Guide to Ministerial Direction No 1 Tendering Provisions for Public Construction

Guide to Ministerial Direction No 1 – Tendering provisions for public construction

Issued by the Secretary, Department of Treasury and Finance

Effective 1 March 2017

The Secretary

Department of Treasury and Finance

1 Treasury Place

Melbourne Victoria 3002

Australia

Telephone: +61 3 9651 5111

Facsimile: +61 3 9651 2062

dtf.vic.gov.au

Authorised by the Victorian Government

1 Treasury Place, Melbourne, 3002

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ISBN 978-1-925551-20-4 (pdf/online)

Published January 2017

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Contents

Guide to Ministerial Direction No 1 – Tendering provisions for public construction 1

1. Introduction 1

1.1 Authority 1

1.2 Effectiveness 1

1.3 Application 1

1.4 Order of precedence 1

1.5 Definitions and interpretation 1

2. Tendering protocols 2

2.1 General principles 2

2.2 Seeking tenders 3

2.2.1 Seeking tenders 3

2.2.2 Size of tender fields 3

2.3 Tendering conditions 3

2.3.1 Tender terms 3

2.3.2 Tender documentation 4

2.3.3 Time for submitting tenders 4

2.3.4 Changes to tender documentation 4

2.3.5 Evaluation criteria 4

2.3.6 Reduce unnecessary information requirements 4

2.3.7 Avoid pricing multiple options 5

2.4 Conduct of tender processes 5

2.4.1 Probity 5

2.4.2 Responding to questions and providing clarifications 5

2.5 Process closure 5

2.6 Urgent works or related consultancy services 5

2.6.3 Meaning of ‘urgency’ 5

2.6.4 Common urgent works 6

3. Accreditation of whole of government and Agency-specific registers 6

3.1 Whole of Government Registers 6

3.2 Agency Specific Registers 7

3.3 Conditions for the Accreditation of Registers 7

3.4 Panels of Suppliers 8

4. Assessment protocols and criteria 8

4.1 Mandatory registration Categories or Classifications 8

4.2 Mandatory assessment criteria 9

4.2.1 Occupational Health and Safety (OHS) Criteria 9

4.2.2 Industrial Relations Management (IRM) Criteria 10

4.2.3 Project-specific criteria: Price 10

4.3 Approved assurance systems 11

4.4 Recommended criteria 11

4.4.1 Construction Related Consultants 11

4.4.2 Contractors 12

5. Reporting and Administrative Arrangements 12

5.1 Performance Reporting 12

5.2 Standard reporting requirements 12

5.3 Administrative arrangements 13

APPENDIX A - Detail Guidance on Occupational Health and Safety (OHS) Management Criteria 14

The occupational health and safety criteria for Contractors - Part 1 – An explanation of the criteria 14

The occupational health and safety criteria for Contractors - Part 2 - Guide to acceptable evidence 23

The occupational health and safety criteria for Consultants - Part1 - An explanation of the criteria 31

The occupational health and safety criteria for Consultants - Part2 - Guide to acceptable evidence 42

APPENDIX B - Detail Guidance on Industrial Relations (IR) Management Criteria 52

Page i

Guide to Ministerial Direction No 1 – Tendering provisions for public construction

1. Introduction

1.1 Authority

This Guide is issued by the Secretary under the delegation of the Minister for Finance in Ministerial Direction No 1 issued pursuant to the Act.

1.2 Effectiveness

This issue no. 4 of the Guide is effective from 1 March 2017 and supersedes issue no 3, effective from 4 April 2016, which is repealed and replaced from the effective date of this Guide.

1.3 Application

This Guide applies to public construction as defined in the Act.

1.4 Order of precedence

This Guide is incorporated into and must be read in conjunction with Ministerial Direction No 1 issued by the Minister under the Act.

