Procurement guidance for local government
The Procurement Guidelines for NSW Local Government (Guidelines) outline principles and processes that represent best practice in procurement. These principles and processes enable delivery of quality outcomes that provide value for money while effectively managing risks, that help to support NSW local councils to serve their communities.
The Guidelines also provide clarification on the interpretation and application of the Local Government Act 1993 (Act) and the Local Government (General) Regulation 2021 (Regulation) as they apply to procurement activities.
Local government operates within a devolved governance structure. Ultimately, councils are responsible for managing the lifecycle of their procurement activities in compliance with law, guidelines, and councils’ policies and procedures. Legislation and these Guidelines must inform local government policies and strategies for procurement.
How to use the Guidelines
The Guidelines and supplementary guidance are issued under section 23A of the Act. Local councils, or entities acting on behalf of local councils, are required to consider the Guidelines and supplementary guidance when conducting procurement or procurement-related activities.
Users should refer to the Guidelines and supplementary guidance together with the Act and the Regulation. The Guidelines replace the Tendering Guidelines issued in 2009.
The term 'must' and 'required' denotes mandatory rules based on requirements embedded in legilsation.
The terms 'should', 'may' and 'recommended' indicate good practice.
Definitions of terms specifically used in procurement and relevant legislation are listed in the Glossary.
References to further information and resources that can be used to build awareness, increase knowledge and understanding, and relevant Government agencies and industry bodies specialist guidance are listed in Resources.
When the Guidelines reference NSW Government procurement policies or processes, these can be adapted to meet the specific needs and requirements of local governments.
Structure
The Guidelines begin by outlining high-level best practice principles of procurement. They then provide increasingly specific guidance tailored to the local government sector, individual councils, and the procurement process itself.
References to organisations that are not NSW Government agencies that may provide resources or support does not in any way constitute endorsement of those organisations.
The content and structure of the Guidelines will be finalised following collaboration with the Procurement Working Group and consultation with the sector.
Guidelines content and supplementary guidance
The Guidelines and supplementary guidance are proposed to be divided into the following sections:
Procurement and local government
A high-level overview of the legislative framework, principles of best-practice procurement and key governance considerations.
Download and read Procurement Guidelines for NSW Local Government (PDF, 920 KB)
Procurement activities and risk management
An overview of various procurement activities, including procurement under the threshold, natural disaster response and recovery, public private partnerships and joint procurement.
Plan
Details on what councils should consider during the planning phase of a procurement activity, including guidance on the requirements of the legislative framework.
Source
Details on what councils should consider during the sourcing phase of a procurement activity, including guidance on the requirements of the legislative framework, specific types of tenders and the tendering process.
Manage
Details on what councils should consider during the managing phase of a procurement activity, including guidance on the requirements of the legislative framework.
Glossary
Following are definitions of terms specifically used in relevant legislation or procurement generally. They may be referred to in the Guidelines or supplementary guidance.
Also called direct dealing or sole sourcing. Exclusive dealing between a buyer and a supplier over a commercial proposal without first undertaking a competitive process. Depending upon a council’s delegations and policies, approval to directly negotiate requires a council resolution as outlined in section 178(3)(e) of the Regulation and section 55(3)(i) of the Act where relevant.
The process of seeking interest of service providers to provide capability information about their business, their skills, product and service offering and to determine they are equipped to undertake specific work, and to test the market to find out whether a good or service exists. It may invite a detailed proposal. Suppliers respond to a broad set of criteria which generally does not include pricing. It is useful when council is unsure of what it is procuring or not clear on the best way to supply. EOIs are usually the first stage of a multi-stage tender process as provided for under section 168 of the Regulation and do not result in a contract being awarded.
The invitation to supply required goods, materials or services is publicly advertised and any supplier can submit a response. An open approach encourages healthy market competition and greater comparison for value for money.
