Understanding the legal requirements for tendering in Australia is essential for SMEs. Whether you're bidding for government or private contracts, knowing your obligations helps reduce risk, improve compliance and strengthen your tender response.
This article breaks down the legal must-knows of tendering so you can prepare winning responses and protect your business interests.
Business Law WA’s Commercial Legal team can assist with tender applications, such as contract reviews and contract negotiations. Find out more about the team’s tendering assistance services.
What is tendering and why is it important?
Tendering is the process where governments or large organisations invite businesses to bid for contracts to provide goods or services. For SMEs, it’s a way to access lucrative opportunities and expand into new markets.
But every tender comes with legal conditions – from how bids are evaluated to how contracts are awarded and enforced.
Legal requirements for government tenders in Australia
Government tenders are governed by strict procurement laws at both the federal and state levels.
If you’re bidding on a Commonwealth tender, your submission must comply with the Commonwealth Procurement Rules (CPRs), which set out principles of value for money, competition, transparency and accountability.
For State Government contracts, the WA Procurement Rules apply.
Across all jurisdictions, tenderers must also comply with other relevant laws such as, but not limited to:
More resources:
- Grant Finder: access 800+ grants, exclusive to CCIWA Members
- Industry Capability Network WA: connecting supplies with projects
Related reading
- Australian Consumer Law, especially around misleading conduct and misrepresentation and anti-competitive conduct
- Unfair contract terms legislation
- Industry-specific laws that may apply to the contract’s scope of work
Is a tender legally binding?
A common misconception is that submitting a tender automatically creates a binding contract. That’s not the case.
There’s a legal distinction between a request for tender (an invitation to bid) and a contract.
However, some tender processes may establish what’s known as a "process contract" – often referred to as Contract A – which obliges parties to follow a fair process. If your tender is successful, this leads to Contract B – the actual contract for goods or services.
To avoid unintended obligations, ensure your own tender documents have clear disclaimers and terms.
What to do before submitting a tender response
Conducting due diligence after winning a tender contract can sometimes be too late as the scope or terms of the contract may be unchangeable at that point. So, before submitting a tender response, it’s important to:
- Conduct due diligence on the final contract
- Review compliance conditions
- Understand performance requirements and reporting obligations
- Seek legal advice to reduce risk
Many SMEs underestimate the risks in this phase – from penalties for delays to performance-related clawbacks. It’s essential to understand the contract you’re entering and it’s highly advisable to seek legal advice.
Common legal risks in the tender process
Legal risks can arise before, during or after the tender process. Common pitfalls include:
- Misinterpreting the scope of work
- Relying on unclear or assumed information without doing due diligence
- Missing key deadlines
Quick tips: what to look for in tender contracts
- Read your contract carefully and have a lawyer review it
- Understand how the terms and conditions affect your liability
- Check insurance and termination clauses, and payment terms
- Negotiate where necessary – many terms are not set in stone
Free legal document review
Business Law WA is offering a complimentary Red Flag Review of documents including employment contracts and workplace policies (the terms of which can be accessed here).
When to seek legal advice
If you’re responding to a high-value tender or encounter complex contractual terms, seek legal advice early. Business Law WA’s Commercial Law team knows how to protect your rights and identify legal red flags in the fine print.
Business Law WA’s commercial lawyers can:
- Review tender documents before submission
- Draft contract departures and clarifications and explain contractual risks
- Negotiate contract clauses that may expose you to undue risk
- Explain the importance of levers in contracts to ensure profit margins are maintained
By understanding your obligations and securing the right advice, you can submit stronger bids, win more work and protect your business from unnecessary risk.
Need help reviewing your next tender? Business Law WA’s Commercial Legal team can help. Get in touch on 08 9365 7746 or via [email protected].
CCIWA Members receive a discount on BLWA legal services. Not a Member? We can still help you, so please get in touch.
