Advice and Assistance Regarding the Free Trade Agreements May Be Obtained From

INTRODUCTION

As of 15 January 2015, the Commonwealth Government is a signatory to the Australia-United States Free Trade Agreement (AUSFTA), the Australia-Chile Free Trade Agreement (AClFTA), the Korea-Australia Free Trade Agreement (KAFTA) and the Japan-Australia Economic Partnership Agreement (JAEPA). The Government Procurement chapters of each free trade agreement[(] contain legally binding requirements relating to procurement activities conducted by particular government agencies, including Western Australian government agencies. A list of government agencies to which the Government Procurement chapters of the free trade agreement applies is contained in Appendix 1.

The purpose of these guidelines is to provide government agencies with information on conducting procurement in accordance with the Government Procurement chapters of the free trade agreements. These guidelines do not substitute for a familiarity with the Government Procurement chapters of the AUSFTA, AClFTA, KAFTA or the JAEPA.

Advice and assistance regarding the free trade agreements may be obtained from:

State Supply Commission

4th Floor, Optima Centre

16 Parkland Road

OSBORNE PARK WA 6017

Telephone: (08) 6551 1500

STATE SUPPLY COMMISSION ACT 1991

The requirements of the free trade agreements are in addition to the requirements of supply policies issued under the State Supply Commission Act 1991. Government agencies which are public authorities for the purposes of the Act must comply with those supply policies as well as with the free trade agreements.

COVERED PROCUREMENTS

The free trade agreements apply to “covered procurements” undertaken by government agencies.

A “covered procurement” means a procurement of goods and/or services by any contractual means, including purchase, rental, or lease, with or without an option to buy,
build-operate-transfer contracts, and public works concessions contracts, for which:

· the total contract value is estimated to equal or exceed $551,000 for the procurement of goods and/or services; and

· the total contract value is estimated to equal or exceed $7,769,000 for the procurement of construction services.

Appendix 2 contains a list of procurements to which the free trade agreements do not apply.

TOTAL CONTRACT VALUE

The free trade agreements require that a procurement must be valued on a total estimated contract value basis to determine whether it is a covered procurement.

In determining the total estimated contract value for a procurement, a government agency must take into account:

· all forms of remuneration, including any premiums, fees, commissions, interest and other revenue streams that may be provided for in the proposed contract and, where the procurement provides for the possibility of option clauses, the total maximum value of the procurement, inclusive of optional purchases; and

· any taxes or charges (including Goods and Services Tax).

Where a procurement is to be conducted in multiple parts, with contracts to be awarded at the same time or over a given period to one or more suppliers, a government agency must base its calculation on the total maximum value of the procurement over its entire duration.

A government agency must not divide a procurement into separate parts nor use a particular method to estimate the value of the procurement to circumvent the requirements of the free trade agreements.

In the case of procurement by lease or rental, or a procurement that does not specify a total price, the basis for estimating the value of the procurement is as follows:

(a) in the case of a fixed term contract,

(i) where the term is twelve months or less, the total estimated contract value for the contract’s duration; or

(ii) where the term exceeds twelve months, the total estimated contract value, including the estimated residual value; or

(b) in the case of a contract for an indefinite period, the estimated monthly instalment multiplied by 48.

Where there is doubt as to whether the contract is to be a fixed term contract, a procuring entity must use this method for estimating the value of the procurement.

Where the total contract value of a procurement cannot be estimated, the procurement must be treated as a covered procurement.

PROCUREMENT METHODS

Under the free trade agreements, a government agency may procure via one of the following three methods:

(a) open tendering procedures;

(b) selective tendering procedures in accordance with the rules described below; and

(c) limited tendering procedures in accordance with the rules described below.

Selective tendering and limited tendering are allowed only in specific conditions.

Open Tendering

Open tendering is a procurement method where all interested suppliers may submit a tender.

