Top 10 ‘need to knows’ to becoming an LGP Approved Contractor
To be fully informed, we suggest you read the information in entirety, below.
Procurement can be a complex and costly process and subject to a number of significant risks. Where the procurement function is not properly managed and resourced it can lead to poor outcomes, wasted money, damaged reputation, non compliance and legal liability.
The Local Government Act 1993 (NSW) and the Local Government (General) Regulation 2005 (NSW) govern procurement activities by councils in NSW. The intention of the Act and Regulation is to ensure integrity, fairness and transparency and allow supplier markets to bid for local government business. They prescribe a range of compliance and legal requirements in relation to how councils purchase goods and services. In particular purchases over $250,000 (over the lifetime of the contract) inclusive of GST require a council to conduct a public tender or to utilise a tender exempt arrangement such as those that LGP provides. LGP is a prescribed entity (see s55 of the Act) which means councils are exempt from tendering if they use an LGP arrangement.
Local governments that have not independently tendered or used a prescribed entity are at risk of non-compliance. The Independent Commission Against Corruption (ICAC) in Operation Jarek, investigated allegations that staff from a number of local councils and other authorities engaged in corrupt conduct by accepting gifts as an inducement or reward for placing orders with those companies. The subsequent reportmade 15 recommendations. The following are two that LGP can assist with.
That councils, if they have not already done so, analyse their procurement processes to identify points of corruption risk and take steps to improve the design of their procurement processes.
That councils, if they have not already done so, consider introducing e-procurement as an efficient method of controlling possible vulnerabilities in their system.
Aside from the very important legal obligations that councils must meet, there are the benefits that can be realised by aggregated procurement. With the combined purchases of potentially 152 NSW councils, the arrangements can provide advantageous pricing.
Resourcing plays a significant role as councils typically have many projects and contracts to manage. Using an LGP arrangement can make the process less onerous for both buyer and seller and of course, save the time that is generally associated with tendering.
Local government is an extremely diverse sector and is active in a wide range of markets. LGP contracts are just as diverse and can be used by all councils in NSW. Councils look to the panels to satisfy their need for choice, compliance and competition as well as being their preferred method of purchasing goods and services.
Being an Approved Contractor represents a business relationship between LGP and the appointed supplier. Some of the benefits of being an Approved Contractor are:
- LGP’s endorsement as an approved contractor for the local government sector
- Not having to respond to multiple tenders thus making it easier to do business with local government
- Shortening the timeframe between quotation and purchase – promoting more efficient partnerships with councils
- Promotional support from LGP through ongoing communications, face to face contact and promotional initiatives
- Standardised Terms and Conditions – giving consistency across a broad market
- Access to LGP publications and events – supporting targeted exposure to your local government marketplace
- High quality contractual protection – minimising the risk of dispute
- Compliance with local government purchasing regulations – giving greater protection to both you, the supplier and council.
LGP deals with all kinds of suppliers. There is no discrimination regardless of whether your organisation is a sole trader or a multi national corporation, based in a capital city or a regional centre. We welcome anyone that does or would like to do business with local government and believes it can meet the assessment criteria.
Being an approved contractor on an LGP panel will be of no benefit to you or LGP if you only supply to one council. It is preferred that you are willing to provide goods and/or services to a region of NSW as a minimum.
As a minimum your organisation will need to have the following:
- ABN and/or ACN
- Have a registered office in Australia
- Provide Trust documents, if you are a trust
- Public Liability Insurance of $20 million
- Workers Compensation or Income Protection insurance (for sole traders)
- Product Liability $5 Million (goods contracts)
- Professional indemnity of at least $2 million (consultancy and design)
- Demonstrate Corporate Responsibility; WH&S, QA and Employee and Community Initiatives
- Competitive pricing as part of the tender assessment
- Possibly a pricing schedule that may be published (securely) to local government.
LGP develops approved contractor panels where there is an identifiable need and benefit to local government. LGP initiates extensive research to determine a viable business case with input from both the market and local government.
Following the development of tender documentation, LGP undertakes a rigorous public tender process that fully complies with the Act and Regulation. Following the open market period, a comprehensive evaluation of tender responses is undertaken to assess the capability, resources, expertise and compliance of all tenderers.
The evaluation process also includes reviewing insurances, licenses (if applicable), accreditation and completion of an independently commissioned financial due diligence report.
Through the evaluation process, a panel of suppliers are prequalified and appointed as approved contractors. The contractual arrangement is via a Standing Offer Deed.
From that point on, suppliers can engage with councils as customers delivering the protection of legal terms and conditions to support their purchasing, a rates card or price schedule that is guaranteed “best price” and resources to access technical specifications and templates to improve the purchasing process.
If you have never responded to a tender before, please investigate for your own benefit the level of resources and quality of response that might be required. If you have responded to tenders before you will understand the formality of the process.
LGP can only approve tenders that are completed in full and submitted before the closing time of the RFT. Late tender submissions cannot and will not be accepted. You are best to commence your response to the RFT as soon as possible after release of the RFT and not wait until the last moment to respond. Missing out on submitting your response in time could mean that you are not included on the LGP panel for several years.
All LGP current contracts, including expected contract end dates, can be viewed here. The 25+ contracts are listed within the following five categories;
- Engineering and Works
- Fleet and Plant
- Information Technology
The only way to become a LGP approved contractor is via a Request for Tender (RFT) process. There is no opportunity to be “added” to a LGP contract panel unless LGP releases a RFT, and your organisation has both, submitted a tender response and been through the tender process.
In order to prepare yourself, we suggest the following:
Firstly, you will need to confirm that LGP has a panel arrangement covering the goods and/or services you offer. See Current Contracts.
Secondly, look out for the contract expiry date. Most, but not all LGP contracts have 3 year terms, with options of 2 x 12 month extensions. LGP generally releases RFTs six months prior to contract expiry. You should find out and diarise these dates.
Lastly, ensure you are registered with TenderLink and eProcure and that you have nominated a profile that accurately represents your organisations offering. These are tendering portals that many organisations, including local government, use to manage their tendering process.
Registration on Tenderlink or eProcure does not mean you are an LGP approved contractor, it is for notification of LGP tenders. You should ensure that your details are kept up to date so that you don’t miss out on these notifications.
LGP does not offer the service of individual tender notification. We suggest you keep yourself informed with a number of the following safety nets:
- Check the Sydney Morning Herald Local Government Tenders and the Daily Telegraph Tenders section on Tuesdays
- The LGP website contains all information on Current Tenders
- Register with TenderLink and eProcure in their tender alert service. Once your profile is complete you will receive automatic notifications
- Speak to your council customers.
Whilst being an approved contractor for LGP presents many opportunities, there are also contractor obligations. Some of these are:
- Compliance with the established Terms and Conditions
- Regular contact with LGP
- Delivering best value to local government
- Dedicated account management and support to local government
- Commitment to transfer existing local government business to the LGP arrangement
- Continued marketing and self promotion as well as that of the LGP arrangement
- Monthly reporting of sales
- Payment of a management fee. Fees vary from contract to contract.
There is no guarantee of sales or turnover by being an LGP approved contractor. LGP does not influence the autonomous purchasing decisions of any council or promote or nominate any individual approved contractor as being a preferred supplier.
It is the responsibility of the approved contractor to maintain ongoing relationships with any council.
The above information has been compiled by LGP to address the most frequently asked questions by suppliers wanting to become LGP Approved Contractors. Please ensure you read the above information in its entirety before contacting LGP. If after reading this information you have further questions, please send your enquiry to LGP in writing at [email protected].