Enforceable procurement provisions

The PW&P Act provides a statutory right for an affected supplier to lodge a written complaint alleging that the conduct of a government agency contravenes, or proposes to contravene, an enforceable procurement provision.

The head of the agency must investigate the complaint. They must take reasonable and prompt action to try to resolve the matter. The NSW Procurement Board complaint management guidelines provide advice on managing supplier complaints.

Under the PW&P Act, an affected supplier can apply to the Supreme Court for an injunction to enforce compliance with an enforceable procurement provision and to request the payment of compensation for the breach.

Compensation must not exceed the reasonable procurement process expenditure of the supplier, plus the supplier’s reasonable costs associated with making the complaint.

An agency cannot contract out of its responsibility to comply with the EPP Direction.

An agency can arrange for a third party to conduct a procurement on its behalf. When it does, it must ensure that the third party complies with the EPP Direction for all procurement covered by the EPP Direction.

The EPP Direction does not apply to contracts (including whole-of-government contracts) entered into before 29 November 2019.

This exemption applies for the life of the contract, including any extensions made in accordance with its provisions.

Any agency that establishes a new whole-of-government contract after 29 November 2019 must comply with the EPP Direction and ensure that:

• the procurement process to establish the contract complies with the EPP Direction
• the requirements for agencies using the contract are consistent with the EPP Direction.

An agency using a whole-of-government contract established in accordance with the EPP Direction doesn't need to publish an open approach to market. But it must comply with other relevant provisions of the EPP Direction. This can be done by complying with the requirements of the contract, including requirements about the selection of suppliers and the placement of orders.

The EPP Direction creates a legal duty for each covered agency to comply with requirements in the EPP Direction. This is regardless of their procurement accreditation status.

A covered agency that has no accreditation for a proposed procurement must obtain endorsement in accordance with relevant policies and directions, but also has a legal obligation to ensure compliance with the EPP Direction.

The EPP Direction provides that it prevails if there is a conflict between one of its provisions and any other Board policy or direction.

An agency can exclude the value of goods and services listed in Schedule 2 when estimating the maximum value of a proposed procurement contract. Key exemptions include:

Land and existing buildings

All land, existing buildings and other immoveable property is exempt. This includes any associated rights.

Public employment contracts

Contracts where an agency engages an individual to provide labour either directly or through a firm that exists primarily to provide that individual’s services.

The engagement of consultants is not exempt from the EPP Direction.

Specified services

Procurement of the following services is exempt:

• health services (including plasma fractionation services)
• welfare services
• education services
• government advertising services
• research and development services
• fiscal agency or depository services
• services related to the sale, redemption or distribution of public debt.

These services are not defined in international procurement agreements and are not defined in the EPP Direction.

An agency should use the ordinary meaning of these services when determining whether to apply the EPP Direction. It must be able to justify any exclusion if a supplier lodges a complaint.

Motor vehicles

The procurement of motor vehicles is exempt. This does not include services associated with the use of motor vehicles.

Procurement from disability organisations

Procurement of goods and services from a business that primarily exists to provide the services of persons with a disability is exempt.

Procurement from another government agency

Procurement of goods or services from a Commonwealth, State or Territory or local government entity is exempt.

Procurement supporting bushfire-affected communities

A procurement that is undertaken pursuant to Procurement Board Direction PBD-2020-01 Support of bushfire affected communities.

An agency must include estimates of the following values (excluding GST) when calculating the maximum value of a proposed procurement contract:

• the value of the goods and services to be procured
• the value of any options, extensions, renewals or other mechanisms that may be executed during the life of the contract
• all remuneration payable by the agency including any premiums, fees, interest, commissions
• all revenue streams that may be provided for in the proposed contract, such as when a contract to construct government-owned infrastructure also establishes a right for the supplier to control or operate the infrastructure and demand payment for its use.

A procurement that will result in multiple proposed contracts must include the estimated value of all the proposed procurement contracts.

For example, the estimate should include the value of all contracts that may be entered into under a whole-of-government contract or a procurement panel, even where individual procurement contracts are likely to be below the relevant EPP threshold values.

If procurement is via different contracts, this should be regarded as a separate procurement, subject to the contract splitting prohibition in the EPP Direction.

An agency should establish business rules to determine other circumstances where multiple contracts should be valued as a single procurement.

One approach may be to apply the EPP Direction to all contracts for a program of work where it is managed as a single project. Related or similar contracts can be the subject of a single approach to market.

An agency should ensure they can respond appropriately if a complaint is lodged alleging that a procurement is divided into separate parts to avoid the EPP Direction.

The EPP Direction applies to a procurement where no reasonable attempt at estimating the value of the procurement has been made.

An agency may need to demonstrate that they have taken reasonable actions to estimate the value of a procurement and that the estimated value was below the relevant threshold of $680,000 or $9,584,000.