Selective Tendering

All selective tendering processes must be conducted using either:

1. a multi-use list (pre-qualified suppliers);

2. a list of suppliers that have responded to a notice inviting suppliers to submit applications for participation in a procurement;

3. a list of potential suppliers that have responded to a request for expressions of interest (EOI); or

4. a list of all potential suppliers that have been granted a specific licence or which have been determined to comply with specific legal requirements that exist independent of the procurement process, where the licence or compliance with the legal requirement is essential to the conduct of the procurement.

For methods 2 and 3, an initial open approach to the market must be undertaken to identify potential suppliers eligible and interested in participating in the selective tender process.

For all methods:

· government agencies must invite tenders from the largest number of Australian, United States, Chilean, Korean and Japanese suppliers that is consistent with the efficient operation of the procurement system; and

· the time limits described later in these guidelines apply.

Selective Tendering from a Multi-Use List (Pre-qualified Suppliers)

A government agency may invite all or some of the suppliers listed in the multi-use list to submit tenders. The government agency must invite tenders from the largest number of Australian, United States, Chilean, Korean and Japanese suppliers that is consistent with the efficient operation of the procurement process.

Selective Tendering from a notice inviting applications for participation, or from an EOI.

A government agency may use the list of suppliers that lodge a compliant response to a notice inviting applications for participation, or to an EOI, as the basis for inviting potential suppliers to submit tenders.

The government agency's invitation to submit tenders must be sent to all suppliers that lodged a compliant response unless the notice inviting applications for participation or the EOI expressly stated that limited suppliers would be invited to bid.

Providing that relevant requirements and evaluation criteria have been specified in the notice inviting applications for participation, or the EOI, or the associated request documentation, a government agency may:

· in assessing technical ability, assess the extent to which a submission meets the technical and performance specifications of the procurement; and

· limit the number of suppliers that it invites to tender, based on its rating of submissions, provided that the largest number of potential Australian, United States, Chilean, Korean and Japanese suppliers is invited that is consistent with the efficient operation of the procurement process.

In all other cases, the government agency must invite all suppliers that have responded to the request for expressions of interest and that meet the conditions for participation to submit a tender.

Selecting on the Basis of a Licence or Specific Legal Requirement

Government agencies may conduct a selective tender from a list of all potential suppliers that have been granted a licence, or that have been determined to comply with specific legal requirements that exist independent of the procurement process, provided that:

· the requirement for a licence or compliance with specific legal requirements is essential to the conduct of the procurement; and

· the complete list of such potential suppliers is maintained by the appropriate agency.

Otherwise, the government agency must invite all suppliers on the list to submit tenders.

Information on Decisions Relating to a Participation in a Covered Procurement

Where a supplier applies for participation in a covered procurement, the government agency must promptly advise the supplier of its decision with respect to its application.

Where a government agency:

· rejects an application for participation in a covered procurement;

· rejects a request for inclusion on a multi-use list; or

· ceases to recognise a supplier as having satisfied the conditions for participation,

the government agency must promptly inform the supplier and provide, on request by the supplier, a written explanation of its decision.

Establishing and Maintaining Multi-Use Lists (Pre-qualified Suppliers)

A multi-use list is a list of suppliers that:

· a government agency has determined satisfy the conditions for participation in that list; and

· the government agency intends to use more than once.

Where a government agency wishes to establish a multi-use list (pre-qualified suppliers), a notice must be issued in electronic form inviting interested suppliers to apply for inclusion on the list. The notice must include:

· a description of the procurement, or procurement categories, for which the list may be used;

· the conditions for participation to be satisfied by potential suppliers and the methods that will be used to verify or determine a potential supplier’s compliance with or satisfaction of the conditions for participation;

· the name and address of the government agency and other information necessary to contact the government agency and obtain all relevant documents relating to the list; and

· any time limit for applications for inclusion in the list.

The notice should be made available continuously.

Where a supplier applies for inclusion in a multi-use list, the government agency must promptly advise the supplier of its decision with respect to its application.

