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11 Jun 2020

Procurement of public construction works and services in Victoria in response to COVID-19

By Andrew Fry, Maddie Sutton

Victorian agencies may be permitted to use a “Limited Tender” process in certain circumstances to rapidly procure construction works or services in response to the COVID-19 pandemic.

Government agencies procuring public construction works and services must comply with the tender requirements prescribed by the Ministerial Directions for Public Construction in Victoria, which are supported by mandatory Ministerial Instructions.

Types of tender processes

In accordance with Ministerial Direction 3.2, when engaging a supplier to perform construction works or services, agencies must use:

  • an open tender;
  • a Selective Tender open to all suppliers in the relevant category of an approved register or at least 3 suppliers in the relevant category of an approved register (eg., the whole of Government Construction Supplier Register; or
  • a Limited Tender.

Limited Tender

A Limited Tender involves the engagement of a supplier, whether or not from a Register:

  • without competition by inviting only a single tender participant; or
  • with limited competition by inviting a minimum of two participants.

Agencies may use a Limited Tender if:

  • the value of the engagement will be less than $50,000 (inc GST), in which case the agency can invite a single tender participant;
  • the value of the engagement is less than $200,000 (inc GST) for construction services or less than $500,000 (inc GST) for construction works, in which case the agency must invite at least three tender participants;
  • the agency is procuring under a Supplier Panel; or
  • there are Special Circumstances as set out below.

Special Circumstances and COVID-19

The most relevant Special Circumstance under the Ministerial Directions in the context of COVID-19 is likely to be:

"due to reasons of extreme urgency brought about by events unforeseeable by the agency, or because the Works or Construction Services could not be obtained in time by means of an open tender or Selective Tender. Such reasons may include:

  1. life threatening situations, including threats to human health;
  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 protections; or
  7. any comparable events beyond the control of the agency.

COVID-19 is almost certainly an event unforeseeable by agencies.  The relevant test to qualify under this limb of Special Circumstances will therefore be whether the procurement is due to reasons of extreme urgency brought about COVID-19, or because the relevant works or services could not be obtained in time by means of an open tender or Selective Tender (3 or more participants selected from a register).

There is also the ability for the Responsible Minister or Accountable Officer to certify other exceptional circumstances, however this limb is not available where the requirements of the International Agreements apply (eg., for works > $9,584,000 (inc GST) or services > $680,000 (inc GST)). 

When using a Limited Tender, among other things the agency:

  • must determine the most appropriate way to conduct the Limited Tender considering the nature of the Special Circumstances and, to the extent practicable, identify ways to conduct the Limited Tender in a manner that is consistent with the guiding principles of the Ministerial Directions;
  • must create a written report recording what was procured, the circumstances justifying the Limited Tender and demonstrating value-for-money;
  • must document the nature of the Special Circumstances and proposed approach to conducting the Limited Tender;
  • must ensure the Accountable Officer or Responsible Minister of the agency approves the use of a Limited Tender and the proposed approach;
  • may provide a forward notice (encouraged where appropriate but not required);
  • must give all participants a Tender Notice inviting each potential tender participant to participate in the tender process;
  • may comply with the tender open periods prescribed in Instruction 2.1, Attachment 2;
  • must include an unamended Victorian Public Construction Contract in the Tender Documentation, unless otherwise permitted; and
  • must disclose the details of contracts once procured, unless the Limited Tender was due to protect essential security interests.

Key takeaways

If an agency is procuring material construction works or construction services in response to COVID-19, and the agency does not have a Supplier Panel, it may be able to use a Limited Tender process where:

  • the value of the engagement is less than $200,000 (inc GST) for construction services or less than $500,000 (inc GST) for construction works, in which case the agency must invite at least three tender participants;
  • the value of the works is less than or equal to $9,584,000 (inc GST) or the value of the services less than or equal to $680,000 (inc GST), and the Responsible Minister or Accountable Officer certifies that there are exceptional circumstances; or
  • the procurement is due to reasons of extreme urgency brought about COVID-19, or because the relevant works or services could not be obtained in time by means of an open tender or Selective Tender (three or more participants selected from a register).

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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.