejos Bogotá Tel: +571 6446516 ricardo.trejos@bakermckenzie.com Czech Republic Petra Ledvinkova Prague Tel: +420 236 045 001 petra.ledvinkova@bakermckenzie.com Katerina Schenkova Prague Tel: +420 236 045 001 katerina.schenkova@bakermckenzie.com European Union Nina Niejahr Brussels Tel: +32 2 639 37 46 nina.niejahr@bakermckenzie.com Quentin Azau Brussels Tel: +32 2 639 37 07 quentin.azau@bakermckenzie.com France Arnaud Cabanes Paris Tel : +33 144175362 arnaud.cabanes@bakermckenzie.com Alexia Robbes Paris Tel: +33 144175382 alexia.robbes@bakermckenzie.com Germany Marc Gabriel Berlin Tel: +49 (0) 30 2 20 02 81 720 marc.gabriel@bakermckenzie.com Matthias Scholz Frankfurt Tel: +49 (0) 69 2 99 08 203 matthias.scholz@bakermckenzie.com Katharina Weiner Berlin Tel: +49 (0) 30 2 20 02 81 720 katharina.weiner@bakermckenzie.com Baker & McKenzie v

Hungary József Antal Budapest Tel: +36 1 302 3330 jozsef.antal@bakermckenzie.com Anna Ménes Budapest Tel: +36 1 302 3330 anna.menes@bakermckenzie.com India Amit Kapur New Delhi Tel: +91 011 43110630 amit@jsalaw.com S. P. Purwar Gurgaon Tel: +91 124 4390678 purwar@jsalaw.com Fabio Svizzero Milan Tel: + 39 02 76231 334 fabio.svizzero@bakermckenzie.com Malaysia Kong Si Ying Kuala Lumpur Tel: +603 2298 7924 siying.kong@wongpartners.com Sonia Ong Kuala Lumpur Tel: +603 2298 7931 sonia.ong@wongpartners.com Adeline Wong Kuala Lumpur Tel: +603 2298 7880 adeline.wong@wongpartners.com Vishnu Sudarsan Gurgaon Tel: +91 124 4390677 vishnu@jsalaw.com Italy Pierfrancesco Federici Milan Tel: + 39 02 76231 379 pierfrancesco.federici@bakermckenzie.com Mexico Jorge Guadarrama-Yañez Mexico City Tel: +52 55 5279 2920 jorge.guadarrama@bakermckenzie.com Carlos Maass-Porras Juarez Tel: +52 656 629 1366 carlos.maass-porras@bakermckenzie.com Lorenzo de Martinis Milan Tel: + 39 02 76231 334 lorenzo.de.martinis@bakermckenzie.com Gherri Magaraggia Milan Tel: + 39 02 76231 379 Gherri.magaraggia@bakermckenzie.com Gabriela Marroquin-Garcia Juarez Tel: +52 656 629 1336 gabriela.marroquingarcia@bakermckenzie.com Sergio Legorreta-Gonzalez Mexico City Tel: +52 55 5279 2954 sergio.legorreta@bakermckenzie.com vi Baker & McKenzie