Government agencies must include all potential suppliers that satisfy the conditions for participation in a multi-use list within a reasonably short time.

Limited Tendering

Provided that it does not do so in order to avoid competition or to protect domestic suppliers or in a manner that discriminates against United States, Chilean, Korean or Japanese suppliers, a government agency may contact a supplier or suppliers of its choice in the following circumstances:

· In response to a prior notice, invitation to participate, or invitation to tender, no conforming tenders were submitted or no suppliers satisfied the conditions for participation, and the government agency does not substantially modify the essential requirements of the procurement.

· The goods or services to be procured can only be supplied as a bona fide sole source of supply and no reasonable alternative or substitute goods or services exist for the following reasons:

(i) The requirement is for works of art.

(ii) The protection of patents, copyrights, or other exclusive rights, or proprietary information.

(iii) Due to an absence of competition for technical reasons.

· Additional deliveries of goods or services by the original supplier or authorised representative are intended either as replacement parts, extensions, or continuing services for existing equipment, software, services, or installations, where a change of supplier would compel the government agency to procure goods or services that do not meet requirements of interchangeability with existing equipment.

· For goods purchased on a commodity market.

· A government agency procures a prototype or a first good or service that is intended for limited trial or that is developed at its request in the course of, and for, a particular contract for research, experiment, study, or original development.

· For reasons of extreme urgency brought about by events unforeseen by the government agency, the goods or services could not be obtained in time under tendering procedures consistent with the free trade agreements.

· New construction services that consist of the repetition of similar construction services that conform to a basic project for which an initial contract was awarded following use of open tendering or selective tendering. The government agency must have indicated in the notice of intended procurement for the initial construction service that limited tendering procedures might be used in awarding contracts for these construction services.

· Purchases made under exceptionally advantageous conditions that only arise in the very short term, such as from unusual disposals, unsolicited innovative proposals, liquidation, bankruptcy, or receivership, and not for routine purchases from regular suppliers.

· A contract awarded to the winner of a design contest, provided that the contest has been organised in a manner that is consistent with the Government Procurement chapters of the free trade agreements and the contest is judged by an independent jury with a view to a design contract being awarded to the winner.

CONDITIONS FOR PARTICIPATION

Under the free trade agreements, government agencies must limit any conditions for participation in a covered procurement to those that ensure that a supplier has the legal, commercial, technical and financial abilities to fulfil the requirement of the procurement.

In assessing whether a supplier satisfies the conditions for participation, a government agency:

· shall evaluate the financial, commercial, and technical abilities of a supplier on the basis of that supplier’s business activities both inside and outside Australia;

· may not impose the condition that, in order for a supplier to participate in a procurement, the supplier has previously been awarded one or more contracts by any Australian government agency or that the supplier has prior work experience in Australia;

· shall base its determination of whether a supplier has satisfied the conditions for participation solely on the conditions specified in advance in notices or tender documentation; and

· may require relevant prior experience where essential to meet the requirements of the procurement.

This does not preclude a supplier from being excluded on grounds such as:

· bankruptcy;

· false declarations; or

· significant deficiencies in performance of any substantive requirement or obligation under a prior contract.

TENDER DOCUMENTATION

Under the free trade agreements, a government agency must promptly provide, on request, to any supplier participating in a covered procurement, tender documentation that includes all information necessary to permit suppliers to prepare and submit responsive tenders. Unless already provided in the notice of intended procurement, such documentation must include a complete description of:

· the procurement, including the nature, scope and, where known, the quantity of the goods or services to be procured and any requirements to be fulfilled, including any technical specifications, conformity certification, plans, drawings, or instructional materials;

· any conditions for participation, including any financial guarantees, information and documents that suppliers are required to submit;

· all criteria to be considered in the awarding of the contract;

· where there will be a public opening of tenders, the date, time, and place for the opening of tenders; and