Procurement and Local Industry Participation Policy (Victorian Industry Participation Policy - VIPP)
Context
Government expenditure is a significant contributor to economic activity which has flow on benefits from the level of involvement by local suppliers.
The involvement of local suppliers in winning government business may not only provide a platform to support local employment but can also support innovation in the form of skills formation and development and the introduction of new technologies. This in turn can lead to local suppliers gaining a competitive edge in local and international markets.
The Victorian Industry Participation Policy (VIPP) has been an integral part of Victorian Government procurement since its inception in 2001. The VIPP was introduced to ensure that public sector agencies and tenderers systematically consider local supply and employment opportunities in major public sector procurement and projects.
Amendments to VIPP
Following a review of the Policy in 2008, changes to the VIPP were announced by the Government and have effect from 1 July 2009.
Under the amended VIPP, the scope of application and key criteria remain unchanged in that the VIPP applies to procurement where government funding exceeds $3 million in metropolitan areas and $1 million in regional areas. The criteria to be applied in assessing VIPP commitments by shortlisted bidders retains all the existing factors:
| VIPP Criteria |  |
| Local Value – added Activity | The level of Victorian, Australian and New Zealand value added activity. |
| Employment created or retained | The extent of employment opportunities that will be created or retained in Victoria, Australia and New Zealand as a result of the contract. |
| Training, Skills development and technology Transfer | The opportunities for increasing training and skills development of Victorians, Australians and New Zealanders and any technology transfer that will result from innovation, research and development of technology from the contract. |
| Apprentices/trainees created and existing positions to be utilised on the contract | The number of apprentice/trainee positions that will be created in Australia and New Zealand and existing apprentices/trainees utilised as a result of the contract. |
From 1 July 2009, the application of VIPP in procurement processes is as follows:
- The VIPP commitments by shortlisted tenderers will be a primary selection criterion as part of tender selection.
- The VIPP commitments by tenderers will be contained in a single document – the VIPP Plan – which incorporates the commitments related to the above VIPP criteria and an implementation plan for delivery on these commitments
- Plans prepared by shortlisted tenderers will be subject to certification by the Industry Capability Network Victoria (ICN Vic.)
- ICN Vic. certification will be required for any reduction to VIPP commitments that may occur as a result of post tender negotiations.
This VGPB policy is hyperlinked to the VIPP policy and associated templates and tools developed by DBI and ICN Vic.
Key Requirements
1. Value for money and the consideration of VIPP
Value for money will remain the primary consideration in government procurement decisions which should include consideration of VIPP commitments where relevant. The achievement of a value for money outcome demonstrates a procurement that is fit for purpose and considered whole of life costs.
2. Application of the VIPP policy
The VIPP policy applies to procurement where government funding exceeds $3 million in metropolitan areas and $1 million in regional areas. Tender documents are to note that a VIPP Plan is to be prepared by shortlisted tenderers when requested and where the estimated project value exceeds the thresholds noted. Failure to submit a VIPP plan will result in the disqualification of the tenderer from the tender process.
3. VIPP as a consideration in the tender evaluation process
The consideration of VIPP commitments is to be a primary (unweighted) selection criterion in the evaluation of shortlisted tenderers. ICN Vic. will prepare a comparative assessment of tenderers’ VIPP Plans to assist evaluation panel members in the selection of a preferred tenderer(s).
If, after evaluation of all criteria, including the VIPP commitments, two or more tenderers are rated equally by the evaluation panel, VIPP shall be used as a tiebreaker with the preferred tenderer being the one demonstrating superior VIPP commitments.
4. Post tender negotiations and amended VIPP commitments
Any reduction of a preferred tenderer’s VIPP commitments as a result of post tender negotiations or during the term of the contract are subject to further ICN Vic. assessment and certification. A change in the external operating environment prior to or during the contract period could be grounds to take into account in the reassessment of a tenderers’ genuine commitment to comply with the VIPP requirement. A decision on the merits of the tenderer’s case for a review should reflect the outcome of a consultative process between the tendering party and the ICN Vic.
5. VIPP as a condition of contract
The VIPP commitments of the preferred tenderer must be incorporated into the contract as a reportable performance requirement. A failure to adhere to the contract VIPP performance requirement will lead to a breach of contract unless corrective action is taken. Any evidence of non-compliance with the VIPP performance requirement should be brought to the attention of the ICN as soon as possible to assist in the implementation of action to address the issue.
6. VIPP post contract certification
Contractors subject to the application of the VIPP policy are required to submit a post contract report on the achievement of their VIPP commitments. This report must be certified by ICN Vic.
Other Requirements
7. Application of standard templates and tools
Entities are to apply and use the VIPP related template and tools available from the DBI or ICN websites:www.dbi.vic.gov.au
8. Notification of potential projects of strategic significance
Entities are to inform DBI of any upcoming projects estimated to cost more than $100 million based on capital costs or $250 million based on whole of life costs. DBI and the ICN will conduct a Strategic Project Evaluation and identify additional project requirements. This assessment process must be conducted prior to any RFT being issued.
9. Additional VIPP requirements for projects of strategic significance
A declared strategic project will be subject to additional local content requirements to help drive additional economic activity and jobs. In particular, projects of strategic significance will be subject to a requirement that a minimum percentage of the procurement value (on a whole-of-life basis) is comprised of local content.
Projects of strategic significance will be subject to the normal provisions of VIPP in tender evaluation and contract negotiation and reporting. However, having regard for the scale and complexity of such projects, it is expected that the VIPP Plans prepared by tenderers for projects of State significance will take the form of detailed Local Industry Development Plans.
These additional VIPP requirements must be notified in all relevant tender documentation.
Note:
The following flow charts indicate the sequence of DBI and ICN involvement in the tender process.
Flowchart A: Application of VIPP in standard procurement activities flowchart (30 KB PDF)
Flowchart B: Application of VIPP in Strategic Project flowchart (80 KB PDF)
Related VGPB Policy and DTF Guidelines
DBI guidelines for buyers and suppliers are available from http://www.dbi.vic.gov.au
Related DTF Templates and Forms
Nil
Links to relevant Policy websites
http://www.dbi.vic.gov.au/projects-and-inititatives/victorian-industry-participation-policy
Incorporating:
- New VIPP Guidelines for Bidders (2007-2008)
- New VIPP Guidelines for Government Agencies (2007-2008)
- VIPP Reporting Templates
Version Control Information
Version Number | 3 |
Release Date | September 2010 |
Further Information | Strategy and Policy, Government Services Division, Department of Treasury and Finance |
Phone | (+613) 868 32944 |
| vgpb@dtf.vic.gov.au |