Baker & McKenzie's Global Public Procurement Handbook Jorge L. Ruiz Juarez Tel: +52 656 629 1306 jorge.ruiz@bakermckenzie.com Benjamin Torres-Barron Juarez Tel: +52 656 629 1334 benjamin.torresbarron@bakermckenzie.com Netherlands Robert Boekhorst Amsterdam Tel: +31 (0) 20 551 7533 robert.boekhorst@bakermckenzie.com Maarten Goudsmit Amsterdam Tel: +31 (0) 20 551 7540 maarten.goudsmit@bakermckenzie.com Kevin van t Klooster Amsterdam Tel: +31 (0) 20 551 7493 kevin.vantklooster@bakermckenzie.com Poland Wojciech Pfadt Warsaw Tel: +48 22445 3200 wojciech.pfadt@bakermckenzie.com Singapore Ken Chia Singapore Tel: +65 6434 2558 ken.chia@bakermckenzie.com See Khiang Koh Singapore Tel: +65 6434 2651 see.khiang.koh@bakermckenzie.com Spain Pep Brugera Barcelona Tel: +34 93 206 0820 pep.bruguera@bakermckenzie.com Laia Colome Barcelona Tel: +34 93 206 0820 laia.colome@bakermckenzie.com Elisabet Cots Barcelona Tel: +34 93 206 0820 elisabet.cots@bakermckenzie.com Xavier Junquera Barcelona Tel: +34 93 206 0820 xavier.junquera@bakermckenzie.com Sweden Morvarid Dorkhan Nilsson Stockholm Tel: +46 (0) 8 566 177 87 morvarid.dorkhan@bakermckenzie.com Tobias Nilsson Stockholm Tel: +46 (0) 8 566 177 48 tobias.nilsson@bakermckenzie.com Magnus Stålmarker Stockholm Tel: +46 (0) 8 566 177 08 magnus.stalmarker@bakermckenzie.com Filip Skoglund Stockholm Tel: +46 (0) 8 566 177 54 filip.skoglund@bakermckenzie.com Baker & McKenzie vii

Taiwan H. Henry Chang Taipei Tel: +886 2 2715 7259 henry.chang@bakermckenzie.com Melanie Ho Taipei Tel: +886 2 2715 7393 melanie.ho@bakermckenzie.com Eason Su Taipei Tel: +886 2 2715 7355 eason.su@bakermckenzie.com Thailand Yuthana Sivaraks Bangkok Tel: +66 (0) 2636 2000 yuthana.sivaraks@bakermckenzie.com United Kingdom Ross Denton London Tel: +44 207 919 1978 ross.denton@bakermckenzie.com Yindi Gesinde London Tel: +44 207 919 1057 yindi.gesinde@bakermckenzie.com Richard Pike London Tel: +44 207 919 1416 richard.pike@bakermckenzie.com United States John P. Rowley III Washington, DC Tel: +1 202 835 6151 john.rowley@bakermckenzie.com Denis Chamberland Toronto/Washington, DC Tel: +1 416 865 2333 denis.chamberland@bakermckenzie.com Jennifer Ancona Semko Washington, DC Tel: +1 202 835 4250 jennifer.semko@bakermckenzie.com Theo Ling Toronto Tel: +1 416 865 6954 theodore.ling@bakermckenzie.com Jacqueline Wilkosz Chicago Tel: +1 312 861 7985 jacqueline.wilkosz@bakermckenzie.com Vietnam Fred Burke Ho Chi Minh Tel: +84 8 3 520 2628 fred.burke@bakermckenzie.com Chi Lieu Dang Hanoi Tel: +84 4 3936 9341 chilieu.dang@bakermckenzie.com Dinh Quan Nguyen Ho Chi Minh Tel:+84 8 3 520 2674 dinhquan.nguyen@bakermckenzie.com Yee Chung Seck Ho Chi Minh Tel: +84 8 3 520 2633 yeechung.seck@bakermckenzie.com viii Baker & McKenzie

Baker & McKenzie's Global Public Procurement Handbook Table of Contents Editors Note... i Contributing Lawyers... iv Asia Pacific...1 Australia...3 China...15 India...23 Malaysia...44 Singapore...50 Taiwan...61 Thailand...70 Vietnam...75 Europe...85 Belgium...91 Czech Republic...101 European Union...111 France...120 Germany...129 Hungary...144 Italy...153 Netherlands...163 Poland...172 Spain...181 Sweden...190 United Kingdom...205 Latin America...215 Argentina...219 Brazil...227 Colombia...237 Mexico...252 North America...265 Baker & McKenzie ix

Canada...272 United States...280 United Nations Commission on International Trade Law (UNCITRAL)...289 Commentary...291 UNCITRAL Model Law on Public Procurement...293 Baker & McKenzie Offices Worldwide...375 x Baker & McKenzie

