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Application of the Directions and Instructions (Construction Guidance 1.3a)

This Guidance helps Agencies to work out when the Directions and Instructions apply to a procurement.

Effective date: 1 July 2018

Objective:  To help Agencies work out when the Directions and Instructions apply to a procurement

Summary

The Directions only apply to Public Construction Procurement.

The Directions only apply to certain Agencies.

This Guidance helps Agencies to work out when the Directions apply to a procurement. The key points to consider are:

  • Does the procurement activity constitute Public Construction Procurement?
  • Does the Agency have to comply with the Directions?
  • Is the procurement being undertaken by or on behalf of an Agency that must comply with the Directions?

Does the procurement activity constitute Public Construction Procurement?

When the Directions apply

The Directions apply when undertaking Public Construction Procurement.

Public Construction Procurement is defined as:

  • processes and requirements that apply to engaging suppliers to perform Works or Construction Services;
  • the terms of engagement and contracts used to engage suppliers performing Works or Construction Services; and
  • management of engagements for Works or Construction Services and reporting on how suppliers perform when engaged to deliver Works or Construction Services.

Consider three elements when applying this definition:

1. Engagement of a supplier. The Directions apply when an Agency engages the market to provide Works or Construction Services.

2. What is being procured. The Directions apply when an Agency engages the market to obtain either, or both, of:

  • Works which means construction, maintenance, rehabilitation, alteration, extension or demolition of any improvements on land; or
  • Construction Services which means services directly related to delivering Works, including architectural and design services. Construction Services do not include services indirectly related to delivering Works, such as legal advisory services and commercial advisory services.

3. The activity undertaken. The Directions apply when an Agency is performing any of the following activities:

  • engaging tender participants from the market through processes such as expressions of interest, tenders and quotations. This includes preparing any documents needed for these processes, and the process of assessing the offers received;
  • determining the terms of engagement and contracts used to engage tender participants;
  • managing the engagements, including administering contracts;
  • reporting on the performance of suppliers; and
  • publishing the details of the procurement undertaken.

When the Directions do not apply

The Directions do not apply to:

  • grants;
  • investments;
  • loans;
  • sale by tender, such as land sales;
  • hiring of employees;
  • transactions where the asset being procured is not a fixed asset acquired by the Agency; or
  • acquisition of Works or Construction Services from another public body or government owned entity, except where the public body or government owned entity is a participant in a competitive tender process.

When it is not clear if the Directions apply

Sometimes it may not be clear and Agencies may have to decide on the most appropriate way to categorise what is being procured and whether it meets the definition of Public Construction Procurement.

Defining Public Construction (Guidance 1.3b) provides more information about the scope of activities that are included or excluded from Public Construction Procurement.

Be sure to document any decisions that categorise whether or not the procurement is Public Construction Procurement and the reasons for that decision.

If the Directions for Public Construction Procurement do not apply to a procurement:

  • For Agencies that are Victorian Government Purchasing Board in-scope entities apply the Victorian Government Purchasing Board Procurement Policies for goods and services procurement.
  • For other Agencies apply the goods and services procurement policies of the Agency.

Once a decision is made, follow the relevant procurement rules consistently throughout the procurement process.

Does the Agency have to comply with the Directions?

There are two classes of Agencies for the purposes of the Directions:

  • Agencies that must comply with the Directions directly; and
  • Excluded Entities that are not required to comply with the Directions.

The Directions apply to all Agencies other than those identified as Excluded Entities.

Agencies that must comply with the Directions

Agencies that must comply with the Directions are the same as those in scope for the Standing Directions of the Minister for Finance 2016. 

Excluded Entities that are not required to comply with the Directions

The following Agencies are Excluded Entities:

Note that Excluded Entities must follow any requirements of:

  • their Portfolio Department (for school councils, incorporated committees of management and Class B cemetery trusts); or
  • the Victorian State Emergency Service, or the Country Fire Authority (for their registered units and volunteer brigades respectively).

