Well-drafted RFT saves government from liability to tenderers

When principals engage with the market for the procurement of goods and services, careful consideration and time is normally spent reviewing conditions of contract to ensure that the document adequately manages risk and addresses the specific requirements of the principal.

The recent case of IPEX ITG Pty Ltd (in liq) v State of Victoria (2010) VSC 480 highlights the importance of adequate review and drafting of the invitation to tender document to ensure that the drafting of the terms of the invitation to tender minimise any exposure to process contract risk.

Facts

On 20 May 2002, the Parliament of Victoria issued a written request for tender (RFT) for system integration services to implement a new desktop standard operating environment for the parliament. The plaintiff, Ipex, was one of a number of suppliers that submitted a tender in response.

The RFT document was detailed and included an overview of the selection process and evaluation criteria, the terms and conditions, description of parliament's existing IT environment and a list of parliament's requirements.

A tender evaluation plan was prepared at the same time as the RFT, but this was not made available to tenderers.

Recipients of the RFT were invited to attend a briefing session, which clarified a number of matters and answered questions. Prior to the closing of the tenders, various questions (69 in total) were asked by tenderers. Each question and answer was circulated to all tenderers, including Ipex.

After the close of tenders, the evaluation and selection process took place. A qualitative functional evaluation was followed by a cost evaluation. After this, a value-for-money analysis took place, resulting in a short list of two and finally selection of the successful tenderer.

On 16 July 2002, Ipex was told that its tender had been unsuccessful and was invited to attend a 'detailed debrief'.

On 9 September 2002, Ipex instituted proceedings against the State of Victoria. Ipex claimed that as the lowest-priced tenderer, it should have been awarded the contract.

Issues

The issues to be determined by the court were:

Whether Ipex's submission of a tender in response to the RFT gave rise to a process contract. Whether parliament acted fairly, reasonably and in good faith and complied with the criteria and approach referred to in the RFT. Decision

Sifris J of the Supreme Court of Victoria dismissed Ipex's claim, despite having found that a process contract existed between the parties...