TENDER SUPPORT FOR LOCAL BUSINESSES

There’s been a fair bit of comment in the local media recently regarding Council’s policy of awarding tenders together with criticism over the use of external contractors.

Whilst I understand the concerns raised, the fact is that Council has adopted a documented process which dictates how tenders are assessed. It needs to be borne in mind that there are a number of criteria involved in the assessment process which determines how the tenders are scored and awarded such as ‘Past Experience’, ‘Ability to Complete on Schedule’, etc. For the sake of simplicity, I’m only going to focus on the topical issue of ‘Cost’ so that I can provide an apples-for-apples example based on the assumption that all the other criteria is equal.

Local tenderers already receive a nominal “weighting” of 5% which means that a contract valued at let’s say a million dollars could attract a $50,000 competitive advantage for them because they’re a local business.

Here’s an important factor that needs to be considered…. In the above example, the $50,000 advantage would be coming directly from ratepayer’s funds. 

Whilst here’s obviously justification in supporting the local economy the question remains, “Is 5% enough?” or in other words, “Would the community prefer to increase the “weighting” percentage to say 10% and (in the above case) contribute $100,00 to keep the job local?”

Frankly, it’s a very subjective issue which to my mind is open for debate. On the one hand Council is trying to support local businesses and stimulate the economy but on the other it gets a caning from ratepayers who demand that it be prudent with their money. The crunch obviously comes when the rate notices hit the letterboxes and the questions get asked about where the money’s being spent and why the need for increases.

The other consideration of course is that many of the tenders that are offered by Council require specialised services that simply can’t be provided by local firms. In those cases it’s only natural that the job will go to providers who have that expertise.

At the end of the day Council has to abide by a whole range of legislative requirements to ensure fairness to all. It has policies in place which means that if it wants to alter the way that it does business, it has to first change those policies to make the whole process absolutely transparent.

I’m happy to receive feedback from anyone who disagrees with Council’s current policy and who has a more equitable solution but I thought that I’d at least provide my thoughts here.

Council also has a document entitled ‘Doing Business With Bundaberg Regional Council – A Guide for Suppliers and Contractors’ which can be accessed by clicking here. The following extract may assist those who don’t want to read through the entire document….

DOING BUSINESS WITH BUNDABERG REGIONAL COUNCIL – A GUIDE FOR SUPPLIERS AND CONTRACTORS.

….. LEGAL RULES THAT AFFECT COUNCIL’S PURCHASING

Council is under a legal obligation to operate within the requirements of the Local Government Act 2009 (the ‘Act’) and Local Government Regulation 2012 (the ‘Regulation’).

Amongst other statutory requirements stipulated in the Act and Regulations, Council must comply with the Sound Contracting Principles when acquiring goods, services and contracted works. The Sound Contracting Principles are:

a) Value for money;

b) Open and effective competition;

c) The development of competitive local business and industry;

d) Environmental protections; and

e) Ethical behaviour and fair dealing.

The Sound Contracting Principles explained:

It is important to understand the five sound contracting principles to appreciate the complex regulatory environment within which Council must operate.

Value for money:

The concept of value for money is not restricted to price alone. The value for money assessment must also include consideration of:

a) Availability.

b) Whole-of-life costs factors including transaction costs associated with acquisition, reliability, maintenance and disposal.

c) Non-cost factors including fitness for purpose, quality, service and support.

d) Sustainability factors:

i. the contribution the product or service makes to sustainability initiatives; and

ii. the sustainability of the suppliers operations including:

What waste reduction strategies are in place?

What energy reduction strategies are utilised?

The sources of raw materials?

The employment of staff under appropriate awards?

Adequate and appropriate training of staff?

Contributions made to the community in goods, money or services?

e) Advantage of buying local:

i. shorter delivery times;

ii. local back-up and servicing; and

iii. availability of spare parts.

All of the above mentioned criteria would be considered in relation to the product, service or outcomes required.

Further information about Value for Money may be found at:

http://www.hpw.qld.gov.au/SiteCollectionDocuments/QueenslandProcurementPolicy2013.pdf

Open and effective competition:

The principle of open and effective competition considers the use of transparent, open and unbiased purchasing processes so that potential Council suppliers, contractors and the public have confidence in the outcomes of the purchasing process.

This includes adequately testing of the market to ensure all options and suppliers are considered equally and treated consistently, fairly and equitably.

This process also ensures that bias in specifications is avoided; that is, the specification should be as clear as possible, non-discriminatory and should focus on performance, function, and/or technical and physical characteristics (as opposed to brand and manufacturer).

The development of competitive local business and industry:

Council encourages the development of competitive local businesses within the region.

When price, performance, quality, suitability and legislative compliance are comparable, the following areas may be considered in evaluating offers:

Creation of local employment opportunities;

More readily available servicing support;

More convenient communications for contract management;

Economic growth within the local area;

Benefit to Council of associated local commercial transaction.

Suppliers may wish to seek further information on resources available from the State and/or Federal Government to assist businesses in becoming more efficient and competitive.

Environmental protection:

Protection of the environment is paramount to Council and supports our long-term vision for the Bundaberg region – being vibrant, progressive, connected and sustainable.

Council intends to move towards including environmental criteria (sustainability) in its contracts, tenders and day to day purchasing. Below are some of the ways in which this will influence the selection of suitable suppliers.

Where Council purchasing can influence environmental issues or concerns such as:

Promote the purchase of environmentally friendly goods and services that satisfy value for money criteria, taking into account the whole of life costs of the procurement transaction; and

Foster the development of products and processes of low environmental and climatic impact; and

Provide an example to business, industry and the community by promoting the use of climatically and environmentally friendly goods and services; and

Encourage environmentally responsible activities by stipulating minimum environmental requirements in procurement documentation.

Ethical behaviour and fair dealing:

Ethical behaviour is the moral principles that guide Council purchasing staff in all aspects of their work. Ethical behaviour encompasses the concepts of honesty, integrity, probity, diligence, fairness, trust and respect. Ethical behaviour also includes avoiding conflicts of interest and not making improper use of an individual’s position.

Ethical behaviour and fair dealing supports openness and accountability in purchasing resulting in suppliers, Council and the public having confidence in Council’s dealings in the marketplace.

The applicable documents can be downloaded and viewed from the following links:

Local Government Act 2009

Local Government Regulation 2012

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