Guidance on increasing opportunities for local suppliers to supply to government

Agency buyers must record in procurement plans the steps that have been, or are intended to be, taken to identify NSW-based suppliers.

This information should include a summary of steps taken to identify NSW-based suppliers, how capability and capacity were determined and whether or not NSW-based suppliers were found.

Where local market testing will be undertaken through an Rfx or EOI, agencies should record their intention to conduct local market testing in the sourcing stage and identify the proposed process in the procurement plan (such as the strategy, business case or other planning document).

If one or more NSW-based suppliers is identified through Local Market Testing, and the tender has been awarded to a non-local supplier, you must record the reasons why a NSW-based supplier has not been selected. This is the ‘if not, why not’ part of the direction.

Decision making documents

You must record the reasons why a NSW-based supplier has not been selected, if there was one available, in decision-making documents. These are government records used at every stage of the procurement to document your decisions and the reasons behind them.

Agencies will need to determine the specific form of document used and can be informed by existing procurement processes and governance. For example, agencies may use the Evaluation Report or a contract award brief. Good records are part of meeting the policy and legal obligations of every procurement.

Referencing value for money criteria

The reason(s) provided for not awarding a contract to a NSW-based supplier should be aligned to the value for money criteria used to evaluate the tender proposals. Value for money remains the overarching consideration in NSW Government procurement activities.

The Direction requires agencies to report to the Procurement Board on the reason why a supplier was not awarded a contract. While this reporting is fulfilled through a separate process, it may assist with the Board reporting if you consider and record the primary reason why the contract was not awarded to NSW-based suppliers in agency decision making documents. The Procurement Reform Advisory Group has agreed the following standard ‘reason codes’ for the purposes of the Board reporting:

• Mandatory minimum requirements or other specific requirements
• Capability, experience or qualifications
• Capacity
• Quality of submission or tender
• Financial risks
• Pricing
• Suitable but not selected
• Local benefits test score (made available once Local Content Policy is alive)

See section 10 for a description of each reason.

Agencies can fulfil their reporting requirements using buy NSW.

NSW Government supply opportunities valued more than $150,000 (including GST) must be published on the buy NSW Opportunities Hub. Agencies are required to transition during 2025. An application programming interface (API) allows agencies to automate publication of opportunities from existing agency systems:

1. The reporting fields will be populated from the publication notice on buy NSW for any contract to which the Direction applies (based on actual contract value).
2. Reporting will be triggered by actual contract value. Agencies should consider their level of confidence in contract value estimates, and apply the Direction if there is a moderate or higher risk that the actual value of a procurement may exceed $7.5 million. There may be a chance they'll need to report on the contract.
3. Agency buyers will need to ensure they complete opportunities via the Opportunities Hub, and enter the reason codes for each unsuccessful supplier, to use the online reporting features.
4. Agencies have 2 weeks following the close of each reporting period (the last day of the March, June, September and December quarter) to update and finalise their opportunities and activate the reporting.
5. NSW Procurement will then download and distribute a report to agencies for verification, prior to submitting the whole-of-government quarterly local market testing report to the Procurement Board.

The report to the Board will contain aggregated agency group data across the 4 reporting requirements in the Direction. The reports will not include individual supplier data or specific tender outcomes.

The Direction requires agencies to report to the Board on the reasons why a supplier wasn't awarded a contract. This fulfils the Direction's reporting requirement d).

The Procurement Reform Advisory Group has agreed the following standard 'reason codes'. Agency buyers should select one reason code per unsuccessful supplier when closing the opportunity on the Opportunities Hub:

• mandatory minimum requirements or other specific requirements
• capability, experience or qualifications
• capacity
• quality of submission or tender
• financial risks
• pricing
• suitable but not selected
• local benefits test score (made available once Local Content Policy is released).

While there may be many reasons why a supplier might be unsuccessful, the most dominant reason should be selected.