An agency should ensure that business processes used to authorise expenditure include measures to estimate the value of procurements.

The estimated value and the process used to prepare the estimate should be documented in the procurement strategy approved by an appropriate delegate. Any valuation for this purpose should be done in accordance with clause 7 of the EPP Direction.

The EPP Direction does not apply to a procurement if the agency makes a reasonable attempt to estimate the value and the estimated value is below the relevant threshold. This applies even where a subsequent procurement action unforeseeably results in a contract that equals or exceeds the threshold.

The EPP Direction applies to a proposed procurement if the estimated maximum value of covered goods and services equals or exceeds the relevant threshold values of $680,000 or $9,584,000.

When estimating the maximum value, an agency can exclude the estimated value of goods and services listed in Schedule 2 of the EPP Direction.

The agency should only divide the procurement into separate procurements if this can be done efficiently and will provide better value for money.

The EPP Direction does not apply to any measure included in a procurement for the economic and social advancement of indigenous people.

An agency should continue to comply with the Aboriginal Procurement Policy when undertaking procurement covered by the EPP Direction.

The EPP Direction does not apply to a preference given to benefit small and medium enterprises, that is an Australian or New Zealand firm with less than 200 full-time equivalent employees.

An agency should continue to comply with the SME and Regional Procurement Policy when undertaking procurement covered by the EPP Direction.

The EPP Direction does not require an agency to use any specific procurement method or strategy.

The EPP Direction does, however, prohibit an agency from directly inviting suppliers to participate in a procurement except:

• in certain specific circumstances listed in clause 15 of the Direction (referred to as limited tendering)
• when using a procurement list (or prequalification scheme) established in accordance with the EPP Direction
• when procuring from a supplier on a procurement panel established in accordance with the EPP Direction or
• when undertaking procurement which is exempt from the EPP Direction under the savings and transitional provisions in clause 29.

In all other cases, an agency publishes an open approach to market (OAM) on eTendering and uses an appropriate procurement method or strategy. This may be an open request for tender, an expression of interest process or any innovative strategy that involves a competitive market approach.

The open approach to market must include information about:

• the procurement method that will be used
• any qualifications that suppliers must meet to participate in the procurement
• if relevant, any criteria that will be used to select a limited number of qualified suppliers who will be invited to make detailed submissions.

The EPP Direction does not apply to contracts entered into before 29 November 2019, including the exercise of any option to extend the contract.

A contract entered into from 29 November 2019 can include options for contract extensions if this is identified in the procurement documentation and notified in the open approach to market.

The EPP Direction does however prohibit a government agency from using a contract extension to avoid operation of the EPP Direction.

A decision to extend a contract should be documented sufficiently to respond to any potential complaint that the agency has extended a contract to avoid publishing an open approach to market.

The EPP Direction prohibits discrimination based on:

• a supplier’s location
• the origin of the supplier’s goods or services
• a supplier's foreign affiliation or ownership.

This prohibition applies for all suppliers wherever they are located. It is not limited to suppliers from nations that have a government procurement agreement with Australia.

The prohibition applies to all procurement covered by the EPP Direction and to all aspects of the procurement process.

For example, an agency should ensure that:

• conditions for participation do not discriminate against overseas suppliers
• there is no requirement for prior experience in Australia
• there is no requirement that a supplier have previous contracts with a government agency in Australia
• technical specifications are based on international standards where they are available and relevant
• financial assessment of a supplier is based on the supplier’s business activities wherever they have occurred.

An agency must provide suppliers with sufficient time to prepare and submit a response to any invitation to participate in a procurement, consistent with the agency’s reasonable needs.

The time period must be at least 25 calendar days (or 10 calendar days in some specified circumstances) even where some suppliers may be able to respond in a shorter period.

An agency should consider time limit requirements when planning a procurement. The agency should take account of:

• the nature of the goods and services being procured
• the complexity of the procurement documentation
• the conditions that the supplier needs to meet to participate in the procurement and any evidence or certifications that may be required
• the extent and complexity of information that is being requested.

The time period may vary depending upon the stage of a procurement. For example, an initial stage in an EOI may require less time than development of a subsequent detailed proposal.

An agency may receive a complaint alleging that a supplier has not been provided with sufficient time to respond. The agency should have evidence to demonstrate that these matters have been considered where relevant.

An agency can potentially require that suppliers provide a submission in 10 days where:

• the agency requires goods or services urgently
• the agency is procuring commercial goods or services that are routinely for sale to businesses for non-government purposes
• the agency has published an open approach to market (OAM) within the previous 12 months for substantially similar goods or services and stated in that OAM that a further OAM would be published
• the agency has included a notice of the procurement in an annual procurement plan published on eTendering at least 40 days before publishing the OAM.

