NSW Procurement Overhaul

The NSW Government has introduced significant changes to the State’s procurement framework to bring it into line with Australia’s obligations under international free trade agreements.

The Procurement (Enforceable Procurement Provisions) Direction 2019 and the Procurement Agreements: Guidelines for NSW Government Agencies Guidelines took effect on 29 November 2019 and have material implications for how NSW agencies procure goods and services.

The provisions of the Direction are enforceable, the effect of which is that it is a requirement for the 41 government agencies, including all principal government departments, to adhere to them.

The Direction applies to

  • all construction services procurements over $9.247 million (excl, GST) and
  • all goods and services procurement over $657,000 (excl. GST).

These thresholds will be reviewed on 1 January 2020 and every two years after that.

A number of procurement categories, including grant funding programs, listed in schedule 2 of the Direction are exempt from the provisions.  Exemptions also apply to Transport for NSW for procurements relating to transport infrastructure function, managing and maintaining the rail network and the provision of rail access.

Under the Direction, NSW agencies:

  • must not discriminate against suppliers with foreign affiliations or ownership
  • must not provide offsets for domestic content to encourage local development
  • can exclude suppliers only in specific circumstances, such as where a finding of corrupt conduct by the ICAC in the last 10 years
  • must use open approaches to markets, with limited tendering applicable only in certain circumstances
  • must not specify as a requirement to participate in a procurement process prior experience in Australia
  • must not make a supplier’s participation in a procurement process conditional on having previously been awarded one or more contracts by a government agency in Australia
  • must include specific information on the evaluation criteria to be used for the assessment as well as their relative importance
  • can only conduct negotiations with suppliers where this approach has been anticipated in the procurement documentation and the outcome of the tender evaluation has not demonstrated a value for money outcome
  • must open their pre-qualification lists or panel arrangements every 12 months to allow new suppliers to apply
  • must provide a justification for the selection of the suppliers to be invited as well as the criteria used for this selection where a pre-qualification list or panel arrangement has been used for a select tender.

Where a supplier believes an agency has failed to adhere to their obligations with regard to international procurement agreement, they may lodge a formal complaint.  This applies to Australian suppliers as well as those from other countries participating in an international procurement agreement.

While the complaint provisions within the international procurement agreements vary, all agreements:

  • require agencies to consider complaints impartially and in a timely manner
  • give suppliers a right to have their complaint reviewed by an impartial external body if it is not resolved.

The Guidelines indicate that agencies should ensure that any complaint received is managed in accordance with the NSW Procurement Board Complaint Management Guidelines.

In the next OCM newsletter we will outline some tips to handle procurement complaints aligned to oversight agency guidance.

For further information or if you would like to talk about any aspects of the changes please contact Rochelle Kirk, Andrew Marsden or Peter Barnett.