Navigating contract negotiations is a critical phase in the tendering process, particularly for local governments seeking to finalise agreements with their preferred tenderer. In the fifth and final instalment of our Probity, Procurement and Tendering Series, this article explores the key elements of effective negotiations and provides practical insights into developing a negotiation strategy, maintaining competitive tension and ensuring that the negotiation process is transparent, fair, and legally compliant.

The objectives of a local government procurement policy are generally to advance the local government’s priorities, achieve value for money, and ensure probity and accountability for outcomes.

Probity requires the purchase to be conducted ethically, honestly, and with fairness to all participants. Accountability for outcomes is about being able to explain or account for how the purchase has achieved its anticipated outcomes. Best practice in government procurement would see the development of a suitable probity plan, and for high value or complex procurement activities, the development of the plan well before the commencement of the procurement process, as well as the engagement of an external probity adviser.

This article serves as a checklist of tasks in chronological order which can form the basis for a probity plan.

The below article on Tender Process Risks and Strategies to Mitigate is the third article in our five-part Probity, Procurement and Tendering Article Series. This article will be followed by articles on Probity Plans, and lastly Contract Negotiations. This article explores strategies for minimising risks in the tender process, for both procurers and tenderers.

For procurers, we discuss key strategies for risks associated with:

• process contracts, including express contracts and non-binding processes;
• RFTs, including various waivers and conditions of the tender that should be included;
• documentation, including important that verification and signoff procedures;
• disclaimer: including the requirement of tenderers to fully inform themselves of all matters relating to the tendered project and an acknowledgement that they will not rely on any information provided by the procurer; and
• training.

For tenderers, we discuss key strategies for risks associated with:

• conforming and non-conforming tenders;
• tender qualifications; and departures.

We also discuss “Closing the deal” and the risks associated with:

• a delay in finalising the tender process and a contract being concluded; and
• “awarding” the contract, including when a binding and enforceable contract actually comes into being, and incorporating tender documents into the final contract.

This article on tendering and process contracts is the second article in our five-part Probity, Procurement and Tendering Article Series.

Requests for Tender (RTFs) have traditionally been viewed as invitations to treat, that do not create a legal or contractual obligation until a tender is accepted by the party inviting the tenders. However, a process contract can arise as are sult of a term within an RTF that constitutes an offer, which when accepted or complied with (generally by the tenderer submitting its tender) brings about a separate binding contract, or “process contract”. The implications of a process contract can be far reaching, due to the legal obligations that arise. As a result, the party inviting tenders must pay close attention to the tender process and draft the RFT to reduce the risk.

Managing process contract risk requires the procurer to:

• carefully consider if it wants the tender process to form a binding legal relationship;
• pay close attention to the terms of the criteria for selection (or exclusion) of a tender;
• ensure the RTF is drafted so there is no presumption that a binding contract will arise if a tenderer complies with certain criteria; and
• draft disclaimer clauses clearly and consistently with terms of the RTF.

In Queensland a Payment Claim must:

• identify the construction work or related goods and services to which they relate;
• state the amount of the progress payment that the claimant claims is payable by the
  respondent; and
• request payment of the claimed amount.

In the recent case of MWB v Devcon , the Contractor (Devcon) was engaged to construct 56 townhouses. They sent what they said was a payment claim to the Principal which purportedly claimed payment of $149,485.60 by reference to a table listing 42 trades and showing a ‘contract value’, ‘amount previously claimed’, % complete’, and ‘remaining balance’ for each trade.

The Court of Appeal found that the purported payment claim was not a payment claim under s68 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) because it failed to comply with s68(1)(a), (b) or (c).