Support Local. The concept of supporting local businesses has been well publicised over the past year in light of recovery efforts made by Australian businesses and governments as a way to stimulate the Australian economy back to its pre-pandemic successes.
In the construction and property industry, support local is known as local procurement. As Federal and State governments invest billions of dollars into building and infrastructure and continued the industry operations throughout lockdowns, there is a renewed focus on local procurement to promote and focus on Australian businesses as leading choices for government contracts.
Which means it is a good time to be thinking about local procurement for your next project.
Why is local procurement important?
The Australian Government has Procurement Rules that govern how entities buy goods and services that are designed to ensure the Government and taxpayers get value for money. All state governments, with the exception of NSW, have procurement guidelines that emphasise their own “buy local” policies, supplemental to the federal rules.
If you are: • a consultant or contractor, in depth understanding of local procurement, which can comprise 30% or more of each tender evaluation, is an important part of putting together a winning strategy.
• Someone who manages procurement on behalf of a government agency, being a trusted advisor hinges on your ability to provide sound advice. Not understanding the local procurement rules makes this task difficult.
• A government agency looking to undertake a project in the coming year that involves procurement of significant services like capital development, local procurement guidelines, and reporting responsibilities will certainly be involved.
The problem is that local procurement rules can sometimes be hard to follow, possibly confusing, and inconsistent across the states. Which is why, as experts in handling government contracts for capital projects, we are providing this helpful summary of information on local procurement guidelines from around Australia.
Australian Capital Territory
A Local Industry Participation Policy (LIPP) is in place covering the Canberra region in the ACT. The objective of the LIPP is to ensure that competitive local businesses, including Small and Medium Enterprises (SMEs), are given every opportunity to respond to procurement opportunities offered by the ACT Government. The following are the key things you need to know: • Procurements between $25,000 and $200,000 in value have to seek 3 quotes, and one must be sought from someone in the local Canberra region, and one must be sought from an SME.
• Procurements between $200,000 and $5m require respondents to complete an Economic Contribution Test (ECT) and this will be allocated a 10% weighting in the evaluation process.
• Procurements above $5m in value require a Local Industry Participation Plan, and this will be allocated a 10% weighting in the evaluation process.
NSW is an outlier in that it does not have an overarching local procurement policy in place. However, this is soon set to change.
The NSW Jobs First Bill 2021 - is currently being reviewed in Parliament. The details of the Bill seem to be very similar to the policies in place in Victoria, however, the details are not set in stone until the Bill is passed. Stay tuned.
NSW does have a procurement policy related to bushfires. After the bushfires and 2019 and 2020, and flooding in 2020, NSW put in place a requirement that NSW Government agencies must use local businesses wherever possible for projects related to recent bushfires.
The NT Government’s Buy Local Plan includes a number of local procurement elements related to capital projects, such as: • All tenders include local content as one of the evaluation criteria, at a minimum weighting of 30%.
• Tenders over $5m in value currently require the development of an Industry Participation Plan. (However, the policy is currently being revised and this may change).
QLD’s aforementioned Buy Queensland strategy emphasises a value for money approach to its tenders, and value for money in this case includes prioritising the use of Queensland businesses and creating local employment opportunities.
To this end, all significant procurement activities are required to conduct ‘a local benefits test for all significant procurement where a weighting of up to 30 percent may be applied’. The actual percentage is at the discretion of the agency in charge of the project.
SA’s Industry Participation Policy affects procurement beyond just involvement of local businesses, it also puts specific emphasis on key South Australian industries like steel. The following are the key points to be aware of: • Government Agencies are required to seek at least 1 quote from a business based in SA for any procurement above $33,000.
• Industry participation will be an evaluation criteria in all tenders and have a minimum weighting of 15%, and this can be increased at the tendering agency’s discretion. The minimum weighting is 20% if steelwork is included in the project.
• All procurement of publicly funded projects above $550,000 in value must produce an Industry Participation Plan. This can also apply to some private projects that received monetary support from the government.
Find out more: Website for the Office of the Industry Advocate, which works to implement SA’s procurement objectives and is the gateway for much of the procurement information
Tasmania includes mandatory tendering criteria that covers local economic benefits, local social outcomes, and also industry participation plans. The key points: • For all procurements over $100,000 in value, one of the mandatory criterion relates to local social and economic benefits and will have a minimum weighting of 25%.
• All publicly funded projects over a value of $5m (and some private projects that have received public grants) are required to produce an Industry Participation Plan.
Victoria has a Local Jobs First Policy which applies to the full range of Victorian Government projects that meet financial thresholds. The key points: • The Industry Capability Network (ICN) operates across Australia as a connection between projects and local businesses, and plays a key role in Victorian procurement. It evaluates all Local Industry Development Plans (LIDP) and can provide good advice about strategies for meeting local procurement requirements.
• Industry development has a minimum 10% weighting in the tender evaluation criteria and a 10% weighting for jobs outcomes.
• The Major Projects Skills Guarantee (MPSG) is a requirement that all public projects over $20m in value utilise Victorian apprentices, trainees, or cadets for at least 10 percent of the total estimated labour hours.
On 1 July 2020, WA’s Buy Local 2020 Policy came into effect, phasing out the 2002 edition of the policy. The policy includes: • Local content to be included as a mandatory tender evaluation criterion with a minimum weighting of 20%.
• A Regional Price Preference, which is unique to WA. It reduces the evaluated price for tenders submitted by regional businesses and suppliers, thereby giving them an advantage over businesses from outside the region.