Is the procurement by or on behalf of an Agency that must comply with the Directions?

The Directions apply when:

  • an Agency is undertaking Public Construction Procurement; or
  • a third party is undertaking Public Construction Procurement on its behalf.

The Directions do not apply to allocating resources within or between government Agencies. Government Agencies in this context includes another public body, government owned entity, local government or the equivalent from the Commonwealth or any other state or territory.

The Directions apply if a government entity is a participant in a competitive procurement process.

Example

An Agency may determine that the most effective, efficient and economical way to develop engineering drawings (Construction Services) is to use its in-house engineering staff to develop them. The Directions do not apply because there is no Public Construction Procurement.

Procurement undertaken under the following Procurement Models / methods is covered by the Directions:

  • construction related services;
  • construct only;
  • design and construct;
  • construction management; and
  • direct managed.

Procurement undertaken under the following collaborative Procurement Models is covered by the Directions, to the extent that the Directions are not inconsistent with the Victorian Alliancing Policy:

  • early contractor involvement;
  • managing contractor; and
  • alliance.

Procurement undertaken under the Partnerships Victoria Requirements is covered by the Directions, to the extent that the Directions are not inconsistent with the Partnerships Victoria Requirements.

Procurement undertaken under the following Procurement Models is not covered by the Directions (apply the construction procurement principles as much as possible):

  • work undertaken under rail franchise arrangements, unless the arrangement requires the Directions to be applied;
  • work undertaken by developers for water companies (including any other work undertaken in addition to statutory requirements while the ground is open); and
  • Works or Construction Services undertaken under a Growth Areas Infrastructure Contribution Work-in-Kind agreement, as defined by the Planning and Environment Act 1987 (Vic).

Example

In the case of works-in-kind undertaken under the Growth Areas Infrastructure Contribution, the value of these works should be benchmarked against equivalent works to ensure value for money and documented to ensure transparency and defensibility. The works must comply with relevant standards and the Accountable Officer needs to be satisfied with the arrangement.

Where procurement is undertaken under the Victorian Alliancing Policy or the Partnerships Victoria Requirements, the components of the Directions and Instructions noted in the following table apply.

 

Directions and Instructions

Policy framework applying

1.2 Guiding principles

Ministerial Directions

2 International Agreements

Ministerial Directions

3.1 Tender preparation and planning

Ministerial Directions

3.2 Competition and contestability

Number of tender participants and their selection is determined by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

3.3 Promoting efficiency in the tender process

Ministerial Directions

3.4 Tender Notices

Format and timing of notices is determined by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

3.5 Tender open times

Timing of tenders is determined by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

3.6 Tender Documentation

As required by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

3.7 Evaluation criteria

As required by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

3.7 Evaluation criteria  

 As required by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

4.1 Probity requirements

Ministerial Directions

4.2 Managing probity in Public Construction procurement

Ministerial Directions

5.1 Forward notice

Format and timing of notices is determined by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

5.2 Publishing details of procurements undertaken

Projects under Partnerships Victoria Requirements– as required by the Partnerships Victoria Requirements

Projects under the Victorian Alliancing Policy – Ministerial Directions

6.1 Use of Registers and Supplier Panels

Number of tender participants and their selection is determined by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

7.1 Contracting requirements

As required by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

7.2 Contractual terms and conditions

As required by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

8.1 Debrief for tender participants

Communication with participants is determined by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

8.2 Shared reporting regime

As required by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

8.3 Complaints

As required by either the Victorian Alliancing Policy or the Partnerships Victoria Requirements

9 Standards

Ministerial Directions

Useful resources

Defining Public Construction (Guidance 1.3b)

Helps practitioners work out if a procurement is Public Construction Procurement. Includes examples of matters noting whether they are subject to the Directions.

Victorian Alliancing Policy

Sets out policy and approvals requirements that apply to alliance contracts.

Partnerships Victoria Requirements

Sets out policy and approvals requirements that apply to public-private partnership contracts.

Reviewed 30 October 2018