New requirements applicable to Victorian public construction came into force on 1 March 2017. These are important tendering rules in the 2017 Guide to Ministerial Direction No. 1 (MD1) made under the Project Development and Construction Management Act. Some of these rules are similar to tendering requirements in the former Code of Practice for the Building and Construction Industry that was withdrawn in January 2016.

The Guide applies to all Victorian government departments and public bodies (including statutory authorities and government businesses) carrying out public construction (construction, rehabilitation, alteration, maintenance, extension or demolition of any buildings or other improvements on land).

What are the new tendering rules about?

Ensuring sufficient competition but not wasting costs for tenderers and government:

• conduct tender processes efficiently and reduce unnecessary costs for tenderers
• make reasonable attempts to obtain at least three tenders
• check the willingness of potential tenderers before inviting them to a selective process
• if invited tenderers don’t respond, consider alternative procurement processes such as a publicly advertised tender or restructuring the work packages to be more appropriate for the industry
• if less than three tenders are received, compare value for money offered against market rates
• generally only seek three to six tenders and – if more than three, consider any competitive benefit derived from a larger field against factors such as:

1. the time and cost of preparing and evaluating tenders
2. the complexity of the project
3. the project delivery method, and
4. the structure of the supply market and interest among potential tenderers.

• consider a two stage tender process or short-listing within a single stage tender process.

What should be in the tender invitation documents?

• tender conditions and clearly define project requirements
• ensure tender documentation is sufficiently resolved and appropriate for the project
• specify evaluation criteria in tender documentation
• don’t request unnecessary information from tenderers – be mindful of the time and cost to tenderers of preparing project-specific plans and documents
• 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
• 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
• avoid asking tenderers to price multiple, mutually exclusive options in a tender process – establish cost estimates prior to releasing a tender, including, where appropriate, by engaging a professional cost advisor.

How long should tenderers be given to respond?

• allow sufficient time for tenderers to respond
• if changes to an RFT are made near to closing time, consider extending.

What does the MD1 guide say about evaluation criteria?

• verify the tenderers’ compliance with the mandatory assessment criteria set out in MD1 if tenderers aren’t prequalified e.g. if it’s a public tender
• confirm that the preferred tenderer remains pre-qualified before acceptance of the tender e.g. where tenders were sought from prequalified suppliers
• evaluation criteria must be specified in tender documentation.

What probity rules apply to construction projects?

• 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
• the MD1 Guide says that the Victorian Government Purchasing Board probity guidance is relevant to construction projects – VGPB probity principles include:

1. acting with integrity and impartiality
2. ensuring market equality by applying an appropriate level of competition and contestability relevant to the procurement activity
3. consistent and transparent processes
4. secure and confidential market engagement information
5. identifying and managing conflicts of interest
6. allocating appropriate capability to elements of the procurement process and
7. engaging a probity practitioner(s) where the complexity of the procurement warrants independent process oversight.

These probity principles are explained in detail in the VGPB Guide to Probity. Please see our FAQ about probity for further details.

What should unsuccessful tenderers be told?

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

When does urgency justify a tender exemption from the departmental Secretary ?

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

1. life threatening situations
2. occupational health and safety
3. security
4. loss of essential services
5. avoiding significant loss or damage to assets, or significant service delivery disruption
6. weather protection.

• avoid tender exemptions on the grounds of urgency just because a project is running late or in situations where urgency occurs frequently.

As well as these rules about tendering, the new MD1 Guide also has requirements about agency-specific registers and whole-of-government registers of prequalified suppliers. 

DTF has a toolkit for construction practitioners. 

*   *   *

Image by Shutterstock