1.5 Definitions and interpretation

(a) In this Guide, terms defined in Ministerial Direction No 1 shall have the same meaning in this Guide, and

Term / Definition /
Agency-specific Register or ‘ASR’ / means a Register established by an Agency primarily to meet the business needs of that Agency.
Category / means a division within a system of classifying pre-qualified Suppliers.
CCAP / means the Construction Contracts Advisory Panel established under the Guide to Ministerial Direction No 2.
Classification / means a group of Suppliers within a Category sharing common attributes.
Contractor / means a person that supplies works.
Consultant / means a person that supplies related consultancy services.
Guide / means this Guide to Ministerial Direction No 1.
Ministerial Direction No 1 / means Ministerial Direction No 1: Tendering Provisions for Public Construction issued under the Act.
Ministerial Direction No 2 / means Ministerial Direction No 2: Contractual Provisions for Public Construction issued under the Act.
project-specific / means restricted to a particular project.
Qualification Criteria / means standards applied to a Supplier to assess its capacity to successfully complete a project.
Register / means a list of qualified Suppliers who have been assessed and deemed suitable to be considered for projects at varying levels.
Supplier / means a Contractor or Consultant.
tenderer / a Supplier that submits a tender.
VGPB / means the Victorian Government Purchasing Board established under the FMA.
Whole of government Register or ‘WGR’ / means a Register that may be used by all Agencies.

(b) For the purposes of this Guide, a reference to an Act or subordinate instrument is a reference to that Act or subordinate instrument as amended from time to time.

2. Tendering protocols

2.1 General principles

Ministerial Direction No 1 establishes the minimum requirements that Agencies must apply when tendering works or related consultancy services. These requirements are underpinned by the general principles to support the economical and efficient use of State resources in procurement through:

(a) applying relevant legislation, standards, policies and funding arrangements;

(b) achieving value for money;

(d) encouraging open and fair competition;

(e) supporting probity, accountability and transparency; and

(f) managing risks appropriately.

2.2 Seeking tenders

Participating in tender processes involves time and cost for all participants. Agencies must endeavour to conduct tender processes efficiently and reduce unnecessary costs for tenderers.

2.2.3 Seeking tenders

When seeking competitive tenders or quotations for works and/or related consultancy services, Agencies should make reasonable attempts to obtain the minimum number of tenders as required by Ministerial Direction No 1.

In a selective tender process, it is good practice to check the willingness of potential tenderers prior to invitation, including where a Register is used to identify relevant tenderers.

If, despite making reasonable attempts or, in the case of a selective tender, confirming the willingness of all tenderers invited to participate, less than the minimum number of tenders is obtained, Agencies may be satisfied that sufficient effort has been made to maximise competition. In such cases the value for money evaluation of the remaining tender(s) may need to include a comparison with current market conditions before a decision to accept is finalised.

In cases where pre-qualified tenderers are unwilling to bid, their lack of interest in the project may indicate that an alternative procurement process should be considered such as a publicly advertised tender or restructuring the work packages to be more appropriate for the industry.

2.2.4 Size of tender fields

Generally, the number of tenders sought should be between three and six. In determining whether to seek more than the minimum number of tenders required by Ministerial Direction No 1, Agencies should consider any competitive benefit derived from a larger field against factors such as:

· the time and cost of preparing and evaluating tenders;

· the complexity of the project;

· the project delivery method, and

· the structure of the supply market and interest among potential tenderers.

When Ministerial Direction No 1 requires an open tender, these considerations should be applied when considering the most appropriate way to structure the tender process, for example by using a two stage tender process or short-listing within a single stage tender process.

2.3 Tendering conditions

2.3.1 Tender terms

Tender documentation should clearly set out the terms and conditions applicable to the tender process.

The CCAP model tendering conditions provide relevant guidance to this provision.

2.3.2 Tender documentation

Agencies must clearly define project requirements in tender documentation in a manner that is appropriate for the procurement strategy and project delivery method.

Agencies must ensure that tender documentation is sufficiently resolved and appropriate for the procurement strategy and project delivery method prior to commencing a tender process.

2.3.3 Time for submitting tenders

When developing the overall project programme, Agencies should allow a reasonable time for tendering and construction.

Agencies must ensure that potential tenderers are given a reasonable amount of time to submit their tenders, taking account of the project delivery method, the time required for tenderers to make site visits (if applicable), obtain quotes from their sub-contractors and suppliers, and undertake any other work necessary to tender.

2.3.4 Changes to tender documentation

Agencies should avoid making changes to tender documentation during the tender process. In cases where changes are unavoidable, Agencies should ensure tenderers have a reasonable time frame to consider the changes and make any necessary adjustments to their tenders.

