Last updated: 3 April 2020

Introduction

Public sector agencies and their procurement teams should consider each procurement on a case-by-case basis. The emergency and urgent response provisions within the NSW and Commonwealth procurement frameworks are not all encompassing and are subject to conditions. Agencies should get to know the exemptions, their conditions and how they apply.

If public sector agencies conduct procurements relying on the emergency or extreme urgency provisions, they are advised to:

  • make it clear in any procurement or tendering documentation that the procurement is made under clause 4 of the PWP Regulation or rule 10.3(b) of the CPRs (as applicable);
  • ensure that the contract has a defined contract period that does not exceed the needs of the agency to respond to the relevant emergency event or extreme urgency (as applicable) and contains no automatic renewal provisions; and
  • ensure that the contract includes the right for the agency to cease procuring goods or services once the emergency or extreme urgency (as applicable) ends.

Procurement: Commonwealth

Commonwealth entities are required to conduct procurement activities in accordance with all applicable legislation and rules, including the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act) and the Commonwealth Procurement Rules (CPRs) enacted under the PGPA Act.

The CPRs are the "keystone of the Government's procurement policy framework" and establish a common set of rules for all Commonwealth Government procurements to ensure value for money and the use of public resources in the most efficient, economical and ethical way. To this end, the CPRs include rules with respect to the conduct of procurements, including when an entity may conduct a limited tender (that is approaching one or more suppliers to make submissions rather than conducting an open approach to market).

A limited tender can only be used in a narrow category of cases; for example, when the procurement is under the relevant financial procurement threshold as set out in the CPRs or when a relevant exemption under the CPRs applies.

Exceptions for "extreme urgency"

Under rule 10.3(b) of the CPRs, a relevant entity may conduct a tender above relevant procurement thresholds through a limited tender "when, for reasons of extreme urgency brought about by events unforeseen by the relevant entity, the goods and services could not be obtained in time under open tender".

A Commonwealth entity that conducts a limited tender under this exemption must:

  • still comply with the rules set out in Division 1 of the CPRs, such as achieving value for money, treating all potential suppliers equitably and acting ethically throughout the procurement process; and
  • prepare and appropriately file within the relevant entity's record management system a written report that includes sufficient information to comply with rule 10.5 of the CPRs, including a statement indicating the circumstances and conditions that justified the use of a limited tender.

The CPRs do not define "extreme urgency". An ordinary, dictionary definition meaning of the term is likely to apply. It is important to note that the event of extreme urgency must be brought about by events unforeseen by the relevant entity. This therefore differs from the requirements under NSW legislation, which does not require that the relevant emergency be "unforeseen".

Procurement: New South Wales

The NSW Government has issued guidance on undertaking emergency procurements in response to the COVID-19 pandemic. These guidelines provide for the head of an agency, in an emergency situation, to authorise procurements to a value sufficient to meet the immediate needs of that emergency and undertake an expedited procurement.

How the emergency COVID-19 procurement works

NSW Government agencies must conduct their procurement activities in accordance with the Public Works and Procurement Act 1912 (NSW) (PWP Act), Public Works and Procurement Regulation 2019 (NSW) (PWP Regulation) and relevant policies, including the NSW Government Procurement Policy Framework (for more on this, see below).

Clause 4 of the PWP Regulation permits the head of an agency (or their nominee), in an emergency situation, to authorise procurement of goods and services to a value sufficient to meet the immediate needs of that emergency. These procurements will be exempt from section 176 of the PWP Act, meaning the agency will not need to comply with any policies or directions of the Procurement Board, including the Enforceable Procurement Provisions (PBD 2019-05). This enables agencies to undertake expedited procurement during the COVID-19 pandemic.

The NSW Government has determined the COVID-19 pandemic qualifies, at this time, as an emergency under clause 4 of the PWP Regulation. This may change in the future as the COVID-19 situation stabilises and no longer necessitate "emergency" status. Further general guidance on this may be given in the future by the Procurement Board. If so, we will keep you updated of any change.

Does your procurement meet the needs of the emergency?

NSW Government agencies will need to conduct a case-by-case analysis of any proposed emergency procurements to assess whether it is necessary and of a value sufficient to meet the immediate needs of the emergency. This assessment should have regard to, but is not limited to, the following:

  • type, quantity and value of the goods and/or services for procurement and their general market availability;
  • the agency's functions and operations; and
  • any other relevant factors pertaining to the immediate needs of the emergency.

Agencies are only able to procure what is necessary to meet the immediate needs of the COVID-19 emergency. If their assessment determines that the proposed procurement exceeds this threshold then the agency will not be able to rely on the emergency procurement provisions to the extent that it does so. However, the guidelines are silent as to what threshold agencies should apply in their assessment of "necessary" and "immediate needs".

