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28 May 2020

WA's Procurement Bill 2020 to fundamentally change the way the WA Government procures goods, services and works

By Donna Charlesworth and Matilda Stoneman

The new Procurement Bill 2020 will streamline government procurement, maximising opportunities for businesses to supply to government. It will introduce greater transparency in public procurement and a debarment regime to exclude suppliers who break the law.

The Western Australian Government has introduced the Procurement Bill 2020 (WA) which aims to provide a streamlined and effective Government procurement framework and support the State's economic recovery post COVID-19. Given the significant changes that are being introduced, it will be vital for both suppliers and State departments and agencies to understand the new procurement framework.

The new framework will replace the current State Supply Commission Act 1991 (WA) (State Supply Act). It will apply to the procurement of goods, services and works or any kind (including community services, ICT and construction work) by State agencies, including sub-department, Ministerial and CEO administered bodies corporate and most statutory authorities. The Bill does not apply to universities, Verve, Synergy, Horizon Power, port authorities, Water Corporation or Development WA, or any other entity as prescribed by regulation not to be a State agency. 

Need for change

The WA Government spends about $27 billion each year on procuring goods, services and public works. Government procurement has become even more critical to the Western Australian economy in the context of the COVID-19 pandemic.

The problems with the current government procurement framework were documented in the 2017 Service Priority Review and the 2018 Special Inquiry into Government Programs and Projects, both of which identified that the current procurement framework is complex, fragmented and inefficient. Added to this complexity is the issue that procurement for works is covered by a number of Acts including the Public Works Act 1902 (WA), which operates to prevent many State agencies from contracting for and undertaking works.

The need for change to the procurement framework has been one of the McGowan government's key priorities. The COVID-19 pandemic has made this change a matter of urgency for the Government, which is seeking to introduce a framework which is flexible and responsive and one which enables the Government to procure in an efficient manner.

Key aspects of the Bill

Key features of the proposed new framework include:

  1. Removal of the fragmented approach of the State Supply Act by introducing a whole of government procurement policy. This will make it easier for businesses, particularly local and small to medium enterprises, to understand and engage with supply opportunities. Streamlining of the process will also potentially minimise suppliers tendering costs. The Bill also expands on the previous definition of procurement, which was limited to goods and services, to now include procurement of goods, services, works and commercial leasing.
  2. Introduction of a mechanism for State Government to implement new policy measures by issuing Procurement Directions about how State agencies are to administer and comply with the procurement framework. General Procurement Directions will be applicable to all types of procurements and all State agencies. Agency specific Procurement Directions will allow the procurement arrangements to be modified on a case by case basis for individual State agencies which reflect their unique needs and priorities.
  3. A requirement for the Department of Finance to establish a program for the audit and investigation of the procurement activities of State agencies. The Department will audit agency buying, collect and report on information, and address supplier complaints that cannot be resolved by agencies. This will allow for deficiencies in the integrity of State agency procurement activities to be identified and addressed as part of the governance framework.
  4. The ability for State agencies to enter into cooperative procurement arrangements whereby a State agency can use an arrangement established by another agency or authorised body. This will streamline arrangements and allow opportunities to collaborate with local governments or universities. Further, it overcomes a previous limitation of the State Supply Bill which prevented other agencies establishing common use arrangements with suppliers which could be used by various State agencies for their procurement.
  5. Introduction of a supplier debarment regime that is the first of its kind in Australia, applicable to goods, services and works. A supplier of goods, services or works may be debarred or suspended from government procurement. Conduct that might be grounds for debarment will be set out in the regulations yet to be released, but which is likely to include offences relating to fraud and corruption, industrial relations, environmental offences and non-payment of taxes. This is intended to promote fair competition and respond to community concerns regarding fraud and corruption in procurement.

Next steps

The Bill is likely to be brought on for debate in June 2020. Both suppliers and State agencies involved in government procurement activities should start reviewing their current procurement processes to understand how they will be impacted by the proposed new legislative framework.

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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.