There are indications that military procurement agencies accused of rigging a AU$600,000 technology tender early this week may have breached the Defence Australian Industry Involvement guidelines.

Two Western Australian technology companies last week complained to Defence Minister Robert Hill claiming that the agency that issued the tender, the Test Equipment Logistic Management Unit (TELMU), never had any intention of giving fair consideration to bidders other than the incumbent, Rockwell Automation Entek IRD.

Former director of the Defence Materiel Organisation's (DMO) NSW regional office, John Small, said that there were many circumstances under which the DMO is entitled to approach a single vendor to supply equipment without going to tender. However, said Small, once the decision to go to tender has been made, under AII guidelines indigenous companies are entitled to fair treatment when competing for contracts valued at higher than AU$100,000.

Kelvin Wright, managing director of Vitech, one of the companies that placed a bid for the tender, alleged that TELMU worded technical requirements in the tender to lock competing bidders out of the selection process and failed to state which elements of the tender were critical until after it awarded the contract to Entek IRD.

"If you're going to write a specification to go to open tender then you should write a specification that's fair to all your potential suppliers -- you shouldn't write a specification that's around a particular piece of gear," said Small.

The Australian Industry & Defence Network (AIDN) has issued a statement commending the actions of the two companies challenging TELMU's decision.

-It is an absolute necessity that DMO local content guidelines are followed to the letter to support the interests of Australian industry. This affects not only the interests of Australian SME's but our local enterprises and corporations as well. That these two small companies have been prepared to challenge the TELMU process is important and should be commended by TELMU and the DMO."

The industry support group hopes the incident will raise awareness among Australian companies of their rights when dealing with Defence agencies.

"It is fair to say this $100,000 criteria is not as well known of or highly profiled as the AU$5 million AII criteria, so having attention brought to it will benefit everyone and prevent further concerns in the future over similar misunderstandings".

Small said the Defence should consider measures to compensate companies that responded to the Navy's tender request if it is found that TELMU mishandled it.

"I they got it wrong it's fair they do something about it from my personal point of view," said Small.

According to Small, Defence which will compensate companies for expenses incurred through participating in tender requests in certain circumstances. However he said Defence's policy with respect mismanaged tenders was not clear.

Defence Minister Robert Hill had still not responded to ZDNet Australia's requests for comment on the company's action at publication time.

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