Agencies will not be limited by the terms of their accreditation or the approved maximum contract value applicable to the accreditation. Agencies are also permitted to use any procurement method that meets their needs in the time available.

How can your agency authorise and report an emergency procurement?

Agency heads or their nominees are able to authorise emergency procurements. The guidelines provide an authorisation form agencies can use.

When agency heads are nominating an employee for the purpose of authorising an emergency procurement, standard agency delegations under the Government Sector Finance Act 2018 or Government Sector Employment Act 2013 are not sufficient. Instead, the guidelines recommend that agency heads nominate a relevant officer, such as the Chief Procurement Officer, who will be working with the State Emergency Operations Controller on COVID-19 related procurement.

Agencies are still required to confirm available funds for any proposed emergency procurement and must comply with financial delegations when authorising emergency procurements.

It is recommended that agencies record all decisions and approvals including justification for the emergency procurement as well as standard procurement records. All emergency procurement authorisations must be promptly reported to the Procurement Board. Given the rapidly evolving nature of the COVID-19 pandemic, the guidelines permit agencies to maintain a list of all emergency procurements and provide consolidated reports to the Procurement Board at regular intervals. Contracts greater than $150,000 (including GST) must be disclosed on eTendering.

Exemptions apply to emergency procurements

Under the guidelines, where an emergency procurement is authorised under clause 4 of the PWP Regulation, an agency is exempt from complying with the following requirements under section 176 of the PWP Act:

  • any policies or directions of the Procurement Board, including the Enforceable Procurement Provisions (PBD 2019-05);
  • the requirement to use whole of government contracts or mandated pre-qualification schemes;
  • the terms of the agency's accreditation;
  • the requirement to achieve value for money;
  • the principles of probity and fairness; and
  • the complaints regime aligned with the Enforceable Procurement Provisions (PBD 2019-05).

These exemptions only apply in relation to the specific emergency procurement. All proposed procurements that do not qualify as emergency procurement cannot rely on these exemptions.

While an agency will be exempted from the statutory requirement to achieve value for money for an emergency procurement, it must still use government resources efficiently, effectively, economically and in accordance with the law. The guidelines recommend agencies aim to comply with the Procurement Policy Framework to the extent possible in the circumstances. It is also strongly recommended that the agency maintains records of any such emergency procurements.

Agencies must continue to manage any real or perceived conflicts of interest and ensure suppliers do the same. Compliance with the agency Code of Conduct, public sector values and the law is still required.

For further information on procuring in emergency situations, please contact a member of our team. The COVID-19 Emergency Procurement procedure is available on ProcurePoint, here.

COVID-19 Procurements in NSW are not susceptible to challenge under the Public Works and Procurement Act 1912 (NSW)

On 29 November 2019, the "enforceable procurement provisions" under the Public Works and Procurement Amendment (Enforcement) Act 2018 (NSW) commenced. Since that date, "affected applicants" have been able to challenge certain procurements that are alleged contraventions, or proposed contraventions, of an "enforceable procurement provision". The affected applicant can make a written complaint about the alleged contravention, or proposed contravention, to the head of the relevant Government agency, who then must investigate and attempt to resolve the complaint. If the complaint is not resolved to the satisfaction of the affected applicant, the affected applicant can apply to the Supreme Court for an injunction to restrain the agency from contravening of an enforceable procurement provision or requiring the agency to avoid or remedy a contravention of an enforceable procurement provision. Affected applicants can also seek an order from the Supreme Court for the payment of compensation.

The NSW Procurement Board has issued the Procurement (Enforceable Procurement Provisions) Direction 2019 which contains the relevant "enforceable procurement provisions". Subject to certain exceptions, the Direction applies to procurements for construction services with an estimated value of $9.247 million (excl GST) or more and procurements for other goods and services where the procurement has an estimated value of $657,000 (excl GST) or more.

Challenges to procurement decisions may be highly disruptive and expensive for the public sector as they have the potential to suspend procurement processes and inflate project timelines and costs. However, NSW Government agencies should be aware that the Direction does not apply to a

"measure …

(a) necessary to protect public … safety, or

(b) necessary to protect human …life or health"

which is contained in Schedule 3.

Therefore, procurements that relate to COVID-19 are likely to fit within either criterion (if not both) and would therefore not be susceptible to the independent complaints mechanism established by the Public Works and Procurement Amendment (Enforcement) Act 2018 (NSW) and found within the Public Works and Procurement Act 2012 (NSW).

It should also be noted that, to the extent that procurements are listed in Schedule 2, they will also not come within the ambit of the Public Works and Procurement Act 2012 (NSW). For example, since 28 January 2020, a procurement that is undertaken pursuant to Procurement Board Direction PBD 2020-01 Support of bushfire affected communities, does not fall within the ambit of the Act.