Fires and floods: NSW local government procurement powers in times of crisis

As the State tackles the impacts of the recent fires, the NSW Government has amended local government procurement regulation to provide councils with additional tendering powers.

Local governments and service providers alike should be aware of the changes below.

The new procurement regulation

The Local Government (General) Amendment (Tendering) Regulation 2020 commenced on 24 January 2020. The amendment has increased the tendering exemption threshold for contracts for bushfire recovery and operations. This will provide local governments with additional powers to assist with the recovery and remediation works of the recent bushfires.

Ordinarily, section 55 of the Local Government Act 1993 (NSW) requires councils to invite tenders for services before entering into a wide range of contracts, with an exemption for contracts involving an estimated expenditure of less than $250,000.

However, in order to allow councils to respond to the damage sustained in their local government area quickly and efficiently, the amendment has expanded this exception to include contracts where:

• the primary contract purpose is for bushfire response and recovery;
• the expenditure amount is less than $500,000; and
• the contracts are entered into between 17 January 2020 and 1 July 2020.

Impact for NSW local governments

This amendment will reduce red tape and allow affected councils to undertake urgent bushfire protection, recovery and remediation works and services. By increasing the expenditure threshold for bushfire related tendering, councils will be able to respond quickly and more cost-effectively, as the tendering process can take up a significant amount of time and resources. This is particularly evident where councils affected by the fires are finding themselves in short supply of both of these.

It is important to note that no guidelines have been released as to what constitutes "bushfire response and recovery", so councils should seriously consider the primary purpose of the services and goods being sought, or seek advice to ensure their contracts will be compliant if they are uncertain.

Councils should also pay particular attention to the 1 July 2020 time limit, to allow themselves enough time to assess damage and plan for recovery efforts, where they intend to use these provisions.

Impact for service providers

Given that councils will not have to tender as per the usual process, there will be no mandatory 21 day advertising period for works associated with bushfire response and recovery. Therefore, service providers should remain in contact with local governments to be sure to remain updated as to any opportunities.

What about the recent storms, floods and other crises?

More generally, section 55(3) of the Act outlines the types of contracts that are exempt from the tendering process. This includes contracts made in a case of emergency or in extenuating circumstances.

These terms could apply to the recent fires, floods and storms that have ravaged NSW in recent months, with consideration of the following factors:

• In the case of extenuating circumstances, the council must decide by resolution that a satisfactory result would not be achieved by inviting tenders.
• In regards to a case of emergency, councils should consider the time period after the emergency in which the exception could be extended to apply. As there are no guidelines, councils will need to consider this carefully.
• In regards to both exceptions, the Tendering Guidelines for NSW Local Government outlines that they should only be used as exemptions to the tendering requirements after careful consideration and with the reasons clearly documented.

Further, given that neither case of emergency or extenuating circumstances are defined in the Act, it is suggested that these exemptions are used with careful consideration, as cases involving the alleged misuse of these terms have ended up in front of the Courts.

For more information on local government procurement powers, please contact Nikki Robinson.