NSW Government agencies will now have to comply with “enforceable procurement provisions” as listed in a Direction of the NSW Procurement Board Direction (EPP Direction). These provisions are intended to implement a consistent approach to government procurement, ensure fair competition between international and domestic suppliers, ensure value for money and improve access to Government procurement by both the private sector generally, and small and medium or regional businesses[1].

Which agencies need to comply?

The new rules apply to 41 NSW Government agencies, which notably include:

  • Housing NSW
  • TfNSW
  • the Department of Planning, Industry and Environment
  • the EPA
  • Property NSW[2]

A full list of covered agencies can be found here: procurepoint.nsw.gov.au

What types of procurement are covered?

The new rules apply to procurement of:

  • Construction services with an estimated value that equals or exceeds $9,247,000 (excl. GST)
    Construction services includes pre-erection works and construction work, as well as repairs, alterations and restorations.
  • Goods and other services with an estimated value that equals or exceeds $657,000 (excl. GST)[3]

Key procurement principles introduced

1. Non-Discrimination

Under the provisions, NSW Government agencies must not discriminate against any supplier due to its foreign affiliation or ownership, location, or the origin of its goods and services[4].

Further, invitations to specific suppliers can only be issued in some circumstances (outlined below)[4]. The new rules also govern the conduct of procurement processes, including what information can be given to potential suppliers, and promote accountability by debriefing unsuccessful tenderers as to why they were unsuccessful[4].

2. No “Local-Only” Restrictions

An agency must not enforce, or take account of, any arrangement that requires such things as the use of domestic services, local investment, or licensing of certain technology for the purpose of promoting Australian development. However, please take note of the exemptions that may apply, described below.

3. Suppliers may be Excluded from Tendering

It is also worth noting that a supplier (including any person involved in the management of the company) may be excluded from a procurement process if:

  • it is bankrupt or insolvent
  • it has made a false declaration
  • there have been significant or persistent deficiencies in the performance of a prior contract
  • the supplier has engaged in corrupt conduct in the past 10 years
  • it has failed to pay taxes
  • it has been convicted of an offence that carries a term of at least 2 years, or a fine of $200,000 or more
  • it has been found guilty of professional misconduct or unprofessional conduct

3. Open Approach to Market

Under the rules, the “default” approach to procurement is an open market approach. That is, information about the procurement, application process and selection criteria are made publicly available[4].

However, there are potentially broad circumstances where an approach other than ‘open market’ is acceptable, including:

  • where the supplier is part of a procurement panel that was set up using an open-market approach;
  • where the supplier is on a procurement list developed by a government agency (being a list of suppliers who passed a prequalification scheme);
  • where limited tendering is allowed (limited tendering is where an agency invites a limited number of suppliers of the agency’s choice – in such circumstances the procurement process will not be subject to all of the enforceable procurement provisions). Limited tendering is allowed in a wide range of circumstances, including:
    • where no submissions were received, or none were acceptable;
    • for reasons of extreme urgency; or
    • for procurements made under exceptionally advantageous conditions that only exist in the short term.

For the full list of circumstances in which limited tendering may occur, see clause 15 of the Procurement (Enforceable Procurement Provisions) Direction 2019 [NSW][4].

Rules for procurement

For Government agencies involved in procurement, the following rules apply:

  • Conditions for participation in the procurement process must be specified. For example, relevant prior experience (not to be limited to experience in Australia), or demonstration of legal, financial, commercial and technical capability
  • Agencies must not use specifications which create an obstacle to trade (such as requiring a particular brand or design, unless necessary);
  • Agencies must ensure procurement documentation contains full details of the procurement, conditions for participation, selection criteria, and relevant dates;
  • Relevant information must be supplied following any reasonable request;
  • An agency may undertake negotiations if:
    • It has previously indicated its intent to do so in the open approach to market; or,
    • No submission will provide the best value for money based on the evaluation criteria
  • Agencies must adhere to the timelines for submission set out in the EPP Direction
  • The contract must be awarded to the supplier that satisfied the criteria and will provide the best value for money (unless it is against the public interest)
    Note that in determining the “best value for money“, the agency may have regard to:
    • Financial costs and benefits (including indirect costs and benefits, such as disposal or licensing costs)
    • Quality and quantity of goods or services provided
    • A tenderer’s experience
    • Environmental sustainability

What happens if an agency does not comply?

If these rules are not complied with, an affected supplier can lodge a complaint against an agency. If a complaint is made, the agency in question must investigate and attempt to resolve the complaint, then prepare a report regarding the investigation. An affected supplier may also commence legal proceedings in the Supreme Court for an injunction or compensation[1]. The NSW Procurement Board has published a useful “Complaint Management Guidelines” about these options[5].

It is worth noting that a procurement process may be suspended when a complaint is made so as to avoid adversely affecting the complainant’s application, unless (among other reasons) it is against the public interest. This could, of course, have program and cost implications.

Exemptions

The rules will not apply in certain circumstances. For example:

  • when procuring for certain transport infrastructure
  • procurement (including leasing) of land or existing buildings
  • certain procurement funded by international grants, loans or other assistance
  • procurement of health, welfare or education services[4]

Procurement of construction services, however, is not generally exempt[4].

In addition, some decisions of Government agencies may also be exempt if, for example, they are for the benefit of Indigenous peoples, to benefit small and medium businesses, or for national security reasons[4].

For further information visit procurepoint.nsw.gov.au

The following articles may also be of interest:
NSW Interactive Tendering Guidleines – June 2019
NSW Construction Leadership Group – July 2019


[1] Public Works and Procurement Act 1912 (NSW).

[2] https://www.procurepoint.nsw.gov.au/policy-and-reform/enforceable-procurement-provisions/agencies-covered-epp-direction

[3] https://www.procurepoint.nsw.gov.au/policy-and-reform/enforceable-procurement-provisions

[4] Procurement (Enforceable Procurement Provisions) Direction 2019 [NSW].

[5] https://www.gtlaw.com.au/insights/nsw-procurement-boards-recent-direction-imposes-new-procurement-obligations-nsw-government

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.