Effective date: 1 July 2018
Objective: To explain how the principles of probity relate to treating tender participants fairly and equally
The probity-specific Directions and Instructions should be an ongoing reference at all points of a tender process and contract management.
This Guidance discusses the probity requirements for fair and equal treatment of tender participants in Public Construction Procurement.
Treating tender participants fairly and equally
Fairness and impartiality should be considered at all stages throughout a procurement process. Agencies need to be aware of how their actions will be perceived by tender participants and potential tender participants. For example to be fair and impartial:
- Do not engage in any conduct that would defeat the purpose of a fair and transparent selection process.
- Identify and actively manage actual and perceived conflicts of interest.
- Provide equal access to information made available at the same time for all interested tender participants (except for other tender participant’s details that are commercial in confidence).
- Provide additional information or clarification arising from individual potential tender participant’s equally to all potential tender participants and where feasible, do this in writing, whether in hard copy or electronic form.
- If the closing date is extended, provide an extension notice to all potential tender participants in sufficient time before the originally published closing date and time.
Tender participants invest time, effort and resources in preparing and submitting tender responses. In return, they are entitled to expect fair treatment at every stage of the procurement process. Any form of bias could jeopardise the integrity of a procurement. Tender participants have the right to lodge a complaint or to take legal action if they suspect bias, leading to delays and financial costs not anticipated in the budget.
Dealing with current and previous suppliers
Tender participants may have an existing relationship with an Agency – for example, from a current or previous contract. During a procurement this may create a perception (whether real or perceived) among other tender participants that the current or previous supplier has an advantage. Agencies need to be aware of the potential for a current or previous supplier to gain a competitive advantage and to manage this situation.
An Agency has a maintenance contract. The incumbent contractor has special knowledge of the services required and has developed a good relationship with the Agency. When re-tendering the services, other potential tender participants may feel that they cannot compete effectively and so may be discouraged from participating.
The challenge is to create a level playing field for all participants. Consider the following strategies:
- Separate duties so no-one involved in managing the current or previous supplier is involved in, or able to influence, the tender process.
- Adopt an effective disclosure and market engagement process. Include detailed (non-confidential) information about the requirement (including performance data such as volume or demand levels) in the Tender Documentation.
- Ensure the existing contract contains effective transition-out provisions. This will typically require the incumbent contractor disclosing information to both government and through government to other tender participants.
- Develop a strategy to assess value for money if the incumbent contractor is the only tender participant - for example, through benchmarking, preparing robust pre-tender estimates for comparison purposes and with open book reviews.
- Ensure that intellectual property rights under the current contract are sufficiently broad to allow the Agency to access and use the intellectual property.
Industry engagement and collaboration
Done effectively, collaborating and engaging with the tender’s target industry before beginning the tender process can provide the following benefits:
- more potential for innovative solutions that are fit-for-purpose;
- greater confidence in the quality of the solution;
- fewer transition risks because tender participants have been involved with the Agency in developing solutions;
- more opportunities for the Agency to balance the service scope, quality and budget imperatives; and
- better focus for the shortlisted tender participants to refine and agree to the solution approach under competitive pressure.
Industry engagement and collaborative approaches can, however, lead to probity risks such as:
- Information provided might not be consistent with the Tender Documentation.
- Tender participants might not receive the same information, clarifications or guidance.
Strategies to deal with such probity risks include the following:
- Ensure that details of any information provided, clarifications, questions submitted and answers given are recorded and distributed to all tender participants as soon as possible.
- Make attendance at briefing sessions or site inspections mandatory, and confirm all participants’ attendance in writing. Written material may not address ‘nuances’ raised in conversation.
- Avoid informal discussions between Agency representatives and tender participants before or after a briefing session.
Interactive sessions with tender participants are generally one-on-one meetings with each tender participant before the closing date for responses. Typically this form of collaboration involves the Agency interacting with the tender participants to test fit-for-purpose project ideas. This testing enables tender participants to be confident they are submitting a response that complies with tender requirements and that the Agency is likely to accept. Interactive sessions are useful where the procurement involves design (such as Design and Construct) or calls for innovation.
Interactive sessions should be carefully structured and preferably involve a probity adviser (either external or Agency based).
Generally, what is discussed in interactive sessions is not shared with other tender participants. However, if the Agency discloses any new information during a session, it should ensure that the same information is promptly shared with all tender participants. Any change to the Agency’s requirements following a session needs to be advised by an addendum to the Tender Documentation and issued promptly.
The Conditions of Tender should state if the evaluation team intends to interview all tender participants or only the short-listed tender participants. Agencies normally use this opportunity to ask questions to better understand the tender responses.
To ensure fairness in the post-tender interview process:
- All eligible tender participants should be given equal opportunity to participate in a post tender interview.
- All tender participants should be given equal time for their interview.
- No tender participant should be allowed to change or enhance the value of the response they have submitted.
- The interview should not be used to negotiate on price.
- Appropriate representatives from both sides should be at the interview and a written record of what is discussed should be kept, with a copy forwarded to the tender participant.
Negotiations with preferred or short listed tender participants
The objective of any negotiation is to get the best outcome for the Agency. Negotiations may focus on any aspect of the response, such as the price, the terms and conditions of contract, the design or the completion timeframe.
In such negotiations the Agency should not make any substantial changes to the nature of its requirements or allow a preferred tender participant to improve its response in such a way that other tender participants might argue they could have matched, if given the same opportunity.
Where there are two responses of more or less equal merit it is acceptable to have a competitive negotiation. Only undertake a competitive negotiation if the Conditions of Tender allow for this. Treat the tender participants equally in any such negotiation.
The negotiation may take the form of a best and final offer process. A best and final offer is a formal request to all tender participants or all short-listed tender participants to indicate if they are able to improve their response. Best and final offer processes are optional and should only be requested if the Conditions of Tender reserve the Agency’s right to ask for them.
Treat the tender participants involved in the best and final offer process equally and follow the standard probity practices, such as equal access to information, equal time to prepare the response and documenting the process. Best and final offer processes are not an opportunity to change the tender requirements or to advantage or disadvantage any tender participant.
Managing Probity – procurement guide (Victorian Government Purchasing Board, 2015)
Contains general guidance on probity issues for Agencies.
National Public Private Partnerships Guidelines Volume 2: Practitioners’ Guide (Department of Infrastructure and Regional Development, October 2015)
Contains guidance on probity issues that relate to public private partnerships.
National Alliancing Contracting Guidelines (Department of Infrastructure and Regional Development, September 2015)
Contains guidance on probity issues that relate to alliancing policy.
Towards agreed expectations: Tender strategies to improve Design and Construct Infrastructure Delivery Outcomes (Commonwealth of Australia Department of Infrastructure and Transport, June 2012)
Describes collaborative strategies to improve Design and Construct infrastructure delivery outcomes.
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.