Application

This Direction applies to the procurement of goods and services of any kind, including construction, by a government agency within the meaning of Part 11 of the Public Works and Procurement Act 1912.

This Direction applies to all new tenders, engagements and contracts from the date of this Direction. This Direction does not apply to procurements that have already commenced on the date this Direction is issued, however government agencies are to take reasonable steps to apply this Direction to any procurements that have already commenced, where feasible.

All values are exclusive of GST.

This Direction must be implemented in accordance with the Public Works and Procurement Act 1912, the Procurement Policy Framework and all other active NSW Procurement Board Directions, including the requirement that Agencies are to obtain best value for money in the procurement of goods, services and construction.

In applying this Direction, agencies must ensure local suppliers have full and fair opportunity to participate in procurement processes.

Embed upfront Local Market Testing in all procurement plans

Agencies are required to embed upfront local market testing in procurement plans for projects or contracts with a budget of $7.5 million or more.

Recording reasons for not selecting a local supplier during the decision-making process

Agencies are to require that procuring officers must state in decision-making documents for tender processes for projects or contracts with a budget of $7.5 million or more, on an ‘if not, why not’ basis, why a local supplier has not been selected if one is available.

Purpose

The purpose of this Direction it to:

-        ensure local suppliers are provided a full and fair opportunity to compete for government contracts

-        better inform the State about the NSW procurement landscape.

Reporting

Each agency is required to report to the Procurement Board quarterly, and as otherwise requested by the Board:

a)    the number of procurements valued $7.5 million or more conducted in the past quarter, broken down by procurement category

b)    the number of procurements valued $7.5 million or more for which market testing identified that a local supplier was available or only a non-local supplier (grouped by other Australian and New Zealand, and other international), broken down by procurement category

c)     the number of procurements at item b) that were awarded to a local or non-local supplier (grouped by other Australian and New Zealand, and other international)

d)    the key reasons that suppliers were not awarded the procurements listed at item b), aligned to value for money criteria, broken down by local and non-local suppliers.

NSW Procurement will issue a reporting template for the purposes of this Direction, which will define the procurement categories and key value for money criteria to be used for reporting purposes.

Definitions

A local supplier is a NSW based enterprise.

Decision-making documents may vary by agency, and may include a briefing note, procurement form or online approval process used by the agency head or delegated officer to approve the award of a contract to a successful supplier or suppliers.

Local market testing:

·       means taking reasonable steps to confirm if any local supplier or suppliers with the required capacity and capability can supply the goods or provide the services required

·       should be proportionate to the scope and value of the procurement

·       may involve desktop research, market research and/or issuing a request for information or expression of interest to the market

·       must be included in the plan stage of the procurement process.

This Direction applies to any NSW Government procurement for a project or contract with a budget of $7.5 million or more. The value of the procurement is to be calculated considering all costs over the duration of the project or contract, including extension options. A project or contract can include a standalone contract, a series of related procurements conducted in multiple parts to deliver a project, a standing offer or a procurement panel, including whole-of-government contracts.

Implementation timing

NSW Government agencies must implement this requirement promptly, but no later than 1 January 2025.

The Minister for Domestic Manufacturing and Government Procurement for NSW has directed agencies to update their procurement frameworks before 15 December 2024 to give full effect to this Local Market Testing Direction before its commencement on 1 January 2025. This includes, but is not limited to, relevant policies, procedures, standards and guidance material.

Locating local suppliers

Supplier Hub has a searchable list of suppliers registered with NSW Government. You can filter suppliers by category, company type, size and location.

Transitional Arrangements

For the purpose of this Direction, a procurement is considered to have commenced if and when:

a)    the business case which contains a strategy for approaching the market for the procurement is:

                    i)          submitted for review to another government entity as part of a mandatory process (for example, an investor assurance (Gateway) process),

                   ii)         if i) is not applicable, approved by the government agency

b)    If a) is not applicable, the strategy for approaching the market for the procurement is approved by the government agency

c)     If neither a) nor b) is applicable, a request for submissions (Rfx) is released by the government agency.

Context

The Minister for Domestic Manufacturing and Government Procurement, Courtney Houssos MLC, on 3 September  2024 directed the NSW Procurement Board to issue this direction.