State Governments spend billions of dollars each year on goods, services and capital works. As government procurement is undertaken on behalf of the community, it is regulated to ensure decisions made deliver the best value for money for the taxpayer's dollar. Find out how to respond to a tender the right way - by highlighting the benefits of dealing with local suppliers.
1. Value for Money
The first principle of government procurement is to drive value for money. However, the lowest price is not the only indicator of value, evaluation criteria considers cost factors (up-front price, whole-of-life costs, transaction costs associated with acquisition, use, holding, maintenance and disposal) and non-cost factors (fitness for purpose, quality, delivery, service, support and sustainability impacts).
When subcontracting to local suppliers, value for money can be demonstrated in:
wider benefits to the State (support for local industry, regional development, job creation)
advantages of dealing with local and regional Australian businesses (reduced mob/demob costs, no accommodation costs, supplier knowledge e.g fuel supply, water supply, material supply, closest quarries and dump sites).
benefits of maintaining an ongoing, innovative and competitive local business environment (keeps local dollars in economy, encourages other to live and work in the community, increases support and diversity, boosts confidence and encourages investment)
2. Supply Chain
A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. Knowing where your company fits in the tier barometer allows you to immediately identify your customer base. The government looks to see you understand the mechanisms of the supply chain - they want reassurance that you have a comprehensive knowledge of who will contract businesses like you and in turn, who you can subcontract to.
A Queensland Government example of a working supply chain.
Demonstrating that you continually review your standards and subcontractors to support local industry participation is very important in major project supply chains. A strong collaboration between you and local businesses can demonstrate good communication, effective reporting, relationship management and innovation to solve problems.
The head of the supply chain wants to know they are working with firms that are committed to ‘going the extra mile’ to deliver better value for money. For example, a schedule of subcontractors that includes multiple options demonstrates effective risk management as local suppliers are better equipped to quickly resolve machinery breakdowns and other onsite issues.
3. Local preference policies
For this reason, many tender opportunities contain a local weighting score that considers your ability to give local businesses full, fair and reasonable opportunities.
All Australian states have policies or charters that commit to the ongoing development of the State in terms of economic growth and supporting regions. Therefore, accommodating any local preference policy by contracting small, local and regional businesses is a key mechanism to support this government initiative.
To help you out, we've created a free eBook (below) which outlines the 3 evalution methods used by government officers to award contracts.