Lend Lease ban risks costly legal wrangle

The Victorian government has left itself exposed to a large damages claim from builder Lend Lease over its handling of the $630 million Bendigo Hospital tender.

The senior public servant in charge of the tender, Anthony Lubofsky, in an email to another public servant, has warned that possible breaches of legal process by the government in the tender risked a claim from Lend Lease for loss of profits.

Internal government documents obtained by Fairfax Media point to the tender process being in disarray after the state government banned Lend Lease from bidding for new government work late last year.

The ban followed Lend Lease signing a union-friendly deal in September 2012 with the Construction Forestry Mining and Energy Union, the type of deal forbidden under tough government rules that took effect in July 2012.

The ban on Lend Lease was towards the end of the tender for Bendigo Hospital – Victoria’s biggest ever regional hospital project – in which Lend Lease was ranked ”materially ahead” of its rival, the Federal Court heard last week.

The government responded by extending the tender for some months.

Health Minister David Davis, in a December 24 letter to then premier Ted Baillieu, said extending the bidding process could ”jeopardise” finishing the project on time. Any further delays ”will likely result in the 2016 completion

date not being achieved”. The documents emerged from a Federal Court case in which the CFMEU had taken legal action against the government, arguing it was breaching the federal Fair Work Act by either threatening to or banning Lend Lease from the tender.

Mr Lubofsky, in a December 19 email to Cathy Cato of the government’s Construction Code Compliance Unit, warned of possible legal action, including Lend Lease suing for loss of profits.

”As I indicated to you, there is a very well established legal principle that when government conducts a tender … government has a legal obligation to conduct the tender strictly in accordance with any process it has set out in the tender documentation,” he wrote.

Mr Lubofsky noted that adherence to the government’s industrial relations rules was just one sub-criteria out of 27 and that the government did not have the ”legal right” automatically to ban Lend Lease for scoring poorly against it.

Bendigo East MP, Labor’s Jacinta Allan, said the admissions from Mr Davis were a ”massive betrayal of all the Bendigo community” as part of an ”anti-worker industrial relations game they’re playing”. Every day the hospital was delayed meant local patients had to wait longer, she said.

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