An agency that allows 10 days for suppliers to lodge submissions may still receive a complaint alleging that a supplier has not been provided with reasonable time to respond.

The agency should have evidence that the shorter time period is appropriate in the circumstances.

An agency can specify conditions for participating in a procurement. Conditions for participation are different from the evaluation criteria used to compare competing proposals.

Conditions for participation identify suppliers who can show they have the capacity and ability to fulfil the procurement. They may help an agency to conduct an efficient procurement process and will help a supplier identify opportunities appropriate for their business.

Any agency should consider specifying conditions for participation for each procurement covered by the EPP Direction. Where it doesn't, an agency will need to evaluate all submitted proposals and potentially may award a contract to a supplier who has not clearly demonstrated the capability to fulfil the contract.

When specifying conditions for participation, an agency must ensure that the conditions do not discriminate against any supplier due to its degree of foreign affiliation or ownership, location, or the origin of its goods and services.

The EPP Direction requires that an agency evaluate a supplier’s financial capacity, and their commercial and technical abilities on the basis of the supplier’s business activities wherever they have occurred.

The EPP Direction also prohibits conditions for participation that require prior experience in Australia or prior contracts with a government agency in Australia.

The EPP Direction limits conditions of participation to conditions that ensure a supplier has the:

• legal capacity to undertake the procurement
• financial capacity to fulfil the procurement
• commercial and technical ability to fulfil the procurement.

An agency may choose to consider the following factors when specifying conditions:

Legal capacity

The supplier must have the legal capacity to enter into a binding contract.

The supplier must have the legal authority to undertake or provide the required services. This includes services that must be provided by a person or body with specified licences, permits or other statutory authorities.

Financial capacity

The supplier has the financial capacity and records to validate their financial position, consistent with the agency’s risk appetite.

Evidence of financial capacity will vary according to the estimated maximum value of the proposed procurement contract and the risk profile of the industry. It may potentially include third party financial guarantees.

Commercial and technical capabilities

Demonstrated commercial capability such as independent certification of relevant business processes – for example quality management certification to ISO 9001.

Specified levels of experience in delivering equivalent goods or services.

Conditions for participation are used to identify suppliers who can demonstrate that they have the legal and financial capacity and commercial and technical capabilities to fulfil the procurement.

All suppliers that demonstrate that they meet the conditions for participation must be invited to participate in the procurement, or included on the procurement list.

An invitation to participate can be an invitation to submit a tender, or an invitation to participate in a process to select a shortlist of suppliers who will be invited to submit a tender.

The open approach to market published by an agency must specify the criteria that the agency will use to select any shortlist of suppliers. These selection criteria are additional to the conditions for participation.

The EPP Direction does not require an agency to use any specific type of selection criteria for shortlisting.

However, any criteria that are used must not discriminate against any supplier due to its degree of foreign affiliation or ownership, location, or the origin of its goods and services.

Selection criteria must also be consistent with the principles of probity and fairness.

Conditions for participation are used to identify suppliers who can demonstrate that they have the legal and financial capacity and commercial and technical abilities to fulfil the procurement.

A supplier may be required to demonstrate that they meet these conditions to have their tender considered.

An open approach to market for a procurement must include a summary of any conditions for participation, with full details being provided in the procurement documentation.

Tender evaluation criteria are used to assess the relative merits of the submissions submitted by suppliers who have demonstrated that they meet the conditions for participation.

Tender evaluation criteria are set out in the procurement documentation. There is no requirement to include information about the evaluation criteria in the open approach to market.

Limited tendering is the process where an agency directly invites one or more suppliers of the agency’s choice to participate in a procurement by making a submission. Examples of a submission include a request for quote (RFQ), a request for tender (RFT) or an expression of interest (EOI).

An invitation issued to a supplier on a procurement list (or prequalification scheme) established in accordance with the EPP Direction is not limited tendering.

The EPP Direction prohibits an agency from using limited tendering for a covered procurement covered except in certain cases specified in clause 15.

Some common circumstances where an agency may be able to use limited tendering include:

• an agency published an open approach to market and did not receive any complying proposals that represented value for money
• only one supplier can provide the goods or services and there is no alternative or substitute due to technical reasons
• additional deliveries of goods or services are required and a change of supplier:
  • would result in significant duplication of costs or cause significant inconvenience for the agency
  • is not possible due to technical reasons such as interoperability with existing equipment, software or installations procured under the initial procurement
  • is not possible due to conditions under the original supplier’s warranties
• an extreme urgency exists as a result of unforeseen circumstances and the goods and services cannot be obtained in time using an open approach to market.

An agency must prepare a written report for each procurement contract that is awarded by conducting limited tendering. The report must state:

• the circumstances and conditions justifying the use of limited tendering
• the value and type of goods and services procured.

The notice establishing a procurement list should provide a clear and comprehensive description of the goods or services for which it can be used.

