Exemptions (Public construction - Guidance 1.4)

This guidance helps Agencies apply for exemptions from the Directions and Instructions for public construction procurement.

Effective date: 1 July 2018

Objective:  To help Agencies in applying for exemptions from the Directions

Summary

The Minister for Finance, as the minister responsible for Part 4 of the Project Development and Construction Management Act 1994 (Vic), may approve exemptions from specific or all requirements in the Directions or the Instructions.

The Secretary to the Department of Treasury and Finance may approve exemptions from specific or all requirements in the Instructions when an application for exemption applies only to the Instructions.

This Guidance describes what to include in an application for exemption and the factors that will be considered when assessing applications for exemption.

Preparing to apply for an exemption

The Directions provide a principles-based, outcomes focused framework to support good procurement practice.

The principle of scalability allows the Directions and Instructions to be applied flexibly, in a way that is proportionate and appropriate to an Agency's procurement profile.

While having an exemption process is necessary, few exemptions will be warranted.

What types of exemption may be applied for?

An exemption may:

  • be for a specified time period, or be ongoing;
  • be for a specific project or class of projects;
  • apply to Works or Construction Services;
  • relate to specific Directions or Instructions, or to the Directions or Instructions as a whole;
  • relate to all or part of an Agency's Public Construction Procurement; or
  • apply to a single Agency or to a class of Agencies.

Example

An authority or statutory office created to deliver a particular project or program of Works or Construction Services has a Public Construction Procurement profile that includes only large scale works projects, while the rest of the Agency undertakes works projects of different values.

Applying the Public Construction Procurement framework developed for the Agency to the authority may lead to less efficient, economical or effective procurement activity. This may warrant applying for an exemption to revise the threshold values that apply to Limited Tenders.

When considering the need for an exemption:

  • identify the minimum scope of the Directions or Instructions that would apply to the exemption application; and
  • ensure that the proposed alternative approach takes account of the purpose of the Directions and the underlying principles listed in Guiding Principles (Guidance 1.2).

Who should be involved in preparing an application for exemption?

All Agencies should consult with the Construction Policy Unit within the Department of Treasury and Finance before applying for an exemption.

Where the Agency seeking an exemption is a Portfolio Agency, it should first consult with its Portfolio Department before consulting with the Construction Policy Unit within the Department of Treasury and Finance because there may be common issues with other Agencies in the Portfolio justifying a joint application.

Apply sufficient time and resources to develop a strong case for an exemption.

How to apply for an exemption

What is the format of an application for exemption?

The format of an exemption is a letter from the Agency’s Accountable Officer or Responsible Minister to the Minister for Finance where the exemption refers to:

  • any of the Directions; or
  • any of the Directions in combination with any of the Instructions.

Where an application for exemption refers to the Instructions only, the format is a letter from the Agency’s Accountable Officer or Responsible Minister to the Secretary to the Department of Treasury and Finance.

In both cases, always send a copy of the application letter to the Construction Policy Unit within the Department of Treasury and Finance as well.

What information is needed in an application for exemption?

Information needed in an application for exemption includes:

  • the Directions or Instructions from which the exemption is sought;
  • the reasons for seeking the exemption;
  • relevant information about the Agency, including size, nature and risk profile of the Agency's procurement, if relevant to the application;
  • if the application for exemption refers to a procurement, provide relevant information about the procurement, including its size, nature and risk profile;
  • alternative action or procedures that will be adopted to ensure that:
    • the objectives of the relevant Directions or Instruction are achieved; and
    • the Agency's approach to Public Construction Procurement is undertaken consistent with the principles in Guiding principles (Guidance 1.2); and
  • the scope of the exemption sought, whether for:
    • a specified time period or on an ongoing basis;
    • a specific project or a class of projects;
    • specific Directions or Instructions, or to the Directions and Instructions as a whole;
    • all or part of an Agency's Public Construction Procurement; and
    • the applying Agency or a class of Agencies (if the latter, list the Agencies proposed to be covered by the exemption).

What information should be provided to support an application for exemption?

An Agency applying for an exemption needs to provide reasons that demonstrate that it has a compelling case for an exemption.

The following information may be provided to support an application for an exemption:

  • an explanation of how the exemption and alternative arrangements would support the integrity of the Agency’s Public Construction Procurement activities and the purpose and principles set out in the Directions;
  • a description of the effects on the Agency of being granted or being denied the exemption;
  • a cost benefit analysis, or other analysis, of the exemption; and
  • relevant supporting material, such as information about the supplier market.

Demonstrating that the exemption will result in a clear net benefit to the Victorian community and supplier market may be persuasive. A ‘net benefit’ is an overall positive impact on the community. It takes into account the costs and benefits related to economic impact, financial risks, social and environmental considerations and other matters.

The nature of the Agency’s Public Construction Procurement activities and the supplier market will inform how these benefits are assessed.

Evaluating and responding to exemption applications

Who determines the outcome of an application for exemption?

The Department of Treasury and Finance will evaluate exemption applications on a case by case basis, and make a recommendation to the Minister for Finance. The Department may contact an Agency to clarify aspects of an exemption application.

The Minister for Finance may approve or reject an application for exemption where the application refers to:

  • any of the Directions; or
  • any of the Directions in combination with any of the Instructions.

The Secretary to the Department of Treasury and Finance may approve or reject an application for exemption where the application refers to the Instructions only.

How is the outcome of an application for exemption presented?

The Minister for Finance or Secretary to the Department of Treasury and Finance will respond by letter to the Agency.

An exemption may be approved subject to, for example, the Agency:

  • implementing an alternative action or procedures;
  • providing an annual assurance that there has not been any significant change to the Agency’s procurement profile, procurement risk profile and functions, or a relevant adverse audit finding.

The exemption approval may be revoked if the Agency does not comply with a condition to an approval.

After receiving the results for an application for exemption

Implement the proposed alternative action or procedures immediately after receiving the approval for the exemption.

Maintain a register to record:

  • applications for exemption;
  • the date when an application was submitted;
  • the outcome of the application, whether approved, rejected or approved subject to conditions; and
  • if an exemption was approved subject to conditions, the conditions applying to the approval.

The register of exemptions must be made available for inspection by external oversight bodies.

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.

Reviewed 24/07/2018
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