Asia Pacific

Baker & McKenzie's Global Public Procurement Handbook Asia Pacific Asia Pacific As a general rule, in the Asia-Pacific region (particularly in the countries surveyed, namely Australia, China, India, Malaysia, Singapore, Taiwan, Thailand and Vietnam), there exist local frameworks which regulate government procurements. Such frameworks have been established under procurement specific legislation or government-issued regulations, circulars or policies and vary in terms of the level of detail and transparency. In considering the regulatory frameworks in place across the Asia-Pacific region, a number of similarities, differences and trends may be observed. Similarities The frameworks regulating government procurement are generally built upon similar principles of fairness, transparency, accountability, equitable treatment, efficiency, value and open competition. A range of procurement models are available in each country, varying from competitive to sole/direct source models. An open competitive bidding process is not required for government procurements in certain circumstances, such as where the value of a given tender does not meet a specified threshold. Prospective bidders may be excluded from competition in a tender for various reasons, including where such a bidder fails to meet tender criteria or has been previously blacklisted. Rules apply to the nature and/or presentation of criteria/specifications for tenders. Rules against anti-avoidance, bid rigging or other anti-competitive conduct impact upon the procurement processes. Successful bids are generally based on evaluations of both price and compliance with bid criteria. Differences Notwithstanding that there is a basic underlying principle of equitable treatment in Malaysia, this principle is affected in part by the Bumiputera affirmative action policy whereby certain government procurement contracts are only available to Bumiputeras. Baker & McKenzie 1

In India and Australia, defence procurement is not treated differently from other types of procurement but additional policies or rules may apply. In Taiwan and China, military or defence procurement is treated differently from other types of procurement and in Singapore, procurements by the Ministry of Defence of certain goods will be treated differently. In Vietnam, government procurement laws do not distinguish in their application between public agencies and private organisations. In Taiwan, certain private entities may be covered (where they are the beneficiaries of government grants, subject to specified thresholds being met). In Thailand, procurement specific laws prohibit bidders from joining to submit a bid. In other countries, aside from general competition laws, there are no procurement-specific laws that expressly impose an outright prohibition on joint bids. Although in a number of jurisdictions, agencies may issue specific requirements or there may be standard contracts for technology procurements, only China has specific laws that apply to government procurement of technology goods or services. Trends Online bidding or procurement processes are increasingly being used or trialled in countries such as Malaysia, Singapore, Thailand and Vietnam. A number of countries in the region are shifting toward frameworks that encourage flexibility in procurement processes and competition. There is also a movement towards more effective regulation of procurements, procurements of green or eco-friendly products, and greater vigilance and enforcement in respect of compliance with procurement laws. There is a growing recognition of the role of international trade agreements and/or their impact on local procurement laws in countries such as China, India, Singapore and Vietnam. 2 Baker & McKenzie

Baker & McKenzie's Global Public Procurement Handbook Australia Australia 1. The Laws a. What is the applicable legislation? Government procurement activity in Australia is regulated at federal, state/territory and local government levels. At the federal level, the Financial Management and Accountability Act 1997 (Cth) establishes a framework and general principles for the proper expenditure of public monies by government departments and agencies. Requirements for procurement are primarily contained in the Commonwealth Procurement Guidelines ( CPGs ) issued under regulations to the Act. Government procurement is also subject to other policies and directions. Many of these are captured in Finance Circulars issued by the Department of Finance and Deregulation. Finance Circulars address some contract positions (e.g., on indemnities). Unlike some jurisdictions, contract terms for Australian government procurement are not contained in regulations. At the state/territory and local levels, there is also legislation regulating the proper expenditure of public monies. As an overall comment, regulation of government procurement activities at these levels tends to be more prescriptive than at the federal level. At a state/territory level, legislative instruments typically require, subject to limited exceptions, that a competitive procurement process be conducted for government supplies. Legislation in most states/territories create a central procurement body to set procurement policy and conduct most procurement. The procurement policies address similar matters to the federal CPGs. Most states/territories also issue Treasurer s Instructions (or equivalent) which address similar issues to the federal Finance Circulars. Discrete pieces of legislation or government policy in each jurisdiction also address other procurement issues such as public disclosure of contract details. Legislation regulating local government procurement tends to require, with limited exceptions, a tender to be conducted for supplies to local government. Note, this chapter does not cover generally applicable legislation such as legislation dealing with freedom of information or foreign corrupt practices which apply to contracts entered into by government entities. Baker & McKenzie 3

