Legislation – Section 553

Local Government Procurement has met the requirements of Section 55(3) of the Local Government Act 1993 (NSW)

In relation to the need for councils to tender, Section 55(3) of the Local Government Act 1993 (NSW) states:

“(3) This section does not apply to the following contracts:

• Subject to the regulations, a contract for the purchase of goods, materials or services specified by a person prescribed by the regulations made with another person so specified, during a period so specified and at a rate not exceeding the rate so specified.”

As a Prescribed organisation, LGP’s contracts meet the requirements of this section of the Local Government Act 1993 (NSW) by:

• Specifying the persons (organisations) who are accepted through the tender process to be on the LGP contract. This is listed on the LGP website and VendorPanel;
• Stipulating the period of the contract within the tender documentation, via the LGP website and via VendorPanel; and
• Specifying the rates (pricing) by means of pricing that is first submitted at the time of tender and secondly, for certain contracts, via the LGP website and/or via VendorPanel. The Local Government Act 1993 (NSW) does not require for pricing to be published as such, but to be specified it does need to be available somehow.  LGP can provide such information, where not published, upon request; and there are exceptions to pricing being published on the LGP website. Some contracts, by the nature of the product or service being supplied, the complexity and variability of type, do not lend themselves to a single pricing point prior to council specific requirements being identified and a quotation being requested for a specific, non-exceedable pricing. Typical of the LGP contracts where this would apply are the LGP707-3 Heavy Plant, the NPN03-13 Trucks for Local Government, the LGP1608-2 Specialised Truck Bodies & Machines, the LGP 306-2 PCs, Notebooks, Servers & Associated Services & Equipment and other similar contracts.

  For example, the complexity of providing a truck body is created by: the specific utilisation of the end product required by the council, the materials required in the construction of that body and the type of vehicle the truck body is to be built upon. This combination of factors is far too complex for any single pricing point to be established prior to the council specific construct specifications being known.

  LGP’s tender requests for this type of product or service stipulate that the tenderer’s pricing must be provided for a specified range of services or products in order to allow pricing to be evaluated by the LGP evaluation panel (consisting of council and LGP employees) as per the requirements of the  Local Government Act 1993 (NSW).

  Independent legal opinion (see Independent Legal Advice below) confirms that such pricing is deemed to meet the needs of Section 55(3) of the Local Government Act 1993 (NSW).

• The LGP VendorPanel quotation system allows councils to receive a specific price for a specific unit of supply based on a specific custom-built requirement that is competitive.

  By council seeking a competitive quote from the LGP panel suppliers appointed through a tendering process, council can receive a specific price for a council defined requirement under the stated terms and conditions of the LGP contract. In engaging an LGP contract supplier via a specific LGP nominated process, a council contracts under the terms and conditions as stipulated by LGP and the resultant contract is considered to be in accordance with the requirements for exemption from tendering.

  Independent legal opinion (see Independent Legal Advice below) confirms that such pricing is deemed to meet the needs of Section 55(3) of the Local Government Act 1993 (NSW) in that the supplier is named, the time frames for providing the service or goods are stipulated by council and the price, not to be exceeded, is provided by the LGP contract supplier.

  The independent legal advice also confirms that the manner in which LGP provides for that pricing to be obtained under the relevant contract, following the required tender process, does meet the requirements of the Local Government Act 1993 (NSW) and Regulation.

Independent Legal Advice

Following is an extract from independent legal advice as provided to LGP:

1.  In our opinion, LGP received a ‘rate so specified’, pursuant to section 55(3) of the Local Government Act 1993 (NSW), at 2 stages.

a) Firstly; when the selective list of tenders was being compiled; and
b) Secondly, upon periodic receipt of the fixed quotation for the specific machine being sought.

2. Further, while it is possible that the fixed quotations may exceed the value of the initial quotes, in our opinion, this is not contrary to section 55(3) of the Local Government Act 1993 (NSW), as we have been instructed that the contract provides for the best market price to be provided at the time of quotation. The reason for this is that the initial prices were provided on a range of the suppliers basic products whereas a quotation is likely to be sought for a particular machine with additional functions and capabilities, which may require to be purpose-built. Once the quotes have been provided to LGP to pass onto a council they cannot be amended by the suppliers.