Breaking up what would be a single contract with a single supplier (including purchase order contracts) into purchases of smaller quantities and amounts or dividing the award of what would be a single contract into artificial phases or smaller contracts, for the purpose of circumventing procurement or financial thresholds, competitive tendering for a single contract, or governance requirements.
A method for classifying suppliers based on a range of criteria, which may include technical and managerial expertise, financial capacity, and previous performance. Prequalification schemes aim to facilitate, but not replace, tender processes.
A precursory request for information to gain a more detailed understanding of the supplier market and the range of solutions and technologies available, or how a project might be undertaken. It may be used to inform a future tender.
Used to elicit a detailed supplier response to a specific need, idea or business solution, or to explore multiple solutions to one problem. It is useful when council is unsure of what it is procuring, not clear on the best way to supply but is clear on the desired outcome. Requirements are specific and detailed and include indicative pricing. Can be used as the first step in a multi-phase procurement process or to negotiate directly with a proponent of the RFP process where the proposal satisfies the buyer’s needs and providing the proposal complies with section 55 of the Act.
Inviting offers to supply goods, materials or services, with an expected value less than the threshold. Requirements range from simple to medium complexity and for standardised goods, materials or services. The successful supplier will be awarded a contract (either detailed or by purchase order or other available payment methods, depending on the value and level of risk).
Inviting offers to supply goods, materials or services with an expected value greater than the threshold, in response to a detailed description of requirements where the successful tenderer will be awarded a contract. Suppliers may be selected either from the open market, or from established supplier lists.
A type of auction in which sellers bid for the price they are willing to sell at, where bids reduce rather than increase. This method is also useful should a council seek to sell its surplus or retired assets.
This refers to the practice of dividing key responsibilities within the procurement process among different individuals to reduce the risk of fraud, error, and misuse of public funds. It ensures that no single person has control over all stages of a transaction, from initiation to approval and receipt.
Inviting a limited number of suppliers to submit a response. The RFT usually follows a public advertised discovery phase (EOI process under which a shortlist is formed) as part of a multi-phase procurement process. The RFT is issued to all or some of the proponents of the discovery phase when council is confident of the solution and supply need. The process for selected requests for tenders is prescribed under section 169 of the Regulation.
An arrangement setting out the terms and conditions, including a basis for pricing, under which a supplier agrees to supply specific goods, materials and services, to an eligible buyer for a specified period.
A process in which an organisation invites suppliers to submit a formal written proposal, bid, or response to a set of requirements relating to the provision of goods, materials or services that match their requirements. It covers all forms of tendering, including RFT, RFQ, EOI.
The value of a procurement which determines whether a tender is required to be conducted under the Act and Regulation and as per the Guidelines. The prescribed threshold value is $250,000, which is the estimated expenditure under the proposed contract, and is inclusive of goods and services tax (GST).
Submissions of the first package is for tender schedules and other documents containing information responding to non-price evaluation criteria and must not include any price information. The second package is for other tender schedules and any other components of the submission which contain price information. A two-envelope system allows price and non-price aspects to be assessed independently, often by separate evaluation teams to minimise the influence of cost on the evaluation of the technical or non-price aspects of the response.
An approach to government from a proponent with a proposal to negotiate directly with that government entity over a commercial proposition, where council has not requested or invited the proposal. The focus of unsolicited proposals is the proponent’s claim to be able to provide a unique and innovative project or service.
Resources
Any links provided in this section are current at the time of publication of these Guidelines. Links and document versions may change over time. Users will need to refer to the source agency/entity for updated links and document versions.
Note: References to non–government organisations that may provide resources does not in any way constitute endorsement of those organisations.
Risk Management – Guidelines (ISO 31000:2018) (The International Organisation for Standardisation (ISO))
ISO 31000 is an international standard that provides principles and guidelines for risk management. It outlines a comprehensive approach to identifying, analysing, evaluating, treating, monitoring and communicating risks across an organisation. The standard may be purchased directly from the ISO.