b. Does the legislation relate to or interact with any applicable trade agreement, such as the European Union procurement rules or the procurement requirements of the North American Free Trade Agreement ( NAFTA )? Bilateral trade agreements have impacted Australia s procurement rules and requirements. The most recent bilateral trade agreement to impact Australian government procurement was the Australia-United States Free Trade Agreement ( AUSFTA ). It came into force on 1 January 2005. The core goals of Chapter 15 of the AUSFTA (which deals with government procurement) are to eliminate preferential treatment and provide transparency in the tendering process. These goals have been incorporated into procurement frameworks across all Australian governments. For example, the CPGs ensure that competition is encouraged in procurement processes by prohibiting discrimination which would otherwise favour local suppliers and codify the requirement for transparency of process in procurement activities. Note that Australia is an observer, but not a member, of the World Trade Organisation Agreement on Government Procurement. c. What are the basic underlying principles of the legal framework (such as value for money, transparency and equal treatment)? The central principle of government procurement in Australia at all levels is value for money. Other procurement principles deal with encouraging competitive markets, adhering to non-discriminatory purchasing practices, accountability for purchasing decisions, and using efficient, effective, ethical and transparent procurement processes. These principles are reflected in broadly the same manner in the CPGs and state and territory procurement guidelines. Outside of the legislative framework, the courts have found governments to be subject to an implied term to conduct tenders fairly and in good faith. However, such an obligation is not automatically implied into each government tender, but depends upon the facts of each case. 4 Baker & McKenzie

Baker & McKenzie's Global Public Procurement Handbook Australia d. Is aerospace and defence procurement treated differently from other types of procurement? Defence procurement is undertaken by the federal government and is subject to the same legislative regime as other federal government procurement. However, due to the size of defence procurement spending and the specialised nature of defence procurement, the Department of Defence, through the Defence Materiel Organisation, has a number of complex additional defence-specific procurement rules. These are primarily contained in the Defence Procurement Policy Manual which is updated regularly. Defence also issues its own specialised contract terms. The contract terms include terms dealing with controlled technology provided by other countries (e.g., the United States). Australia is in the process of enacting legislation to implement the Australia- United States Treaty on Defence Trade Cooperation. This will result in some changes to aerospace and defence procurement requirements. 2. Application of the Statutory Procurement Laws a. Which public agencies are covered by the laws? At the federal and state/territory level, there are typically two types of government agencies for procurement purposes: departments and agencies which do not have a separate legal identity to the Crown (complying with the procurement laws and policies in most cases is mandatory for these bodies); and other government created bodies that have a separate legal identity to the Crown (e.g., bodies created by statute or government-owned companies). Treatment of these bodies differs. In some cases they may choose to subject themselves to the procurement laws and policies and in other cases they can be directed to comply. At the federal level, under the Commonwealth Authorities and Companies Act 1997 ( CAC Act ), government authorities and government whollyowned companies may be directed to comply with the CPGs. As a practical matter, most government created authorities and companies will have in place very similar procurement requirements to government departments and agencies. Baker & McKenzie 5

At the local government level, each local government will be required to comply with the local government procurement laws. b. Which private entities are covered by the laws? Private entities are not covered by the procurement frameworks discussed in this chapter. However, in a number of cases, private sector entities may be permitted to benefit from government purchasing. For example, private schools and hospitals may be allowed to buy from government established supply arrangements. c. Which types of contracts are covered? Any contracts that are awarded by government departments or agencies using public money or relating to public property will generally be subject to the procurement laws. It is important to check in each case whether the proposed procurement activity is covered by the relevant procurement laws especially where the relevant activity is not for procuring goods or services or the means of acquisition or contracting are non-standard. For the purposes of the federal CPGs, grants, investment (or divestment), sales by tender, loans, purchases of property or services for resale or of property or services used in the production of goods for resale and any property right not acquired through the expenditure of public money are not considered to be covered procurement activities. d. Are there anti-avoidance rules (including laws on bid rigging)? The Competition and Consumer Act 2010 (Cth) ( CCA ) (previously the Trade Practices Act 1974 (Cth)) was enacted to encourage competition in Australia. The CCA prohibits practices such as cartel conduct, anticompetitive agreements, boycotts, misuse of market power, exclusive dealing, resale price maintenance and acquisitions that substantially lessen competition. The CCA prohibits collusive tendering and price fixing and would apply to bid rigging between competitors. At the federal level, Part 7.6 of the Criminal Code Act 1995 (Cth) prohibits bribery of a Commonwealth government official. The states and territories also have laws prohibiting bribery and the giving of secret commissions. Secret commission offences also exist under common law. 6 Baker & McKenzie

