Impact of new Council procurement rules in NSW

Long-awaited changes in the rules governing Local Government procurement in NSW have come into effect. LGP CEO Luke Kenny shared his views on the implications in a recent newsletter and I thought it would be useful to summarise them here.

At this stage, the reforms appear to have brought about three changes.

Increase in the tender threshold from $150,000 to $250,000

This change reduces the overhead in running full tender processes and it will allow procurement staff to engage with the market faster. But it also puts an onus on Councils to ensure that policies, training and financial delegations are robust enough for the new, higher spend level. We know how hard sub-tender spend can be to manage in a decentralised organisation!

And the Audit Office Report on Local Government that I wrote about recently should give Councils additional food for thought when assessing their readiness.

Accessing pre-qualified panels without rate cards

Changes to the legislation also mean that Councils can now access contracts established by prescribed organisations (such as LGP and others), where rates are not specified at tender. Again, this should be good news in terms of simplifying local government procurement teams’ access to panels.

But the procurement function will need to ensure that suppliers engaged through these arrangements have been subjected to due diligence by the panel owner (as is done by LGP, for example).

Engaging disability employment providers without tenders

This loosening of the rules is welcomed by LGP and others in the context of social procurement priorities but, as Luke Kenny suggests, Council policies should still be applied, to avoid stakeholder criticism and to be in a position to demonstrate value for money when engaging disability employers.

I think that these reforms are all to be welcomed for allowing Council procurement teams to function better and deliver value. Like Luke Kenny, whose thoughts can be found in full here, I agree that changes like these need to be adopted with safeguards - including updated training, policies, processes and systems.

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