[Solved] BUSS 5143 – Assignment #1 Contracts (Legal) Analysis

Read the following factual account and answer all the questions at the end:
Kangaroo Island Council has been successful in obtaining funding from State and Commonwealth Government to implement the $18M Kangaroo Island Airport Upgrade Project. The objective of the project is to establish regular, sustainable air access to/from Australia’s east coast and from there to/from international markets. Essential to the delivery of this project on time, in scope, quality and cost the Kangaroo Island Council has advertised a Request for Tender on the SA Tenders & Contracts website to identify and secure the services of a suitably qualified, experienced independent project management specialist. The Request for Tender document includes the following excerpt: ‘The project is to commence on confirmation of signed funding agreements with State and Commonwealth Governments and it is anticipated that this will be achieved by the end of February. To this end any successful tenderer will be required to start work almost immediately. The Project Manager minimum requirements:
1. Significant organisational aviation experience (including new and refurbished terminal experience) including recent regional aviation project experience.
2. Aviation experience of proposed team members.
3. Aviation/Airport programming capabilities within the company
4. Federally funded project experience.
5. Local Government Project Experience 5. South Australian-based project management organisation.
6. Fully independent project management companies only. All tenders will be considered, amongst other criteria, in accordance to satisfying all the minimum requirements.’

Although your company, ‘UniSA Projects R Us’ have had aviation experience with managing airport runway extensions, overlay and associated airside works, it has never had experience with terminal upgrades. Your company submits its tender in accordance with the Request for Tender instructions. Your tender is competitive with respect to the fixed lump sum fee for the scope of services and is awarded the tender. Boot Projects Australia is a Project Management company who were commissioned to undertake the expansion of Melbourne Airport including the runway extensions, overlay, associated airside works as well as terminal works. Boot Projects Australia also submitted a tender and spent $25,000.00 to prepare and submit the tender. UniSA Projects R Us circulate a Request for Tender for the New Terminal IT infrastructure. A tender is submitted by a local Kangaroo Island business, Rexell Consultants to fit the New Terminal with all the Information Technology and cabling requirements for $4,075,987. On August 10 UniSA Projects R Us’ representative informed Rexell Consultants that they would be prepared to pay $3, 567,567 for the work proposed in Rexell’s tender. Rexell’s manager asked UniSA Projects R Us’ representative if they would keep the deal open until the end of the month to give Rexell time to see if this would be financially viable. UniSA Projects R Us’ representative replied that he didn’t think this would be a problem. On August 17 Rexell wrote to UniSA Projects R Us: While we are interested in performing the work to fit out the New Terminal, we are of the opinion that the price you are proposing is too low. Would you be prepared to accept $3,900,000?

On August 20 UniSA Projects R Us replied by letter as follows: Thank you for expression of interest. Unfortunately, the price you have proposed does not make sound economic sense to us in view of other proposals we received. Our price stands and if you change your mind, the New Terminal project would be awarded to you as we are particularly looking at utilising local businesses where possible. We wish you success building your business in South Australia. This letter arrived on August 23. On August 24 Rexell lost a contract with the local hospital and in turn decided they would have the available resources to perform the work at lower cost. They immediately posted a letter agreeing to the price that UniSA Projects R Us proposed to pay for IT project works. This letter arrived at UniSA Projects R Us’ office on August 27. On August 26 UniSA Projects R Us was approached by Boots IT brothers, enquiring about the progress of the tender they submitted for the IT works in the New Terminal and said they would be prepared to now do the work for $3,440,000.00. UniSA Projects R Us immediately accepted. On August 27 Rexell contacted UniSA Projects R Us to arrange execution of the contract, only to be informed that the tender had been awarded to another party. Since August 20, Rexell have employed a further 3 employees on a fixed 12-month contract. They are now claiming that UniSA Projects R Us should compensate them for the extra cost of paying redundancy pay for the surplus workers. Construction of the New Terminal commenced in March 2017. All going to plan, construction was scheduled to be completed by August 2018. The contract completion date for the New Terminal was Monday 13 August 2018 to enable the ‘fit-out’ to commence and be completed in time for the start of the summer tourism season. The New Terminal would be officially opened by the Premier and it was expected that the occasion would also be attended by various high-profile members of the community. In mid-July 2018 Westside Building Services (WBS) asked the City’s project manager if the completion date for the contract could be extended by several weeks. WBS was experiencing a cash flow problem since a client for whom they had completed a large refurbishment went into liquidation resulting in a huge loss in revenue to WBS. After consulting with Kangaroo Island Council, UniSA Projects R US notified WBS that it was unable extend the completion date for the contract owing to the scheduled events for the opening date and that the New Terminal had to open before the summer tourism season. Instead, Kangaroo Island Council agreed to pay WBS an extra $450,000 if they guaranteed completion by the contract date. WBS agreed and hired the extra labour and purchased the extra supplies they needed to meet the contract deadline. WBS completed the New Terminal by the date agreed in their contract. Kangaroo Island Council is now refusing to pay the extra $450,000 that they promised for completion by that date claiming that Westside Building Services were always obligated to complete by the agreed contract date.
Answer ALL the following Questions
Question 1
Boot Projects Australia are threatening to take legal action against Kangaroo Island Council claiming that they should have accepted their tender before UniSA Projects R Us, since they have had previous aviation project management experience with expanding the T2 terminal at Melbourne Airport. Advise Boots Projects Australia.
Question 2
Rexell claim that they have a binding agreement to perform the IT project works in the New Terminal. They are now claiming the extra cost of having to hire and terminate the 3 employees hired to assist with the New Terminal project. Advise Rexell.
Question 3
Westside Building Services claim to be entitled to the extra $450,000 promised by the Kangaroo Island Council for completing the project on time. Advise Westside Building Services

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