Agencies procuring goods and services which are not included in this description may need to publish an open approach to market.

A procurement list can be mandatory for all or specified agencies, where this is approved by the NSW Procurement Board. If appropriate, the list can be limited to one or more specified agencies or to procurement in specified circumstances.

The scope of the procurement list should be explained in the description of goods and services in the notice establishing the list.

Any value thresholds used for a procurement list should take account of the requirements in clause 7 of the EPP Direction.

This includes ensuring that the estimated value of a procurement includes options, extensions, renewals or other mechanisms that may be executed over the life of a contract.

Conditions for participation must not discriminate against any supplier based on their location, the origin of their goods or services or the degree of their foreign affiliation or ownership.

Conditions for participation may vary for different categories of goods or services covered by a procurement list. Financial capacity requirements may also vary depending upon the value of the procurement.

Conditions for participation should ensure that agencies using the list can readily identify suitable suppliers.

Legal capacity

Conditions for participation relating to legal capacity may include conditions which ensure:

• the supplier has the legal capacity to enter into a binding contract
• the supplier has the legal authority to undertake or provide the required services including any necessary licences, permits or other statutory authorities.

Financial capacity

Conditions for participation related to financial capacity communicate minimum requirements to suppliers and help agencies identify suitable suppliers.

A list can have multiple levels of financial capacity depending on the range and scale of procurements that will be procured.

Depending upon the risk profile for a particular procurement, an agency using a list may choose to apply additional requirements and assurance processes when selecting suppliers.

Examples of financial capacity that may be appropriate include demonstrated levels of:

• net tangible assets
• working capital
• the ratio of current assets to current liabilities.

For higher risk or value contracts, extra measures may be relevant. For example, forecast profitability, forecast liquidity and the forward pipeline of work.

The Financial Assessment Services Scheme provides reports at 3 levels of financial capacity. The standards established by these reports may provide a framework for specifying financial capacity conditions for a procurement list.

In some cases, a financial capacity condition may include evidence of third party financial guarantees.

Conditions must be applied to all applicants and be consistent with Treasury Circular TC 14/01 Acceptance of performance bonds and unconditional undertakings by government agencies.

Commercial and technical abilities

Conditions for participation relating to commercial and technical abilities should be relevant to the goods and services being procured.

Measures or standards must be limited to those which ensure a supplier can fulfil the procurement.

If used, standards for business processes (such as quality management or environmental management) should be based on international standards such as ISO 9001 and ISO 14001.

Specification of technical abilities should, where appropriate, be based on performance outcomes and facilitate suppliers providing innovative solutions.

Relevant prior experience can be required if that experience is essential. In this case, the conditions must not require prior experience in Australia or previous contracts with a government agency in Australia.

The notice establishing a procurement list must specify the methods that will be used to verify that a supplier satisfies the conditions for participation. Verification methods should be stated for each condition.

Third-party certifications can be used where appropriate. But these certification processes should be readily available to all relevant potential suppliers and not discriminate against them based on location.

Any documentation that a supplier is required to submit should be clearly specified in the notice.

Evaluation of a supplier’s financial capacity or their commercial or technical ability must be done on the basis of the supplier’s business activities wherever those activities have occurred. This includes locations outside of Australia.

A decision on a supplier’s application must be based solely on whether they satisfy the conditions for participation specified in the published notice.

No other factors can be considered apart from certain general criteria for excluding a supplier from procurements discussed in the section on procurement list administration below.

Any supplier that demonstrates that they satisfy the published conditions for participation must be included in the procurement list.

A notice establishing a procurement list can allow agencies to invite a limited number of suppliers on the list to participate in a particular procurement.

This can be for all procurement through the list or for specified categories within the list. It can also apply in specified circumstances, such as where the number of suppliers in a category exceeds a set number.

A selective invitation process is enabled by including the following information in the notice establishing the list:

• a statement that a limited number of suppliers may be invited to make submissions relating to procurements covered by the list
• the justification for that limitation
• the criteria that will be used to select the suppliers who will be invited to make submissions.

Justification of limited number

The notice should explain why a limited number of suppliers will be invited to participate in a procurement.

For example, a category may have a large number of suppliers who meet the conditions and it may be inefficient to invite all to make a submission.

Criteria for selecting a limited number of suppliers

All suppliers on the list will have already demonstrated that they meet the conditions for participation, and are capable of fulfilling procurements covered by the list or category. Therefore, the criteria used to select suppliers are additional to the conditions for participation.

Selection criteria must:

• be consistent with the principles of probity and fairness
• not discriminate against suppliers based on their location, the origin of their goods or services or their degree of foreign affiliation or ownership.

Criteria that potentially could be considered include:

• invite a random selection of suppliers
• invite suppliers who have registered an interest with the agency for a particular procurement listed in the agency annual procurement plan
• invite suppliers who have demonstrated a capacity to meet specific evaluation criteria that an agency will use for the procurement.