Where changes arise close to the time for submission of tenders, it may be appropriate to extend the closing time.

2.3.5 Evaluation criteria

Agencies must specify evaluation criteria in tender documentation. Where appropriate, Agencies may provide guidance to tenderers about the criteria to encourage responsive tenders.

When seeking tenders, Agencies must verify the tenderers’ compliance with the mandatory assessment criteria set out in Ministerial Direction No 1 (see paragraph 4.2 below) prior to acceptance of a tender.

When seeking tenders through a selective tender process from a Register, Agencies should confirm that the preferred tenderer remains pre-qualified before acceptance of the tender.

2.3.6 Reduce unnecessary information requirements

Agencies should not request unnecessary information from tenderers. In particular, Agencies should be mindful of the time and cost to tenderers of preparing project-specific plans and documents.

For large or complex projects, Agencies may consider using a two-stage process so that only short-listed tenderers are required to prepare project-specific documentation.

Agencies should consider whether preparation of project-specific plans and documents, such as project-specific environmental management plans, can be limited to the successful tenderer rather than requested from all tenderers where such plans and documents are not critical to the evaluation criteria and project programme.

When conducting a selective tender process using a Register, Agencies should consider making use of information provided during the pre-qualification process to reduce the amount of information that pre-qualified tenderers are required to provide during the tender process, if appropriate given the circumstances.

2.3.7 Avoid pricing multiple options

Agencies should establish cost estimates prior to releasing a tender, including, where appropriate, by engaging a professional cost advisor.

Agencies should avoid asking tenderers to price multiple, mutually exclusive options in a tender process. Where this is unavoidable or design alternatives are required, Agencies should select an appropriate procurement strategy and project delivery method.

2.4 Conduct of tender processes

2.4.1 Probity

Probity signifies integrity, fairness and honesty. Government often refers to probity in a general sense to mean good process demonstrated by transparency of actions, equity, confidentiality and managing conflicts of interest, whether actual or perceived.

The VGPB’s guide to managing probity and engaging probity practitioners provides relevant guidance on probity in procurement processes.

2.4.2 Responding to questions and providing clarifications

Agencies must endeavour to ensure that all tenderers have access to the same information and are promptly informed of any new information relevant to the tender process that is provided to any other tenderer(s), while maintaining the confidentiality of each tenderer’s commercially sensitive information and intellectual property.

Agencies must respond appropriately to questions and clarifications received from tenderers during the tender process including, where applicable, during interactive sessions.

2.5 Process closure

Agencies must notify unsuccessful tenderers of the outcome of their tender. Agencies must offer a de-brief to all tenderers, conducted by an appropriately senior officer of the relevant Agency.

2.6 Urgent works or related consultancy services

2.6.3 Meaning of ‘urgency’

Ministerial Direction No 1 provides for a range of special circumstances in which the processes described in Direction 2.1 of Ministerial Direction No 1 may be exempted by the Minister or relevant Accountable Officer. One such circumstance is when the works or related services are of an urgent nature.

Urgency may arise due to unforeseen events or occurrences relating to, but not limited to:

(a) life threatening situations;

(b) occupational health and safety;

(d) loss of essential services;

(e) avoiding significant loss or damage to assets, or significant service delivery disruption, and/or

(f) weather protection.

Urgency does not normally arise in circumstances where a project is simply running overtime.

2.6.4 Common urgent works

Where an Agency commonly requires urgent works and/or consultancy services, the Agency could consider arrangements to minimise the need to use procedures other than those specified in Direction 2.2 of Ministerial Direction No 1 to maximise competition, including:

(a) A period contractual arrangement for the management of urgent and/or minor works; or

(b) Establishment of a panel of Suppliers that can respond in urgent circumstances. The panel should be established through an appropriate tender process, including the identification of a purchasing price based on relevant rates for the type of work envisaged. Reference can be made to the VGPB’s guide to aggregated purchasing and guide to pre-qualified supplier arrangements.

3. Accreditation of whole of government and Agency-specific registers

The Secretary is responsible for the accreditation of Registers prepared and maintained by Agencies under Direction 5(a) of Ministerial Direction No 1.

3.1 Whole of Government Registers

The terms and conditions associated with the a WGR are the responsibility of the Agency responsible for that WGR.