Hughes Aircraft Systems International v Civil Aviation Authority [1995] FCA 434

CATCHWORDS CONTRACT - tender evaluation process - whether failure to decide between tenderers in accordance with the agreed criteria may constitute a breach of contract - Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195 - whether claim is reasonably arguable. PRACTICE AND PROCEDURE - preliminary discovery - whether all reasonable inquiries had been made - applicant had not exercised its rights under the Freedom of Information Act 1982 (Cth) - whether sufficient information available to enable a decision to be made to commence proceedings - applicant was in receipt of advice from Senior Counsel as to the prospects of success - whether preliminary discovery should be ordered - scope of discovery - discretion. Federal Court Rules - O.15A r.6 Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195 HUGHES AIRCRAFT SYSTEMS INTERNATIONAL v CIVIL AVIATION AUTHORITY No G913 of 1994 Davies J 28 June 1995 Sydney

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NG 913 of 1994 ) GENERAL DIVISION ) BETWEEN: HUGHES AIRCRAFT SYSTEMS INTERNATIONAL Applicant AND: CIVIL AVIATION AUTHORITY Respondent Coram: Davies J Date: 28 June 1995 Place: Sydney REASONS FOR JUDGMENT This is an application brought by Hughes Aircraft Systems International ("Hughes") against the Civil Aviation Authority ("the CAA") under Order 15A rule 6 of the Federal Court Rules which provides:- "6 Where - (a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained; (b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and (c) there is reasonable cause to believe that the person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision - the Court may order that the person shall make discovery to the applicant of any document of the kind described in paragraph (c)." The application arises from a tender process for The Australian Advance Air Traffic System ("TAAATS") in which Hughes, a wholly owned subsidiary of an international organisation, and Thomson Radar Australia Corporation Pty Limited ("Thomson"), a subsidiary of a competing international group, were tenderers. The procedures and the process for the selection of the successful contractor were originally specified in a document issued on 30 May 1991 which provided for the registration of interest, (the "ROI"). Subsequently, on 2 October 1991, the CAA altered the selection process. By 18 December 1991, the initial evaluation teams had made a recommendation to the Board of the CAA that the Board recommend Hughes be named as the preferred contractor. The Board rejected that recommendation and in the period intervening before 13 March 1992, further information was gathered regarding both Thomson's and Hughes' bids. On 13 March 1992, the Board accepted a recommendation that Thomson be the preferred contractor and that Hughes be the alternate contractor. It appears from a subsequent review of the tender process, however, that inadequate information and unsound conclusions regarding the risks associated with Hughes may have been presented to the Board. Following the decision, a Committee chaired by the Hon. Ian McPhee was established to review the tender evaluation process. That Committee reported in December 1992 and recommended that Hughes and Thomson should again be invited to undertake specification development phases, as contemplated in the ROI, and that their tenders be re-evaluated. In accordance with the recommendation, Hughes and Thomson were invited to participate again. On 9 March 1993, each company entered into a specification development phase contract with the CAA. Together with the contracts there was an agreement in letter form ("the TAP letter") which set out in specific terms the evaluation criteria to be applied by the CAA in the evaluation of the best and final offers. Paragraph 2.5 of the TAP letter read:- "2.5 Evaluation of TAAATS Best and Final Offers 2.5.1 Criteria The CAA will evaluate the best and final offers for the TAAATS Acquisition submitted by the Companies during the Specification Development Phase with reference to the following criteria Major Criteria Criteria Priority 1. Operational and Technical Performance, 1 logistics support and schedule 2. Price and other Financial Issues 2 3. Risk to Performance, Cost and Schedule 3 4. Australian Industry Involvement 4 Minor Criteria • Acceptability of Technical/Operational specification of the Interim Radar Display System, • Cost, delivery schedule of the Interim Radar Display System,