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Process agreements in procurement

17/11/2010

The Victorian government requested tenders for a new desktop environment in Parliament.   The RFT contained comprehensive information about the selection process and evaluation criteria.  Terms and conditions were set out.  A company called Ipex tendered, but was unsuccessful.

Ipex sued the Victorian government.  It alleged that, by submitting a conforming tender in response to the RFT, it had entered into an agreement with the Victorian government.  The agreement reflected the express provisions of the RFT along with implied terms to act fairly, reasonably and in good faith. It also alleged that eh Victorian Government had breached the process agreement by:

–      using flawed evaluation criteria, and in particular, did not giving enough weight to price

–      Failing to do a proper value for money analysis

–      Failing to inform Ipex of the evaluation criteria

–      Reaching a decision using criteria which were not diclosed in the RFT and not communicated to Ipex.

The Court found that the RFT was a legally binding contract as to process. This is consistent with other decisions that very detailed, prescriptive RFTs (usually government RFTs) may give rise to a process contract. Courts decide whether a RFT leads to a process contract on a case by case basis.  However, the Victorian government had not breached the process contract in this instance. They had conducted the tender evaluation in accordance with the RFT. Ipex had misunderstood the evaluation criteria through no fault of the Victorian Government.

Read the decision in IPEX ITG Pty Ltd (in liq) v Victoria

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