Or rather:

3) Telstra submitted a non-conforming tender and the Government had no choice but to reject it.

Being a Government employee myself, when it comes to tendering you have to apply the same rules to everyone. If the Government had accepted Telstra's tender, even though it did not comply with the requirements in the RFT (and this was well publicised, they would have left themselves open for all sorts of problems, e.g. being sued by other applicants.

Optus was right to say that Telstra's submission was a joke: a 12 page letter to the Minister in lieu of a serious tender for a $4.7bn project is brinkmanship of the worst sort and the Government was right to call their bluff.