ISO: Global standards for trusted goods and services
Guidance on Reasonable Steps to Manage Modern Slavery Risks in Operations and Supply-Chains (NSW Anti-slavery Commissioner, Department of Communities and Justice)
This guidance aims to assist covered entities, including councils, in applying clear policies, consistent procedures and effective risk management strategies for modern slavery risks in their operations and supply-chains.
Corruption prevention publications (Independent Commission Against Corruption)
Various publications relating to corruption prevention and risks in procurement and other procurement publications.
Corruption prevention publications
Model Code of Conduct for Local Councils in NSW (Office of Local Government)
The Model Code of Conduct sets the minimum standards of conduct for council officials. It is prescribed by regulation to assist council officials to understand and comply with the standards of conduct that are expected of them, fulfil their statutory duty to act honestly and exercise a reasonable degree of care and diligence (section 439 of the Act), and act in a way that enhances public confidence in local government.
Lobbying local government councillors (Independent Commission Against Corruption)
Guidelines for councillors on the appropriate way to handle lobbying from constituents.
Cyber Security Guidelines – Local Government (Cyber Security NSW)
These guidelines outline cyber security standards recommended for NSW Local Government by Cyber Security NSW.
These guidelines should form the basis of an internally developed cyber security policy for NSW Councils.
Cyber Security Guidelines – Local Government (PDF 535 KB)
Public Interest Disclosures for guidelines for agencies (Ombudsman NSW)
These guidelines are designed to help agencies and their staff handle public interest disclosures under the PID Act.
Procurement skills
Procurement Skills Booster (Buy NSW, NSW Government)
Free training for anyone working in, or seeking, procurement roles in the NSW public sector: Procurement Skills Booster
Access via the Comperio (NSW Government’s procurement training platform) secure login.
For any questions about Comperio access, please email [email protected]
Nationally recognised training in Procurement and Contracting (NSW Environmental Protection Authority and Local Government Procurement)
It is open to officers in NSW councils, Regional Waste Groups, Joint Organisation of Councils and Regional Organisations of Councils.
The NSW Environmental Protection Authority (EPA) also provide an online library of training and guidance material to equip councils with the skills needed to navigate their procurement considerations regarding waste management services.
Joint procurement facilitation service
Supplier Due Diligence: A Guide for NSW Public Sector Agencies (Independent Commission Against Corruption)
Provides non mandatory guidance on undertaking supplier due diligence in the public sector for agencies to consider and adapt to their own circumstances.
Supplier due diligence: a guide for NSW public sector agencies
Guidance on Reasonable Steps eLearning Modules (NSW Anti-slavery Commissioner)
A series of short eLearning modules developed by the NSW Anti-slavery Commissioner in collaboration with Capability Development, NSW Procurement.
These modules will assist covered entities to understand and implement the Guidance on Reasonable Steps to Manage Modern Slavery Risks in Operations and Supply-Chains.
Access via the Comperio (NSW Government’s procurement training platform) secure login.
For any questions about Comperio access, please email [email protected].
The eLearning Modules include:
- An Introduction to Modern Slavery and Your Obligations
- Foundational Concepts for Managing Modern Slavery Risk
- Reasonable Step 1 (Plan): Commit to Effectively Address Modern Slavery Risks
Nationally recognised training courses
Other providers offering nationally recognised training covering the broad range of skills and competencies required for those responsible for the procurement of goods and services:
Corruption prevention
Independent Commission Against Corruption (ICAC)
Information about free training workshops run by ICAC, including some procurement-related, can be found on the ICAC website.
Corruption Prevention Network (CPN)
CPN run regular webinars with speakers from ICAC. These are recorded and previous webinars can be viewed on the CPN web site.
Optional resources and principles for social and sustainable sourcing include, but are not limited to, those listed below.
Small to medium, and regional businesses
Small and Medium Enterprise and Regional Procurement Policy (NSW Government)
Aims to increase small and medium business enterprise participation in procurement opportunities and improve economic, ethical, environmental and social outcomes through a range of initiatives.
