State Labor moves put focus on local business

COMPANIES hoping to win big contracts from the Western Australian Government are now required to prepare Australian Industry Participation (AIP) plans.

This is one of several initiatives adopted by the Gallop Government to maximise local content.

The $437 million railcar contract for the Mandurah railway was the first major State Government contract that required the successful tenderer to fulfil local content obligations under an AIP plan.

“In future, such local content commitments will be mandatory for companies hoping to win major government contracts,” Development Minister Clive Brown said.

This would include the proposed privately built power stations in Kwinana, the South West and the Kimberley.

As well as seeking to maximise local content on big projects, the State Government has a ‘buy local’ policy that applies to all contracts worth $750,000 or more.

A revised buy local policy, introduced last July, included several notable changes.

The local purchasing target was increased from a minimum of 70 per cent to 80 per cent.

Where imported content is included in a bid, an impost of 20 per cent (previously 10 per cent) is added to the price for evaluation purposes.

This means local content can be 20 per cent more expensive yet still compete on price. Local content was given a mandatory minimum weighting of 20 per cent in the qualitative criteria used to evaluate competing bids.

The policy was extended to include the leasing, hiring and disposal of government assets.

It also included new compliance requirements to deal with contractors who agreed during the initial tender process to buy local but then tried to bypass local businesses.

A local content unit has been established in the Department of Industry and Resources to help other agencies implement the buy local policy.

State Government policies have had a significant impact on its $300 million of annual purchases of IT and communications equipment.

A new tendering processing, dubbed SPIRIT, has been introduced to improve access to government contracting for small and medium-sized IT suppliers.

A significant change to the tendering process was to reduce the size and scope of contracts, so that smaller local vendors were able to compete effectively.

“During the term of the previous government, we witnessed the aggregation of government work into large contracts beyond the capacity of small business,” Mr Brown said. 

“We are committed to reversing this trend by ensuring small business has every opportunity to obtain government work.”

The most contentious proposal was the WA-MAID (Western Australian Major Alliances for Industry Development) program.

This would require ICT companies that accrued more than $5 million in sales to government agencies to undertake a range of activities – such as R&D, technology transfers or alliances with local start-up firms – to help develop the local ICT industry.

This program, originally announced on July1 last year, has been put on ice while the Government consults with industry.