Agencies that will use the list should be consulted to identify effective and relevant selection criteria.

Where appropriate, the agency establishing the list may also consider requiring or inviting suppliers to provide profile information that will be used by agencies when selecting suppliers.

On application, a supplier must be included on a procurement list if the managing agency is satisfied that the supplier meets the conditions for participation.

The supplier’s application must be verified using the verification methods stated in the notice.

The agency must notify a supplier if the agency rejects their application. This includes circumstances where a supplier is removed from a list because they no longer satisfy the conditions for participation.

The agency can exclude a supplier from a procurement list if the agency has a reasonable belief that the supplier:

• is bankrupt or insolvent
• has made one or more false declarations
• has failed to pay taxes
• has been convicted of an offence punishable by imprisonment for a term of 2 years or more, or by a fine of $200,000 or more
• has been found guilty of professional misconduct or unprofessional conduct in a jurisdiction in Australia
• has been found by the Independent Commission Against Corruption (or equivalent body in another Australian jurisdiction) to have engaged in corrupt conduct, or one of theses bodies has the opinion that the supplier has engaged in corrupt conduct.

The agency can also exclude a supplier if the agency has the reasonable belief that there has been a significant deficiency (or persistent deficiencies) in their performance under a prior contract.

Supplier complaints

A supplier can lodge a complaint with the head of the agency managing a procurement list.

For example, a complaint may potentially allege that:

• the notice establishing a procurement list contravenes the EPP Direction
• the conditions for participation in the procurement list contravene the EPP Direction
• the supplier’s application was rejected in contravention of the EPP Direction
• the supplier was excluded from a procurement list in contravention of the EPP Direction.

Such complaints must be managed in accordance with relevant provisions in Part 11 of the PW&P Act.

This includes requirements to investigate the complaint, try to resolve it and to prepare a report. In some cases, the agency may need to suspend compiling a procurement list while the complaint is investigated.

The NSW Procurement Board complaint management guidelines provide advice on managing supplier complaints.

An agency managing a procurement list must provide assurance that:

• the notice establishing the list complies with clause 25 of the EPP Direction
• any thresholds for different categories in the list are consistent with requirements for estimating the value of procurements in clause 7 of the EPP Direction
• any supplier selection criteria included in the notice establishing the list are consistent with non-discrimination requirements in clause 8 of the EPP Direction
• that the agency has reasonable grounds for exclusion of any supplier under clause 12 of the EPP Direction
• conditions for participation in the list comply with clause 16 of the EPP Direction
• suppliers on the list have demonstrated that they meet the conditions for participation and where relevant continue to meet those conditions.

Agencies that may use a procurement list should be consulted in the development of the list to ensure that it provides an effective procurement solution.

Particular care needs to be taken to ensure that:

• the structure of any categories within the list reflect procurement being undertaken by agencies
• conditions for participation are relevant to the list and categories within the list
• conditions for participation reflect the business needs of agencies seeking to identify suppliers capable of fulfilling procurements
• selection criteria that will be used to invite suppliers to participate in a procurement are practical and facilitate fair and efficient procurement processes
• processes and information used to determine that a supplier should be excluded from a list are fair, are acceptable to agencies and where appropriate make use of relevant information provided by user agencies
• ongoing administration of a list incorporates appropriate input from user agencies.

In place of publishing an open approach to market, an agency must invite all suppliers on the procurement list (or the relevant category of the list) to submit proposals for the procurement, unless the notice establishing the list states that invitations may be issued to only a limited number of suppliers.

If invitations are issued to a limited number of suppliers, the agency conducting the procurement must select the suppliers by applying the selection criteria set out the notice establishing the list.

A supplier on the list who is not invited to make a submission can potentially lodge a complaint under Part 11 of the PW&P Act. For example, they may allege that the agency has not applied the selection criteria set out in the notice establishing the list.

Any complaint must be managed in accordance with relevant provisions in Part 11 of the PW&P Act.

The NSW Procurement Board complaint management guidelines provide advice on managing supplier complaints.

An agency must comply with other relevant provisions in the EPP Direction for all covered procurement when procuring through a procurement list. This includes requirements relating to:

• estimating the value of a procurement (clause 7)
• not discriminating against any supplier due to its degree of foreign affiliation or ownership, location, or the origin of its goods and services (clause 8)
• not seeking, taking account of, imposing or enforcing any offset (clause 9)
• using specifications for the procurement (clause 17)
• providing procurement documentation (clause 18)
• responding to requests for further information (clause 19)
• amending or reissuing requirements (clause 20)
• awarding contracts (clause 22)
• timing for submissions (clause 23)
• correction of errors (clause 24)
• informing affected tenders of the decision and providing debriefings on request (clause 28).