Small Business Shorter Payment Terms Policy and guidance (NSW Government)
This policy aims to support the important role of small businesses in the NSW economy by promoting the faster payment of small businesses on contracts.
Local procurement toolkit (Small Business Commissioner, NSW Government)
The toolkit contains information and tools for councils on ways to provide opportunities and encourage their local businesses to tender successfully for local Government work, and tools and templates to assist them to become ‘tender ready’.
Local procurement toolkit for councils
Social enterprises
Indigenous businesses and participation of Aboriginal people
Specifications and evaluation criteria may stipulate that a business must be at least 50% or 51% owned, controlled and managed by Aboriginal people, as per recognised standards for classification as an Indigenous business. In conjunction with or separate to encouraging Indigenous businesses, a council may also choose to specify a requirement for participation of Aboriginal people in the supply of the goods, materials or services to be delivered.
The following organisations maintain lists of Indigenous businesses that are audited and undergo quality assurance:
New South Wales Indigenous Chamber of Commerce (NSWICC) – suppliers that have been prequalified through the NSWICC Assured Program are listed on the NSW Aboriginal Business Portal. NSWICC Assured Businesses are Aboriginal owned and Contract Ready. The NSW Aboriginal Business Portal makes purchasing easy for Procurement Teams and other Buyers.
Supply Nation
Provides Australia’s leading database of verified Indigenous businesses: search by business name, product, service, area, or category.
Aboriginal Procurement Policy (NSW Government)
This policy promotes opportunities, skills development and economic participation of Australia’s Aboriginal people, placing value on social and cultural contribution.
Australian Disability Enterprises (ADE)
BuyAbility – the BuyAbility web site helps to identify, connect and source ADEs. Guidance is available on the ‘Australian Disability Enterprises’ page on the Buy.NSW website.
Note: Section 55(3)(q) of the Act states an open tender process is not required when procuring from a person or body approved as a disability employment organisation under the Public Works Procurement Act 1912 where the total cost of the procurement is likely to equal or exceed $250,000.
Other resources for social enterprises
General information on social enterprises (NSW Government)
General information including:
- Understand what a social enterprise is
- Social enterprises operate in every industry
- Social enterprises are supported by policies
- Find a social enterprise
Environmental impact
Some social enterprises may offer products or services that meet a council’s requirements for environmental considerations and would be able to participate in competitive procurement opportunities.
Councils may consider circular economy and resource efficiency principles in their procurement policies and/or in individual procurements. Councils may choose to include a policy position through their CSP, or through planning controls. Specifications written for procurement or market research purposes should clearly state any standards required. Where specifications relate to policy, copies of any relevant policy documents should be made available.
NSW Circular Economy Policy Statement: Too Good to Waste (NSW Government)
The statement sets the ambition and approach for a circular economy in NSW and provides principles to guide resource use and management.
NSW Waste and Sustainable Materials Strategy 2041 (NSW Government)
The strategy outlines the actions the NSW Government will take to deliver on long-term objectives to transition to a circular economy.
Waste and Sustainable Materials Strategy
NSW Government Resource Efficiency Policy (NSW Government)
The policy applies to NSW government agencies. It requires agencies to implement resource efficiency measures and to report on their progress against GREP to the Office of Energy and Climate Change.
The Net Zero Government Operations Policy
Joint Procurement Facilitation Service (NSW Environment Protection Authority)
Find out how councils can access the best expertise, information and guidance to jointly plan, negotiate and contract for waste services.
Joint procurement facilitation service
Sustainable Procurement Guide for local government in NSW (Local Government NSW)
This document provides practical guidance which is specific to NSW local government organisations. It outlines information on key concepts, certifications, standards and processes and is designed for all council staff involved in any purchasing.
Sustainable Procurement Guide for local government in NSW (PDF 1.1 MB)