Baker & McKenzie's Global Public Procurement Handbook Australia There is also legislation and supporting codes of conduct and policies at federal and state/territory level regulating the conduct of public servants and elected officials. These include requirements to obtain approval to receive gifts and register the receipt of any gifts and for dealing with actual or perceived conflicts of interest. 3. Procurement Procedures a. What procurement procedures can be followed? Public agencies in Australia can use a broad range of approaches. Consistent with the underlying principles referred to above, Australian governments will generally be required to procure goods and services by way of competitive tendering processes for procurements over a certain price threshold. Even below the threshold, there may be requirements to go to market in an attempt to ascertain the best value for money for the proposed procurement. Generally, one of the following different forms of procurement will be adopted: Competitive procurement this can be open so that any supplier can bid or a closed or select procurement where a prequalification process results in a limited set of suppliers being invited to bid. The prequalification process might be conducted through an earlier open tender, expression of interest or request for proposal process. Sole/direct source sole sourcing arrangements may be permitted in limited cases but are generally subject to additional rules. Period arrangements period contracts are established to enable agencies to purchase pre-qualified products. Period contracts operate as a standing offer by a supplier to supply specified product to a defined customer group at a pre-agreed cost for a given period. Agencies can source the products offered without the requirement for a tender each time. These types arrangements are generally established by an initial competitive tender to appoint one or more suppliers to a panel to supply the identified products. b. Are there any rules on the specifications/criteria? Most tender documents will set out evaluation criteria (which will reflect the requirements of the applicable procurement framework) and include mandatory specifications. Baker & McKenzie 7

c. Can certain prospective bidders be excluded from the competition? Bidders can be excluded from the competition where a government agency is permitted to undertake a select approach to market or sole/direct sourcing. For example, as noted above, the government may conduct a tender to establish a period contract panel of suppliers for certain supplies and permit government agencies to procure from those suppliers without needing to go to market. Prospective bidders not on the panel have to wait to seek inclusion on the panel until the panel expires and is re-tendered or opened up for new panel members. Select tendering can also be permitted in certain circumstances (e.g., when the agency has made enquiries about suitable prospective suppliers) (see Section 4(a) on sole/direct sourcing). Prospective bidders can be excluded from the competition through the use of conditions for participation. For example, procurement terms will usually require bidders to demonstrate their ability to participate in a procurement. Conditions can require a potential supplier to demonstrate it has the legal, commercial, technical and financial abilities to fulfil the requirements of the procurement. Additionally, procurement frameworks will often enable government agencies to exclude potential suppliers on grounds such as bankruptcy, insolvency, false declarations or significant deficiencies in performance of any substantive requirement or obligation under a prior contract. A bidder might also be excluded if the bidder has failed to comply with a mandatory procurement policy requirement. At the federal level, government agencies cannot procure supplies from a supplier who does not comply with certain mandatory requirements. For example, it is government policy that an organisation who fails to comply with the Equal Opportunity for Women in the Workplace Act 1999 (Cth) is ineligible for government contracts. There are also requirements for specific types of procurement. For construction projects, the government is prohibited by the Building and Construction Industry Improvement Act 2005 (Cth) from funding building work unless the builder is accredited under the scheme created by the Act. If a party has been involved in an earlier stage of the project being tendered (e.g., in preparing the specifications), the party may find itself excluded from competing in the later tender. 8 Baker & McKenzie