An open approach to market is an invitation to participate in a procurement published on eTendering.

It must provide information prescribed in clause 14 of the EPP Direction, which includes:

• a description of the procurement, including, if appropriate, the nature and quantity of the goods and services to be procured, or where the quantity is not known, the estimated quantity
• an explanation of the procurement process that will be followed
• the duration of any contract or the period when goods or services must be provided
• a summary of any conditions for participation, including documents or certifications that must be provided
• agency contact details, how to obtain procurement documentation and the date for lodging submissions
• if applicable, the criteria that will be used to select a limited number of suppliers who will be invited to make further detailed submissions and the justification for limiting the number.

An agency must use an open approach to market for all procurements covered by the EPP Direction, apart from:

• procurement through a procurement panel that was established by an open approach to market
• procurement through a procurement list (prequalification scheme) that was established in accordance with the EPP Direction
• when an agency uses limited tendering in accordance with the EPP Direction.

An open approach to market is not required for procurement that is exempt under the savings and transitional provisions in clause 29 of the EPP Direction.

An agency must ensure that specifications for a procurement do not discriminate against suppliers from any location or based on the origin of their goods or services.

Clause 17 of the EPP Direction also includes certain requirements regarding specifications.

Specifications must be set out as performance and functional requirements where this is appropriate for the procurement.

If an agency determines that it is appropriate to specify that a procurement outcome must be achieved in a particular way, the agency should consider allowing a supplier to also submit an alternative solution.

Unless there is no other way to precisely describe a requirement, specifications for a procurement must not require or refer to:

• particular trademarks or trade names
• particular patents or copyright
• particular designs or types
• specific producers or suppliers
• specific places of origin for a good, service or supplier.

If it is necessary to include these types of requirements or references, the specification for a procurement must also include the words “or equivalent”.

The EPP Direction does not require an agency to use any specific evaluation criteria or evaluation process.

Evaluation criteria should be designed to help the agency identify the submission that:

• achieves the required specifications, and
• provides the best value for money.

The EPP Direction requires that an agency have regard to the following factors (if relevant) when assessing value for money and these factors should be considered when preparing evaluation criteria:

• the financial and non-financial costs and benefits of making the procurement
• the quality and quantity of the goods or services
• whether the goods or services are fit for purpose
• the supplier’s relevant experience and performance history
• the environmental sustainability of the goods or services
• the whole of life costs of the goods or services.

Evaluation criteria must be disclosed in the procurement documentation. The relative importance of evaluation criteria must also be disclosed. For example, weighted criteria could be listed in the order of their weighting or importance.

Any decision to award a contract must be made in accordance with the evaluation criteria disclosed in the procurement documentation.

The EPP Direction requires that an agency promptly replies to a reasonable request from any supplier for relevant information about a procurement, except where the provision of the information would:

• be contrary to any Australian law
• be contrary to an overriding public interest against disclosure of the information (as defined in the Government Information (Public Access) Act 2009)
• give the supplier an unfair advantage over other suppliers in a competitive procurement process.

There is no restriction on when a supplier can request this information. An agency should note that a supplier may seek access to information during the planning phases of a procurement.

Procurement documentation

An agency must make procurement documentation available for free by electronic means at the same time that an open approach to market is published (to the extent that is practicable).

This documentation can be made available through eTendering or some other way advised in the open approach to market.

It must include a complete description of the procurement, including details prescribed in clause 18 of the EPP Direction. Required details include:

• the nature, scope and the quantity of the goods or services being procured, or if the quantity is not known, the estimated quantity
• any requirements to be fulfilled including any technical specifications, conformity certification and others
• any conditions for participation including any financial guarantees
• the evaluation criteria that will be used to assess submissions and if applicable their relative importance
• any dates for the delivery of goods or the supply of services
• any other terms or conditions relevant to the evaluation of submissions.

Any supplier that is invited to participate in a procurement can request other relevant information needed to prepare and a submission.

An agency can amend an open approach to market or the procurement documentation if needed. This includes correcting mistakes in the documents.

The agency must:

• publish any amended or reissued open approach to market on eTendering
• send any amended or corrected procurement documentation to all suppliers participating in the procurement
• if the agency cannot identify all suppliers who may be participating, republish the amended or corrected documentation at the same location that it was originally published.

Suppliers must be provided with reasonable time to modify and re-lodge their submission.

This may include providing all suppliers with additional time to lodge a submission. If needed, suppliers must be provided time to re-lodge submissions which have already been lodged.

An agency can negotiate with suppliers during a procurement if:

• the agency has evaluated submissions and it appears that no submission will provide the best value for money, or
• the open approach to market indicated that the agency intended to negotiate with suppliers.