See section 10 for a description of each reason.

A NSW-based supplier is defined as having:

• an active ABN
• a main business location with a NSW postcode on the Australian Business Register.

These conditions can be confirmed using the Australian Business Register's ABN Lookup website.

NSW-based suppliers are identified in Supplier Hub.

The direction provides information on how to determine whether a procurement has commenced in the ‘Transitional Arrangements’ section. A procurement has commenced if and when:

1. the business case which contains a strategy for approaching the market for the procurement is:
   • submitted for review by another government entity as part of a mandatory process (e.g. an investor assurance (Gateway) process or to Treasury as part of a funding proposal
   • if the above is not applicable, approved by the government agency
2. if 1 is not applicable, the strategy for approaching the market for the procurement is approved by the government agency
3. if neither 1. or 2. is applicable, a request for submissions (Rfx) is released by the government agency.

Note: The reporting provisions apply to procurements that are published on or after 1 January 2025.

The value of a procurement is its estimated budget.

For procurement panels including standing offers (i.e. a procurement panel with one supplier), the value of the procurement is the estimated value of all contracts that may be entered into over the life of the panel, including extension options.

Past agency or whole-of-government spend on the goods or services covered by the panel, sourced from supplier reports (if you are renewing the panel) or spend cube, is often used to estimate the value of a new or renewed panel or standing offer.

The estimated budget includes all costs over the duration of the project or contract consistent with clause 7 of Procurement Board Direction PBD 2019-05 which provides:

1. The estimated value of a procurement is an estimate of the maximum value (excluding GST) of the proposed procurement contract made by the government agency concerned, and is to include the value of the following:
   • the goods or services to be procured
   • all forms of remuneration payable by the government agency, including any premiums, fees, commissions, interest and other revenue streams that may be provided for in the proposed contract
   • any options, extensions, renewals or other mechanisms that may be executed over the life of the contract.
2. If a procurement is to be conducted in multiple parts with a number of proposed procurement contracts awarded either at the same time or over a period of time, with one or more suppliers, the estimated value of the procurement must include the estimated value of all of the proposed procurement contracts.
3. A procurement must not be divided into separate parts if a purpose of the division is to avoid a relevant procurement threshold.
4. If the maximum value of a proposed procurement cannot be estimated, the procurement is taken to have an estimated value that exceeds the relevant procurement threshold for the procurement.

Agencies should consider their level of confidence in contract value estimates, and apply the Direction if there is a moderate or higher risk that the actual value of a procurement may exceed $7.5 million.

See section 7 and section 8.

Mandatory minimum requirements or other specific requirements

Didn't meet mandatory, legal, contractual, regulatory or policy requirements in their proposal. For example, the supplier:

• doesn't have required licenses and/or qualifications
• doesn't meet environmental, social or ethical requirements
• contract departures excessive.

Capability, experience or qualifications

Didn't demonstrate to a competitive level:

• relevant organisational work experience
• staff experience and qualifications
• performance history including appropriate referee reports.

History of contractual commitments not being met.

Capacity

Didn't demonstrate to a competitive level, sufficient resourcing  to deliver the contract successfully, such as personnel, plant or equipment.

Risks identified in contingency planning to meet contract delivery in the proposal.

Quality of submission or tender

Insufficient information provided or didn't demonstrate an understanding of requirements to a competitive level. Errors could not be clarified with the tenderer.

Financial risks

Financial risks identified in the proposal including financial viability and/or can't confirm insurances.

Pricing

Price tendered is beyond market expectation or otherwise uncompetitive.

Suitable but not selected

Supplier satisfies tender evaluation criteria to a high level but value for money scores were lower compared to the preferred supplier. For example, the supplier scored second and scored closely to the winning supplier.This mustn't be selected if any of the other factors in this list were the primary reason the supplier didn't win the contract.

Local benefits test score (made available once Local Content Policy is alive)

To be defined.