In timely announcements ahead of last week’s Labor Party Conference, the Federal Government made some subtle changes to government procurement arrangements to strengthen participation by Australian companies.
Finance Minister Lindsay Tanner released a Government Procurement Statement, and Innovation Minister Kim Carr announced initiatives to boost Australian industry participation in major projects. Tanner’s announcement is accompanied by a detailed statement, while Carr’s included a paper giving examples of the successful operation of a number of initiatives.
The key area of cross-over is a requirement for tenderers for large Commonwealth tenders (generally above $20 million) and to Commonwealth infrastructure projects (such as those financed through the Building Australia fund), to prepare and implement Australian Industry Participation Plans (AIP Plans).
AIP Plans are intended to ensure that a major project proponent is aware of all supply options and has the opportunity to consider domestic suppliers as well as international suppliers when making their commercial decisions.
The application of AIP Plans to Commonwealth tenders greater $20 million would seem supplement the previous SME participation policy, implemented by the previous Government in 2002, although the precise situation is unclear.
Under the SME participation policy, for ICT contracts with an expected value of $20 million or more, Australian Government agencies are to ensure that tenderers meet minimum SME participation levels as follows:
- hardware (for example personal computers, network equipment, mainframes, and printers) - minimum SME participation level of 10 per cent of contract value; and
- services (for example systems integration, software, software development/support, services provision, consultancies, telecommunications) - minimum SME participation level of 20 per cent of contract value.
Where a project contains elements falling under both of the above categories then the minimum SME requirement is the weighted average of these minimum levels based on each category's share of the total expected contract value.
Pending clarification, prospective tenderers therefore need to take care about the possible application of both requirements to certain contracts worth more than $20 million, and be aware that the assessment process may well add to the tender evaluation period.
The Statement reiterates the emerging requirement for disclosure of sub-contracts and sub-contractors (as set out in the revised Government Procurement Guidelines (PCGs) issued last December. AusTender may be upgraded to enable sub-contract reporting, but in the meantime, information about sub-contractors “can be sourced from the relevant Government agency”.
Other developments include the establishment of a Procurement Coordinator within the Department of Finance and Deregulation. The Procurement Coordinator will:
- provide external parties with an understanding of the Commonwealth framework;
- review and advise on procurement practices across government on an ongoing basis;
- handle complaints from suppliers and interested external parties;
- review complaints regarding contract administration;
- aggregate information about Commonwealth procurement across all procurement categories; and
- submit an annual report on procurement matters to the Minister for Finance and Deregulation.
Intermedium understands the Procurement Coordinator will be a Deputy Secretary position within Finance, most likely attached to the role of General Manager, Asset Management Group.
AusTender will be further enhanced, with an improved search function to enable better access to agencies’ Annual Procurement Plans. The statement also mentions “reinforcing policy guidance on Annual Procurement Plans to make agencies and industry aware of the benefits of early and automatic notification of opportunities.”
Finally, the Statement reinforces the continuing importance of ‘value for money” as the primary criteria for procurement and restates the revised policy on liability limitation, with the relevant PCG “revised to clearly state a balanced approach to risk allocation in contracts”. Intermedium will provide a full analysis of the Australian Government Procurement Statement as part of its Procurement Plans Briefing in Canberra on Wednesday, 5 August.