Progress of the reforms

The Victorian Government released to the public on 12 December 2017 its exposure draft to the Local Government Bill (the Bill). The close date for submissions expired Friday 16 March 2018 at 5pm. Once finalised, the Bill is expected to be introduced into Parliament by mid-2018.

Procurement under the current Act

Procurement by local councils in Victoria is currently governed by s 186 (‘Restriction on power to enter into contracts’) and s 186A (‘Procurement policy’) of the Local Government Act 1989 (Vic) (the Act). These provisions set a threshold of $100,000 above which all councils must comply with certain formalities in a public tendering process. Councils must also prepare, maintain and comply with their own procurement policies. Local Government Victoria (a State body) has also updated its “Victorian Local Government Best Practice Procurement Guidelines” (Guidelines) in 2013 to assist council staff and those in the field of local government procurement. The Guidelines are not Ministerial Guidelines under s 186A(5) of the Act and are thus not legally binding on councils.

Proposed changes to procurement

The Exposure Draft of the forthcoming Local Government Bill would give councils more discretion over the procedures to apply when purchasing goods and services and carrying out works. The proposed new Act would do away with the rigid ‘one-size-fits-all’ $100,000 threshold in s 186 of the current Act, by allowing councils to tailor their own thresholds and processes for formal tendering in their mandatory procurement policy. A council’s procurement policy would be required to: (cl 147 of the Bill)

  1. Describe the circumstances in which the council must invite a tender or seek an expression of interest;
  2. Describe how the council will seek collaboration with other councils and public bodies in the procurement of goods or services;
  3. Include any other matters prescribed by the regulations; and
  4. Seek to promote open and fair competition.

Councils would be required to comply with their procurement policies before entering into a contract for the purchase of goods or services or for the carrying out of works: cl 148(1) of the Bill. Council CEOs would be required to ensure that opportunities for collaboration with other councils or public bodies are flagged in any report recommending the entering of a procurement agreement: cl 148(2) of the Bill.

Councils would need to review their procurement policies at least once during each 4 year term of the council: cl 147(4) of the Bill.

These proposed changes in procurement governance recognise the different sizes of councils across Victoria with their varied procurement needs and practices. It is anticipated that Local Government Victoria will continue to maintain the Guidelines to assist councils in the development of their own procurement policies. Alternatively, the Guidelines could be formalised – cl 82 of the Bill would give the Minister the power to issue ‘good practice guidelines’ with respect to any matter under the Bill, a council’s compliance with which could be used as evidence that the council has complied with the relevant statutory requirement.