WTO GPA- Support Behind Suppliers’ Back in Government Tender Disputes

Back in 1998, the Review Body on Bid Challenges was set up following the Agreement on Government Procurement under the World Trade Organization (WTO GPA), which enables Suppliers to guard themselves against unfair tendering practices by governmental procuring entities.

Below is a rough outline of a regular bid challenge:

  1. Supplier (Complainant) files a challenge upon noticing flaws in tender.
  2. Review Body rules if there is a prima facie case.
  3. Review Body rules on imposition of Rapid Interim Measures (RIM) (if requested by the Complainant).
  4. Review Body determines the dispute, recommends appropriate remedies and issues costs orders.

Nevertheless, the Review Body has rarely been invoked since its establishment. Until recently, a Health Care Supply Chain has successfully lodged the 9th valid challenge based on procedural impropriety, after a procuring entity rejected its requests for further explanation of the tender for the provision of medical apparatus.

The Review Body, as illustrated in this case, has certain features that make it effective in resolving breaches of WTO GPA by the Government.

1. INDEPENDENCE

The Review Body is free from any interference to ensure its unbiased position. In the latest challenge, while the Government opposed to the RIM requested by the Complainant to suspend the tender contract award on the ground of protecting public interests, the Review Body rejected this argument as it found potential damage to the public minimal compared to the importance of enshrining the core values of fairness and transparency promoted by the WTO GPA.

2. EXPEDITIOUS NATURE

The Review Body is also being applauded for its high efficiency. Typically, the Review Body rules on the validity of a bid challenge within 90 working days from the date of issuance of the notification of acceptance. Therefore, although the Government argued that the Review Body had discretion to extend the time up to 180 days, which could cause delay in procurement of essential hospital appliances, the Review Body again disagreed, saying that it would reach a decision without necessary delay.

3. RIM

As its name suggests, the Review Body may implement RIM to provide rapid and immediate relief to the Complainant in a defective procurement exercise. Since its implementation will be recommended within 10 working days after confirmation of a valid challenge, like what happened in the case, defects of the tender can be timely rectified and commercial interests of the Complainant preserved.

4. DIVERSE PANEL

If there exists a prima facie case, a panel will be appointed to the Review Body to conduct further investigation. Comprising of 12 professionals with various backgrounds, including law, technology and finance, the panel is capable of handling complainants filed by suppliers of different industries.

Still, there are some limitations in the Review Body’s operations:

a. PUBLIC HEARING ONLY UPON UNILATERAL CONSENT

Procedurally, the Review Body will conclude a challenge either through arranging actual private or public hearing, or considering written submissions.

Ironically, whilst WTO GPA values transparency (transparency and fairness being enshrined in its procedure), an open hearing will only be allowed upon the consent of BOTH parties.

Up to now, procuring entities have always invoked such technicality in order to avoid the risk of bad publicity. Given the circumstances (especially considering the prevailing culture in Hong Kong), procuring entities have virtually on every occasion simply opt to refuse to provide consent for a public hearing, undermining the ideals at roots of the Review Body. Whilst such attitude of procuring entities have often times attracted criticisms from presiding panels in question, this issue has yet to be overcome.

b. PUBLIC POLICY

The Government may rebut the prima facie case or implementation of RIM on the ground of overriding public benefits, making it difficult for Suppliers to lodge a valid challenge or seek any relief. We should nonetheless bear in mind that public policy is not an invincible shield, as shown in the above.

In the past, whilst procuring entities have on one occasion successfully opposed the implementation of RIM on the ground that delays in awarding contracts to pharmaceutical providers will cause disruption (i.e. medicine being consumable), in a more recent case the invocation of similar arguments when the tender is for hardware (i.e. there will not be automatic breakdown of equipment upon expiry of projected operating timeline), the Review Body will utilize its inherent authority to refuse the procuring entity’s opposition.

c. NO LEGALLY BINDING ORDERS

The biggest limitation of the Review Body is that it is only entitled to recommend but not enforce proper remedies. As such, even if a complainant is successful in every stage of the way, the procuring entity can still always simply refuse to implement the recommendations of the board.

Fortunately, every cloud has a silver lining: the decisions of the Review Body is subject to judicial review, and hence a favourable outcome to deserved Complainants is better guaranteed. Alas, however, the existing system leaves for much room for improvement.

Safeguarding fair and open competitions, especially those initiated by the government procuring entities, is always of the utmost importance in Hong Kong being an international business hub. It is therefore believed that the Review Body will continue to realize its greatest utility in resolving forthcoming bid challenges.

 

Solicitor, GPS McQuhae (Hong Kong)

Joshua Chu is Litigation Consultant at GPS McQuhae LLP in Hong Kong. He specialises in corporate, healthcare and technology law and has experience in cross-border and conflict of laws dilemmas. Joshua has also represented the successful Defendant in one of Hong Kong’s first cryptocurrency litigation.

Since embarking on his legal career, Joshua has developed a predominantly civil practice with a focus on general civil, commercial, company and technology. He has represented Clients in all levels of Court in a wide range of commercial and criminal litigation. 

Solicitor, GPS McQuhae (Hong Kong)

Anna Lau is Litigation Consultant at GPS McQuhae LLP in Hong Kong. A biomedical engineer by training, prior to her embarkation onto her legal career, Ms Lau had worked closely with the United States Patent and Trademark Office (USPTO) and US Food and Drug Administration (FDA) on intellectual property and FDA regulatory work.

Her unique skill set enables her to expertly deal with Technology/Intellectual Property law, being able to use an engineer’s perspective to understand each individual client’s need and advise them in their own (tech) language. Anna was part of the team that represented the successful Defendant in one of Hong Kong’s first cryptocurrency litigation.