An agency must award the contract to the supplier that the agency has determined:

• will provide the best value for money (in accordance with the evaluation criteria specified in the procurement documentation)
• is fully capable of undertaking the contract, and
• satisfies the conditions for participation specified in the procurement documentation.

Where appropriate, an agency should consider including mandatory evaluation criteria for any procurement to ensure its outcomes meet a minimum required standard.

An agency cannot cancel a procurement to avoid the operation of the EPP Direction.

An agency can, however, decide not to award a contract in the following circumstances:

• the agency determines that it is not in the public interest to award a contract, or
• no supplier has satisfied the evaluation criteria for the procurement.

In this case, the agency may consider whether it is appropriate to undertake limited tendering, in accordance with clause 15 of the EPP Direction.

In November 2019, the PW&P Act was amended to introduce a statutory right for a supplier to lodge a written complaint alleging that a government agency is contravening, or proposes to contravene, NSW Procurement Board Direction PBD 2019-05.

The revised complaint management guidelines include advice for agencies on dealing with such complaints.

The complaint management guidelines use the term covered complaint to refer to a complaint made under section 176A of the PW&P Act. A covered complaint is a complaint that:

• is made in writing to the head of an agency or their nominated delegate
• alleges that the conduct of the agency contravenes or proposes to contravene an enforceable provision in the EPP Direction
• is lodged by a supplier, or potential supplier, whose interests are affected by the alleged contravention.

The PW&P Act does not specify when a supplier’s interests are affected by an alleged contravention.

The PW&P Act authorises the NSW Procurement Board to specify provisions in directions and policies relating to an international procurement agreement that are enforceable procurement provisions.

The EPP Direction (PBD-2019-05) sets out requirements arising from international procurement agreements applying to the NSW Government.

Clause 4 of the EPP Direction identifies the specific provisions in the direction which are enforceable procurement provisions.

The head of an agency that receives a covered complaint (or their nominated delegate) must:

• suspend all processes in the procurement that would adversely affect the complainant’s participation in the procurement
• investigate the conduct that is the subject of the complaint
• take reasonable action to resolve the complaint promptly
• prepare a written report on the investigation.

Suspension of an affected procurement process must remain in place until the complainant takes one of the following actions:

• withdraws the complaint
• informs the head of the agency that their complaint is resolved
• commences proceedings in the Supreme Court in relation to the complaint.

The head of the agency does not need to suspend a procurement process or continue a suspension that is in place if they certify that suspension of the process is not in the public interest.

A public interest certificate is a written certificate issued by the head of an agency which states that it is not in the public interest to suspend a procurement while:

• a covered complaint is being investigated or
• the Supreme Court is considering an application for an injunction regarding conduct that was the subject of a complaint.

A public interest certificate can be issued at any time, including when an approach to market is approved.

A public interest certificate should only be issued where suspending the procurement would have an adverse impact on the public interest that exceeds the right of a supplier to have the procurement suspended.

It will be a matter of judgment for the agency head to weigh the relative merits of these competing interests, which will depend on a range of factors, including but not limited to:

• the purpose of the goods or services being procured
• the scope, scale and risk of the procurement
• the criticality of timing for the procurement
• linkages and interdependencies with other processes, including other non-procurement processes
• the scale and scope of the alleged breach of the enforceable procurement provision and the potential materiality of that alleged breach on the interests of the aggrieved supplier
• whether the supplier has responded to the agency’s findings about its investigation of a complaint.

If the agency head determines that it is appropriate to issue a public interest certificate, the agency should document the decision and its reasons. This information may be required for legal proceedings.

An agency must suspend all processes in the procurement that may adversely affect the capacity of the complainant to participate in the procurement.

This would include any decision or process that would result in a contract being awarded and, depending upon the circumstances, may include other actions such as:

• issuing procurement documentation and providing information to potential suppliers
• inviting suppliers to make submissions
• eliminating suppliers who do not meet conditions for participating in the procurement
• assessing suppliers' proposals against evaluation criteria.

An agency will need to determine what processes must be suspended based on the particular circumstances.

An agency that suspends a procurement process will also need to consider how the suspension affects other suppliers.

If any change is made to the procurement process or documentation, the agency will need to ensure that all participating suppliers are provided with reissued documents, and if relevant the notice inviting submissions should be republished.

Participating suppliers must all be provided with reasonable time to modify and re-lodge submissions if this is relevant.

An agency must take reasonable action to resolve a covered complaint promptly.

A supplier who has lodged a complaint with an agency can apply to the Supreme Court for an injunction to remedy the alleged contravention at any time.

This application must, however, be made within 10 calendar days of when the supplier became aware (or reasonably should have been aware) of the alleged contravention – unless the Court allows a longer time period.

To prevent an unnecessary escalation, an agency should investigate and, where appropriate, seek to resolve a complaint as soon as achievable within this 10 day period.

