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09 Jul 2020

New NSW procurement guidelines now in effect for skills and diversity on major construction projects

By Lina Fischer and Jessica Lighton

These targets form part of the NSW Government's commitment to improve workforce capability and capacity across the construction industry.

New NSW Government procurement guidelines for skills, training and diversity in construction (published as PBD 2020-03), approved back in May this year, have come into effect. The guidelines apply to all new construction project procurements by a NSW Government agency commencing after 1 July 2020. Agencies should ensure that they implement these requirements in their tender documentation, while businesses should review the new guidelines now and ensure any bids submitted after 1 July 2020 reflect the changes so as to increase their chances of a successful bid.

The new skills, training and diversity guidelines require all agencies to demonstrate a commitment to meeting skill and diversity targets to engage apprentices, learning workers, people under 25 years, indigenous people, and women on major construction projects. These targets are consistent with those outlined in the Infrastructure Skills Legacy Program (ISLP).

These guidelines replace the old PBD-2017-05 Construction training and skills development guidelines which did not specify apprentice and trainee engagement targets. Instead, agencies on all construction projects over $10 million were required to set their own targets and submit progress reports, resulting in highly varied targets between different projects and confused expectations for potential contractors. In comparison, the new guidelines provide significantly more direction and clarity by setting specific minimum targets for agencies across three different levels of construction contracts, thereby eliminating the confusion and establishing clear expectations.

The new guidelines apply to individual contracts rather than overall programs. Agencies are encouraged to comply with the guidelines of contracts are valued between $10-100 million.

Contracts under $10 million

There are no set targets for skills and training but agencies and contractors are expected to support skills development on construction projects. As a minimum, agencies are required to apply the Aboriginal Participation in Construction Policy.

Contracts between $10-100 million

In establishing skills development targets, agencies must:

  • set an apprenticeship target of 20% of the trade workforce, and include this target in contract requirements and tender documentation for potential contractors;
  • include in contract requirements that potential contractors consider the capacity of subcontractors to contribute to skills and training targets;
  • consider the ability of potential contractors to meet these requirements (with reference to a contractor's previous performance in meeting these requirements) when assessing proposals and awarding contracts;
  • ensure contractors contractually commit to quarterly reporting of their  progress against targets;
  • submit quarterly reports to Training Services NSW of achievements against agreed targets; and
  • continue applying the Aboriginal Participation in Construction Policy.

Agencies can also consider adopting additional ISLP targets that apply to contracts over $100 million

Contracts over $100 million

All requirements for contracts valued between $10-100 million apply to contracts over $100 million.

Additionally, agencies must comply with the minimum ISLP targets of:

  • 20% of total project workforce made up of "learning workers" (defined as trainees and workers who need to update their qualifications to meet requirements of the project);
  • 20% of all trades positions on a project to be made up of apprentices;
  • apply the Aboriginal Participation in Construction Policy;
  • doubling the number of women in trade-related work;
  • at least 8% of the total project workforce is aged 25 years or less; and
  • reporting employment and training outcomes for people from the "local region" (as defined in the contract).

These targets form part of the NSW Government's commitment to improve workforce capability and capacity across the construction industry. Additional information on the ISLP targets can be found here.

For assistance in adopting these new guidelines for your next procurement project, please contact a member of our team.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.