Posted on September 15, 2021 by Frances Tse and Lindsay Taylor 12

Discussion Paper on the Local Government Tendering Regulation Review

Earlier this month, the Office of Local Government published a discussion paper titled ‘Local Government Tendering Regulation Review‘ (‘Discussion Paper‘) concerning the tendering provisions in Part 7 of the Local Government (General) Regulation 2021 (‘Regulation‘).

The Discussion Paper proposes amendments to the Regulation to:

1. remove references to outdated technology and clarify that councils can provide and receive information associated with tender process by electronic means, and
2. allow decisions to not accept tenders to be made under delegation, except where the decision is to not accept a tender and to enter into negotiations.

Amendments relating to technology

The proposed changes to the Regulation in relation to technology arise out of the NSW Auditor-General’s report on procurement management in local government published in December 2020 (‘Audit Report‘). We have previously published a blog post on the Audit Report which can be found here.

Amongst other things, the Audit Report recommended that: ‘By June 2022, the Department of Planning, Industry and Environment should…review and update the Local Government (General) Regulation 2005 to reflect the increasing use of electronic tender submissions rather than paper copies.’

It is important to note that the Regulation currently allows the submission of tenders by electronic means. However, this is subject to certain requirements on how the tender is to be submitted and received and does not oblige a council to consider formal tender documents that have been submitted electronically unless they are also provided in hard copy.

The changes to the Regulation proposed by the Discussion Paper:

• specify that formal tender documents may be submitted in electronic form,
• clarify that whether a tender is to be submitted in physical or electronic form (or both) will be specified by the relevant council in its tender documentation and advertisement,
• clarify that certain procedures such as the requirement to provide a tender box and to open tenders in the presence of specified people do not apply where tenders are to be received by electronic means only,
• remove references to facsimile transmission, and
• require councils to publicly notify the acceptance of successful tenders or decision not to accept any of the tenders on their website.

The Audit Report also recommended the publication of comprehensive and updated guidance on effective procurement practices. The Discussion Paper indicates that this will be addressed in a separate review of the Tendering Guidelines for NSW Local Government 2009 prepared under s23A of the Local Government Act 1993 which will occur after the amendment to the Regulation proposed in this Discussion Paper.

Amendments relating to decision to not accept a tender 

The Regulation currently allows a council to delegate the decision to accept a tender. It doesn’t specifically preclude the delegation of a decision to not accept a tender but does require subsequent actions to be made by resolution of the council, implying that the decision to not accept a tender can only be made by resolution.

The Discussion Paper proposes changes to the Regulation to allow councils to delegate the decision to not accept a tender except in circumstances where it is proposed to subsequently enter into negotiations for a contract in relation to the subject matter of the tender. In those circumstances, the decision to not accept a tender and to enter into negotiations must be made by resolution of the council.

The Discussion Paper explains that ‘there is no compelling policy reason to continue to restrict councils from delegating most of the decisions referred to in clause 178(3). However, safeguards need to be preserved where councils decide to enter into negotiations to ensure there is appropriate oversight, transparency and accountability for such decisions.‘

The Office of Local Government is inviting submissions on the Discussion Paper. The closing date for submissions is 15 October 2021.

You can find the Discussion Paper here.

If you have any questions on this blog post, please leave a comment below. Alternatively, you can contact  Frances Tse on 02 8235 9711 or Dr. Lindsay Taylor on 02 8235 9701.