The AFR called it a “shock rejection”. The SMH described it as a “surprise ruling”. “Very petty” was Nick Minchin’s response.
There was no surprise about the Government’s rejection of Telstra’s broadband “bid”. The panel assessing the bids in fact had no choice but to reject it. To do anything else would have been a flagrant breach of the probity of the whole broadband tender process, and rightly mired the Commonwealth in litigation from those who bothered to actually submit a compliant bid.
Some of us thought Telstra’s “bid” would be turfed quick-smart when it was lodged. This is not to claim prescience but a simple knowledge of government procurement processes. Most Commonwealth agencies, wary of litigation sagas like the Hughes case in years gone by, are now extraordinarily careful in how they run tender processes. If something is a mandatory requirement of a bid, it’s a mandatory requirement. The nature of the requirement doesn’t matter, it’s an issue of procedural fairness. Bidders who comply with them have a reasonable expectation that bidders who do not will not be allowed to compete against them, and the courts will enforce that expectation.
One of the few mandatory requirements of the broadband tender process was that bids include “opportunities for Australian and New Zealand SMEs (small to medium enterprises) to provide goods and services to the project.” As Stephen Conroy said yesterday, in addition to the tender documentation, potential bidders received two separate notices in November explaining the mandatory requirements.
There’s been a fair bit of commentary — mainly but not only from Telstra — that the SME requirement is “trivial” or “bureaucratic”. Nick Minchin called it “spurious.” For a start, that doesn’t matter. A mandatory requirement could be that the CEO of the bidder runs naked down Pitt Street. Bidders still have to comply with it.
But Nick Minchin’s words should be remembered next time the Coalition is in Government — if they ever make it back. The SME requirement would not have been inserted into the document by bureaucrats. Politicians are the ones who obsess about small businesses. Salt of the earth and backbone of the country and all that, you see. When in Government, the Coalition never shut up about helping small business. One of the Howard Government’s most absurd SME initiatives was to insist that all forms that businesses might fill in have a small picture of a clock in the corner so businesses could show how much of their precious time was taken up filling out the form.
The inclusion of an SME plan is exactly the sort of requirement for large tenders and contracts that the Coalition insisted on when it was in power. Labor is no different. Minchin, of course, has now given the game away in revealing what he really thinks of such requirements.
And in any event, if the requirement was as “trivial” as Don McGauchie thinks, then why didn’t they meet it?
The real question is exactly why Telstra didn’t bother to do so. Which part of the word “mandatory” doesn’t it understand? If Sol Trujillo seriously thinks he has a legal leg to stand on in challenging his exclusion, he ought to find some better lawyers — something he might think about anyway if any of them advised that the requirement could safely be skipped. The assessment panel didn’t need five separate advices from top lawyers to confirm that they were correct to reject Telstra’s document. In fact, they never had any choice.
There are also questions over Nick Minchin’s comprehension of the process. Playing politics is fine, and there are plenty of grounds to criticise the laborious and much-delayed NBN process, but, as a former Finance Minister, Minchin, better than most of his colleagues, should understand basic procurement requirements. His statement that “the fault lies with the Government, not Telstra” is extraordinary. The clear implication is that Minchin believes the Government should have acted in bad faith, and in a manner that invited litigation, and retained a non-compliant bid — either that or he doesn’t have a clue.
The NBN process has been a dud right from the start. There’s not enough money and the timetable was always too ambitious. But the only people to blame for the rejection of Telstra are the Telstra board and senior executive. The Government had no alternative, regardless of the consequences for the broader process and Australia’s chances of getting a decent broadband network.