Enforceable procurement provisions

If your procurement is over a certain value, it may be subject to the enforceable procurement provisions.
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What you need to know
  1. If you’re procuring goods or services over a certain value, you usually must comply with PBD-2019-05 Enforceable procurement provisions.
  2. There are some exemptions to this, such as if you’re procuring health and welfare or education services.
  3. One of the most important requirements is that you must generally use an open approach to market.
  4. You also mustn’t discriminate against foreign suppliers or require them to have Australian experience.
  5. PBD 2019-05 also includes information you must include in your tender documents and specifies how you must advertise.

Procurements covered by PBD-2019-05 Enforceable procurement provisions

If you’re procuring goods or services over a certain value, you’ll usually need to comply with PBD-2019-05 Enforceable procurement provisions (PBD 2019-05) .

These provisions contain your legal requirements under Australia’s international procurement agreements. This includes your obligations stemming from the World Trade Organisation Government Procurement Agreement (WTO GPA) and free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

PBD 2019-05 applies to 41 NSW government agencies, which means some agencies do not have to comply with the direction. You can read the full list of covered agencies in Schedule 2 of PBD-2019-05 (PDF).

Thresholds that apply

You generally need to comply with PBD 2019-05 if your procurement’s estimated value is more than:

  • $9.584 million (excluding GST) for construction contracts
  • $680,000 (excluding GST) for other goods and services.

You must assess every procurement before you approach the market to work out whether it meets these thresholds.

How to estimate the value of your contract

To estimate the value of your procurement contract, you must include:

  • all goods and services you’re procuring
  • every form of remuneration you’ll pay suppliers, including premiums, fees, commissions, interest and other revenue streams
  • any options, extensions, renewals or other mechanisms that could be executed during the life of the contract..

Where you’re awarding a contract in multiple stages or parts, you must include the entire procurement. This remains true even where you’ll be using multiple suppliers.

You shouldn’t include GST in your estimates.

If you can’t accurately estimate the contract value, PBD 2019-05 will be deemed to apply.

When don’t you have to comply

Procurements of some goods and services are exempt from complying with PBD 2019-05, even where the value is above the threshold.

These include procurements for:

  • health and welfare services, including plasma fractionation services
  • education services
  • government advertising services
  • research and development services
  • fiscal agency or depository services
  • services related to the sale, redemption or distribution of public debt
  • land, including existing buildings, immoveable buildings and other property rights
  • foreign assistance
  • public employment contracts, including contracts for labour-hire
  • goods and services that will be consumed outside of Australia
  • motor vehicles
  • transport infrastructure.

These services are not defined in the international procurement agreements and are not defined in PBD-2019-05, so you should use their ordinary meaning when you’re deciding whether to apply PBD-2019-05.

You must be able to justify why you’ve excluded a procurement under these exemptions if a supplier lodges a complaint that they shouldn’t have been.

You can read the full list of exempt procurements in Schedule 2 of PBD 2019-05 (PDF).

Open approaches to market

Australia’s international trade agreements centre on creating fair and open trade between party countries. In line with this goal, one of PBD 2019-05’s most important requirements is that you must use an open approach to market.

Essentially, this means you must advertise and run your procurements openly and transparently.

The only exceptions to this rule are:

  • where you’re procuring goods or services using a procurement panel. However, the panel must have been established before PBD-2019-05 came into effect or through a compliant procurement process.
  • where you’re procuring goods or services using a procurement list (or prequalification scheme). From 29 November 2020, if you’re using a procurement list for a covered procurement, the list must comply with PBD-2019-05.
  • where you’re allowed to use a limited tender.

Limited tendering

Limited tendering happens when you directly invite one or more suppliers to participate in a procurement, such as through a request for quote (RFQ), request for tender (RFT) or expression of interest (EOI).

Inviting a supplier on a procurement list (or prequalification scheme) isn’t limited tendering.

You can only use a limited tender in the circumstances specified in clause 15 of the EPP Direction. These include:

  • where you’ve already made an open approach to the market but:
    • didn’t receive any responses
    • didn’t receive any responses that met your evaluation criteria
    • you reasonably believe no response offered value for money
    • you determined it wasn’t in the public interest to award a contract, or
    • you reasonably believe a tenderer has colluded with someone in the procurement process.
  • only one supplier can provide the goods or services and, due to technical reasons, there’s no alternative or substitute
  • you need extra goods or services and a change of supplier:
    • would mean duplicating costs or cause you significant inconvenience
    • isn’t possible due to technical reasons, such as not being compatible with the equipment, software or installations you initially procured
    • isn’t possible due the original supplier’s warranty conditions.
  • unforeseen circumstances mean you need the goods or services urgently and you won’t get them in time using an open approach to market.

When you award a contract through a limited tender you must prepare a written report setting out the circumstances and conditions justifying a limited tender. You must also include the value and type of goods and services procured.

Read more in approach to market

General rules and principles

PBD 2019-05 also lists other requirements to make sure your procurements are fair and open to our trade partners. These include:

  • not allowing you to discriminate against a supplier due to location, foreign affiliation or ownership or the origin of their goods and services
  • forbidding you from requiring a supplier to have Australian experience
  • prohibiting offsets. These are any condition or undertaking that requires you to use Australian content or an Australian supplier, as well as actions aimed at encouraging Australian local development or improving Australia’s balance of payments accounts
  • banning you from insisting on unnecessary specifications that act as obstacles to trade
  • setting minimum requirements for what you must include in the procurement documentation
  • setting minimum periods for advertising procurements and identifying where they must be advertised
  • not allowing you to exclude suppliers from a procurement except in some limited situations.

Related content

  • Other considerations: Read an overview of some of the things you must consider before you start a procurement.
  • Non-agency buyers: Discover how you can buy under the NSW government procurement scheme even when you’re not a government agency.
  • Governance: Read about how the NSW Government governs procurement activities.
  • Board directions: Find out what Board directions are and why you must comply with them.
  • Record keeping: Discover your record-keeping obligations for procurement.