The Procurement Bill 2020 (Bill) has gone through the first and second reading stages in the Western Australian Legislative Assembly. At the time of publication, the Bill has been second read into the Legislative Council. Upon enactment, the new regime established by the Bill will change the way that State agencies procure goods, services and works. The current procurement system governed by the State Supply Commission Act 1991 does not apply to works procurement and is decentralised, meaning that businesses that supply the same goods or services to multiple State agencies are subject to different tendering documents, contracts and contract management approaches.

According to a recent media statement, the WA State Government is adopting interim measures to relax and simplify the State's procurement framework in response to the COVID-19 pandemic, and these measures will continue after the Bill becomes law. These changes are proposed to take effect on 2 June 2020, and while the content is not yet available, we understand that the changes will involve:

• increasing the current limit from $50,000 to $250 000 at which agencies can purchase direct from local businesses;
• increasing the threshold for public tender processes to $500 000 where at least one local business is involved;
• enabling State agencies to obtain written quotations instead of tenders where one or more local businesses can supply, and the quotation is between $250 000 and $500 000; and
• allowing State agencies to extend government contracts with local businesses for up to two years, in order to give businesses certainty.

Section 5 of the Bill provides that the following are not State agencies for the purposes of the Bill: universities, electricity corporations, port authorities, water corporations and the Western Australian Land Authority.

The simplification of procurement processes for State agencies brought about by the Bill will also support the objectives of the Western Australian Jobs Act 2017 (WA Jobs Act), in particular the Western Australian Industry Participation Strategy (the Strategy).

These changes complement the recent changes introduced for the Local Government sector.

Key changes to the current procurement framework and its impact

Proposed debarment regime

A significant change to the existing procurement framework is the proposed introduction of a debarment regime. The Bill provides for the suspension and debarment of suppliers by the Department responsible for the administration of the Act. We anticipate suppliers may be debarred for specific offences, such as fraud, corruption and industrial relations (including, potentially, occupational health and safety offences). The offences leading to debarment are to be set out in regulations.

If a supplier is suspended, the Department will not be required to give notice to the supplier or provide the supplier with an opportunity to show cause as to why it should not be suspended. However, in circumstances of the proposed debarment of a supplier, suppliers will be notified and provided with an opportunity to show cause. Suppliers will be able to seek a review of decisions made in relation to suspension and debarment through the State Administrative Tribunal. It is expected that further detail on the debarment regime will be prescribed in the regulations to the Bill.

Debarring will not affect contracts already entered into, however, the Bill does provide a right to termination in the event of debarment, allowing State agencies to terminate following debarment. Notably, this right to terminate may be contracted out of by the State agency.

On 9 June, the Government announced that it was seeking stakeholders' views on the proposed debarment regime. Interested parties are encouraged to make a submission to the Department of Finance by 27 July 2020. We anticipate that these submissions will inform the progress of the debarment regime through the Legislative Council.

Procurement Directions

The Bill includes a power for the Minister responsible for the Act to issue Procurement Directions, which will enable procurement policies to be applied consistently across all State agencies, while also allowing the flexibility to provide for the unique needs of specific agencies or types of procurement. Under the Bill, general Procurement Directions may deal with issues such as:

• setting whole-of-government rules and policies;
• dealing with the method and coordination of procurement;
• providing a role for the Department responsible the administration of the Act to undertake procurement on behalf of State agencies; and
• investigating and handling procurement complaints .

In relation to agency specific procurement directions, the Minister responsible for the Act may issue directions to a particular State agency:

• varying the way in which a general procurement direction applies to a State agency, including by modifying, supplementing or excluding any obligations under a general procurement direction;
• imposing additional obligations on a State agency in connection to its procurement activities; and
• providing that the Department responsible for the administration of the Act undertakes a greater or lesser role in undertaking procurement activities for that particular State agency.
• Where general and agency specific procurement directions conflict or are inconsistent, the Bill provides that the agency specific directions will prevail to the extent of such inconsistency.

Coordination of procurement arrangements

A limitation of the current regime that operates under the State Supply Commission Act 1991 is that the framework prevents agencies other than the State agency establishing a particular procurement arrangement, from readily using that same arrangement. Part 5 of the Bill addresses this issue by making provision for common use contractual arrangements and cooperative arrangements. Sections 25-27 of the Bill will give State agencies flexibility in coordinating procurement across different agencies. Any cooperative arrangements must be approved by the Department CEO responsible for the administration of the Act and will allow State agencies to:

• enter into a cooperative arrangement with another State agency or an authorised body under which one of them uses an arrangement with suppliers established by the other to procure particular types of goods, services or works; and
• enter into cooperative arrangements with other State agencies or authorised bodies under which goods, services or works are procured by one of them on behalf of the others.

Note: The meaning of 'authorised body' is set out in s 6(1) of the Bill as an entity specified in the Procurement Directions. It is therefore not clear at this stage what entities will be deemed 'authorised bodies'.

What you need to know

Public sector

Once the Bill is passed, be aware of your obligations under the Procurement Act and the WA Jobs Act, such as:

• adhering to procurement directions issued by the Minister relating to procurement, including any agency specific procurement directions;
• assisting with investigation and audit relating to procurement as required by the Department responsible for the administration of the Act, in accordance with Part 6 of the Bill;
• adhering to the requirement of obtaining, assessing and considering participation plans from prospective suppliers in the course of procurement (this is an existing obligation under the WA Jobs Act); and
• being aware of the proposed debarment regime and a State agency's right to terminate contracts for debarment, subject to an express provision in the relevant contract.

Private sector

Prospective suppliers under the WA Jobs Act must ensure that they observe the requirement to submit in writing a participation plan outlining their commitments to the Strategy in the course of the procurement process.

Be aware of the proposed debarment regime in the supply of goods, services or works to State agencies. Grounds for debarment include debarment as a result of the conduct of the supplier, the supplier's affiliation with a debarred supplier or failure of the supplier to comply with Part 7 of the Procurement Act in relation to investigation of the supplier by the Department responsible for the administration of the Act.

The proposed debarment regime has been introduced to improve the integrity of public sector procurement and enable the State Government to improve business practices in collaboration with suppliers, as well as to exclude suppliers who engage in unsatisfactory conduct. Debarred or suspended suppliers may be subject to the following consequences being:

• prevented from seeking or being awarded contracts or subcontracts with the State, or be an agent or representative of a supplier to the State; and
• terminated and damages not paid and no civil liability incurred by the State because of debarment or suspension or purported debarment or suspension of a supplier. MinterEllison will be following the progress of the Bill closely, along with any regulations introduced (after the Bill has passed).

We recommend clients contact us on the potential impacts of the debarment regime to your business and risk mitigation in the event of debarment and suspension.