An agency can discontinue an investigation of a covered complaint if the complainant:

• withdraws the complaint
• advises the agency that they consider the complaint has been resolved, or
• commences proceedings in the Supreme Court.

An agency can also discontinue an investigation if the head of the agency considers it reasonable to do so in the circumstances. The Act does not specify the circumstances, but they may potentially include:

• the alleged contravention has already been investigated in response to a complaint from another supplier
• the complaint has no apparent basis and is determined to be vexatious.

An agency that discontinues an investigation must still prepare a written report of the investigation that has been undertaken.

An agency must discontinue an investigation if the Supreme Court makes findings in relation to the conduct that was the subject of the complaint, and in any other circumstance where continuing the investigation would be likely to result in prejudice to the proper administration of justice.

An investigation report should provide sufficient information to demonstrate that the agency has fully considered the complaint and the conduct that is the subject of the complaint.

The agency may need to rely on the content of the report in legal proceedings.

It would be prudent for the report to at least include the following:

• details of the complaint, including the alleged conduct that is the subject of the complaint and the EPP that was allegedly contravened
• information about the conduct of the investigation, including any interviews with officers involved in the procurement, procurement documentation that has been reviewed, and any additional information sought from the complainant
• details of any steps taken to resolve the complaint with the complainant
• a summary of the findings of the investigation
• where the investigation finds that contraventions have or may have occurred, details of the proposed remedial action.

The agency should engage with the complainant at the earliest opportunity to ensure sufficient information is available to enable a proper investigation.

The agency should ensure that any alleged contravention of an enforceable provision is managed as a covered complaint.

The agency should determine the most appropriate way to consider other matters raised in the complaint.

The principal officer of an agency has a duty under the Independent Commission Against Corruption Act 1988 (s.11) to report to the ICAC any matter that the officer suspects on reasonable grounds concerns or may concern corrupt conduct.

Any further action on the investigation or the procurement affected by the report should be informed by advice from the ICAC.

A supplier can complain about not being included in a prequalification scheme or a procurement list.

The complaint should be managed in accordance with the rules for the relevant scheme.

A supplier will be able to lodge a covered complaint about not being included in a procurement list if they allege that the grounds for not being included contravene provisions in the EPP Direction.

An example of a potential covered complaint may be where the criteria used for assessing applicants discriminate against a supplier that is located outside of Australia.

The agency should notify the complainant that they have received the complaint and then manage the complaint as a covered procurement complaint.

The Supreme Court can take any action consistent with its powers to provide remedies for contraventions or proposed contraventions of enforceable procurement provisions.

This includes powers under the PW&P Act to:

• grant an injunction restraining an agency from contravening an enforceable procurement provision or requiring an agency to take any action or do anything necessary to avoid or remedy a contravention or proposed contravention
• grant an interim injunction pending determination of an application for an injunction
• make an order for the payment of compensation to the supplier.

The PW&P Act specifically provides that contravention of an enforceable procurement provision does not affect the validity of any contract.

The Supreme Court can issue an injunction under the PW&P Act where a supplier has:

• lodged a complaint with the agency head
• made an attempt to resolve the complaint to the extent that the Court considers reasonable, and
• applied to the Supreme Court for an injunction within 10 days of the supplier becoming aware (or should reasonably have become aware) of the alleged contravention.

The Court can allow a longer period than 10 days if the supplier failed to lodge an application with the Court due to the supplier’s reasonable attempt to resolve the complaint, or the Court considers that there are other special circumstances.

An agency should investigate a covered complaint and attempt to resolve the matter as a high priority to minimise the risk that a complaint will escalate into unnecessary legal proceedings.

The Supreme Court can issue an interim injunction under the PW&P Act at any time on application by a supplier.

However, the Court must be satisfied that it is in the public interest to issue an interim injunction, if the head of the agency has issued a public interest certificate with respect to the procurement.

An agency head that issues a public interest certificate should ensure that the agency has adequate documented reasons to satisfy the Court that suspension of the procurement is not in the public interest.

The Supreme Court can make any order for compensation consistent with its powers to provide remedies for contraventions or proposed contraventions of enforceable procurement provisions.

The amount of a compensation order made under the PW&P Act is limited to the reasonable expenditure incurred by the supplier in:

• making a complaint
• making a reasonable attempt to resolve the complaint
• preparing a tender or expression of interest
• applying for inclusion on a procurement list (pre-qualification scheme)
• applying for inclusion on a panel.

The Supreme Court can make a compensation order under the PW&P Act:

• on application by a supplier whose interests are affected by a contravention or proposed contravention of an enforceable procurement provision
• in place of an injunction where the Court considers that compensation would be a more appropriate remedy in the circumstances.

A supplier can apply to the Supreme Court for a compensation order at any time.

The PW&P Act does not require that a supplier lodge a complaint with the agency before applying for compensation or require that the application be lodged within any specified time period.