VPS construction procurement rules updated

By Phillip Weiss and Pauline Bernard

The Instructions for Public Construction Procurement in Victoria have been updated, with most monetary thresholds significantly increased. In this blog, we summarise the key changes and their broader implications for procurement activities.

The Ministerial Directions for Public Construction Procurement in Victoria (Directions) and the accompanying Instructions came into force on 1 July 2018. For the first time since their implementation, the monetary thresholds have been raised, with most seeing a 50% increase. These changes took effect on 1 September 2024.

The amendments apply to the Instructions, which are mandatory for Victorian government departments and many agencies, as well as the Guidance, which remains non-mandatory.

The Department of Treasury and Finance (DTF) and Buying for Victoria websites have been updated to reflect these changes, with corresponding adjustments made to affected contracts and Request for Tender templates.

Please note that all dollar amounts mentioned in this blog include GST, except for references to the Fair Jobs Code (FJC), which are GST exclusive.

The Directions outline three types of tendering processes: open, limited and selective. Limited and Selective Tenders are subject to specific monetary thresholds as detailed in the Instructions.

Key changes include:

• The threshold for a single quote Limited Tender has been increased from $50,000 to $75,000.
• For amounts above $75,000, three written quotes must generally be sought. In Limited Tenders, these quotes can be from any tenderers, including those not pre-qualified on an approved register, such as the Construction Supplier Register (CSR).
• For Selective Tenders, at least three pre-qualified tenderers from an approved Register must be invited to participate.
• The upper threshold for Limited Tenders for Construction Services has increased from $200,000 to $300,000, and for Works, from $500,000 to $750,000. Above those amounts, either an open or Selective Tender process is required.

Thresholds for certain mandatory criteria have also been increased:

• The occupational health and safety management criterion now applies to contracts valued at $300,000 or more for Construction Services (previously $200,000) and $750,000 or more for Works (previously $500,000).
• The threshold for the industrial relations management criterion has increased from $500,000 to $750,000 for Works. This criterion also applies to Construction Services when the FJC applies.

From 1 September 2024, the FJC threshold for Works and Construction Services was reduced from $3 million to $1 million.

A significant change has also been made regarding subcontractor requirements. Previously, subcontractors were required to hold an FJC Pre-Assessment Certificate only if their proposed subcontract was valued at $10 million or more under a head contract valued at $20 million or more. This has been revised so that a subcontractor must now hold an FJC Pre-Assessment Certificate if the subcontract is likely to be $1 million or more, regardless of the head contract value. All FJC-related thresholds amounts are GST exclusive.

Additionally, departments and agencies were previously required to use contracts approved by DTF unless the contract value is less than $15,000. This threshold has now been raised to $25,000, allowing for alternative forms of contracts below this amount. ??

Performance reporting thresholds have also been updated in line with the new upper limit for Limited Tenders. For Works, performance reporting is required for contracts valued at $750,000 or more. For Construction Services, it applies to contracts valued at $300,000 or more.

The increase in threshold amounts is significant. Victorian Government departments and agencies should review their templates and guidelines to ensure the new amounts are correctly reflected.

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A participant in the UN Global Compact, CourtHeath seeks to raise awareness about the sustainable development goals and the principles of the Global Compact with business and government organisations in Victoria. The elimination of all forms of discrimination in respect to employment and occupation is Principle 6 of the Global Compact. The Global Compact repudiates labour discrimination internationally.

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