What Is A Process Contract In Relation To Tenders? To Avoid Problems With The Tender Process

What is a process contract in relation to tenders? Well, stick around and I’ll tell you. Hello, Simon here from the contract company Contracts, that’s what we do all day, every day. And sometimes overnight, lucky us.

We also run another website called askacontractlawyer.com.au.  If you’ve got any questions, go there, fill in the form and we’ll make a video answering your question. Just like this one.

What is a process contract when it comes to tenders? Easy, it’s a contract that sets out the process. That’s a new PB, I’m out.

Righto, you want a bit more information, fair enough. Don’t blame you. You’re not really getting your money’s worth otherwise, are you? Not that I’m charging for this.

What is a Process Contract?

So, a process contract is basically the contract between the person who issues the tender and the respondents to the tender. It is a contract that says, this is the process that we will follow when we run the tender. This is how we will evaluate your tender responses.

In Australia, there was a seminal or most important case that arose on this point. And it was between Air Services and Hughes Aircraft. I actually worked for Air Services for five years, but I wasn’t around when that was going down, I thank God.

Basically, they ran a tender as part of that tender process. They deviated from the process they had set out and Hughes took them to court to see what the court thought and whether the court thought there was a process contract that Air Services should follow. And so I say it’s the seminal case, because it basically was the case that established that there was a process contract.

So, when Air Services issued the tender, by doing that and saying what they were going to do, they created a contract between them and the tenderers where they set out the process that they would follow.

So, they were held liable or found to have done the wrong thing in that case, because they said what they were going to do, and they didn’t end up doing it. They deviated from the process.

So, process contract in tendering is where the tender is issued. And by doing that issuing of the tender, that creates a process that the tenderer says, we’ll follow, and then that’s what’s meant to happen.

You can actually sue in Australia for breach of process contract. It’s not quite as simple as that because the party who issues the tender will most often in the tender terms and conditions say that this does not create any sort of process as between the parties, which is crap. It will, right? And then any deviation from that process will leave them exposed.

In Summary

So let’s say you’re acting on the tenderer’s side and you’re going out to market with a tender.  All you need to do is ensure that whatever you say you’re going to do in your tender process, you follow. And if you do that consistently, you’re not going to breach your tender process.

If, on the other side, you think that they treated unfavorably you or one party is getting preferential treatment, which actually you’ll probably never find out about it, because it’s too hard, then you can actually bring a suit for breach of process contract.

So that’s what a process contract is. That’s where they arise in the tender scenario and they are a whole lot of fun.

Anyway, if you’ve got any questions, feel free to get in touch, simon@contractcompany.com.au. Or as I said, going to askacontractlawyer.com.au and fill in the form and we’ll make a video answer just for you. I hope that helps. Thanks very much.

Feel Free to Contact us

  • This field is for validation purposes and should be left unchanged.