Limited Tenders (Public Construction – Guidance 3.2.2)

Effective date: 1 July 2018

Objective: To help Agencies understand the circumstances under which Limited Tenders can be used

Summary

The circumstances when Limited Tenders may be used are set out in Competition and contestability (Instruction 3.2).

In general, non-competitive tender processes for projects with an expected value above $75,000 (inclusive of GST), should be rare.

This Guidance describes the circumstances under which Limited Tenders can be used.

Limited Tender

Circumstances when a Limited Tender processes may be used:

Agencies should consider alternative ways to assess value for money when assessing an offer from a single tender participant- for example, comparing pricing across similar projects or applying benchmark rates as a comparison.

In general, non-competitive tender processes for projects with an expected value above $75,000 (inclusive of GST) should be rare. Agencies may only conduct this form of Limited Tender if one or more of the Special Circumstances set out in Competition and contestability (Instruction 3.2) exist and appropriate approvals are obtained.

A Limited Tender process may be used if Special Circumstances justify using less than the specified number of required tender participants. For example, a Limited Tender may be considered if the required number of tender participants is three, but only two potential tender participants have the required skills.

The challenge is to conduct the procurement with competitive pressure to achieve value for money without creating an unproductive workload for potential tender participants and the Agency itself. The approval for use of a Limited Tender should set out the alternative approach proposed in conducting the Limited Tender, so that any departures from the normal requirements are clearly documented and compliance with the principles is maintained as far as practicable.

Special Circumstances – understanding what they mean

Special Circumstances may be used to justify the use of a Limited Tender.

This section describes two of these Special Circumstances.

Applying the Special Circumstance - Urgency

The Special Circumstances recognise that there are times when Works or Construction Services are required immediately – for example to respond to:

• urgent events such as securing a building after a bushfire
• life-threatening situations.

Note that life-threatening situations include threats to human, animal and plant health.

These events are unforeseen and are generally beyond the control of the Agency.

Urgent events do not arise simply because a project is running behind or overtime.

Where an Agency commonly requires urgent Works or Construction Services, the Agency should consider arrangements to minimise the need to use a Limited Tender and to improve value for money outcomes including establishing:

• a standing order arrangement for managing urgent or minor Works or Construction Services; or
• a Supplier Panel that can be called on to respond in urgent circumstances.

The Supplier Panel should be established through a tender process that complies with the Directions. As part of their application to be on the Supplier Panel, potential members of a Supplier Panel should provide rates for the type of Works or Construction Services envisaged and their terms of engagement.

Applying the Special Circumstance - For the performance of additional Works or the performance of additional Construction Services which are an extension of Works or Construction Services not included in an existing contract, but which are within the objectives of the original Tender Documentation

This Special Circumstance may apply when considering an extension of an existing contract.

For clarity, the Works or Construction Services should be consistent with the specifications and scope included in the original Tender Documentation.

This Special Circumstance addresses additional Works or Construction Services that were not known or disclosed when the Tender Documentation was released.

It is not necessary to apply this Special Circumstance to additional Works or Construction Services:

• where the Tender Documentation discloses Works or Construction Services:
  • to be undertaken in stages, including when decisions to undertake later stages may apply
  • to be undertaken as separable portions, including when decisions to undertake a separable portion may apply
  • subject to contractual options for additional Works or Construction Services;
  • subject to staged funding
• for variations generally within the scope of Works or Construction Services contemplated by an existing contract,

as the exercise by an Agency of such stage, portion, option or variation is not a separate procurement.

Other approvals may apply to confirm additional expenditure or variations to contracts.

Tools and support

The Practitioners Toolkit includes key documents, guidance and information about the Ministerial Directions and Instructions for public construction.

For further information about the Ministerial Directions and Instructions for public construction procurement, please contact the Construction Policy Team.