Further boost for business participation
South Australian businesses have an opportunity to secure even greater work on three major infrastructure projects following a recommendation by the Industry Participation Advocate to boost the participation rate from 10 per cent to 15 per cent.
Industry Participation Advocate Ian Nightingale says the recommendation concerning the Torrens to Torrens Upgrade, the O-Bahn City Access project, and the Darlington Upgrade has been accepted by the Department of Planning, Transport and Infrastructure.
While Nightingale says the value of that increased participation cannot be quantified at this stage because contracts have not been awarded, he says the boost to local firms will be “substantial”.
In an interview with Business Insight, Nightingale said the economic benefits of local engagement went far beyond the major projects themselves with employment and the supply of goods occurring on an ongoing basis down the supply chain.
The State Government revamped its industry participation regime last year with major changes including:
- Lowering the threshold for industry participation from the previous $10 million for metropolitan Adelaide projects to $4 million and from $3 million to $1 million for regional projects.
- Lifting the weighting for business involvement in industry participation plans from the previous 2 per cent to a minimum 10 per cent in four sectors – heavy and civil engineering construction;, professional, scientific and technical services;, non-residential building construction, and electrical equipment manufacturing.
- Setting a minimum weighting for projects between $220,000 and the metropolitan and regional thresholds of 5 per cent.
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After a six month trial to December, in which the processes supporting the new regime were tested and fine-tuned, the Industry Participation Policy came into effect on 1 January.
Nightingale says the new policy settings take State Government purchasing – estimated at $6 billion a year including goods, services and capital spending – down a very different path.
He said the new arrangements are not looking at giving ‘preference’ to South Australian companies and, in a global market, it is increasingly difficult to determine what is ‘local content’.
“So we are saying that if companies or businesses that are genuinely based in the State – and they could be international – are employing South Australians, are investing in the State through capital investment, and using suppliers and inputs from the State, then we can measure the economic contribution that that business makes,” Nightingale said.
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“It is the economic benefit that we are measuring. We are not trying to identify and preference a home grown South Australian business because that is too hard.”
The new policy settings have been supported by an extensive communications and awareness campaign including information workshops and ‘meet the buyer’ sessions that Nightingale likens to ‘speed dating’ with potential suppliers pitching their wares and expertise to major government agencies.
Nightingale says the feedback from the sessions has been “exceptional’ with businesses much more aware of the potential of Government work and how they might prepare quotes and participate in tenders.
He said the ‘Tender Ready’ document produced by Business SA had also been very effective and is being used by the Office of Industry Advocate in conjunction with the information sessions.
While the policy settings have created new potential for companies to secure Government work, Nightingale said several associated initiatives had reduced costs and paperwork for interested businesses.
A previous requirement for companies to pre-qualify for tenders separately with each different government agency has been replaced with a one-stop-shop pre-qualification that applies to all agencies.
The Government has also changed the liability arrangements in relation to so-called ‘low risk contacts’. Previously such contracts imposed ‘unlimited liability’ on the companies involved but companies now only need to insure for up to a $5 million liability for contracts valued up to $1 million.
Elements of accountability have been introduced into the new regime on several levels. The Office of the Industry Advocate is able to follow up and ensure that contracts have delivered the benefits contained in the Industry Participation Plans – which are backed by statutory declarations. Also, the chief executives of Government departments have to report to the Industry Participation Advocate on the implementation of the new policy.
Nightingale said the new Industry Participation Policy had changed the culture of government purchasing but acknowledged that, as with any substantial change, “it takes a while for people to get on board and to understand and adopt it’.”
He said part of the State Government’s motivation was to drive confidence through the new regime.
“If you can increase confidence through continuity of work, hopefully the private sector is then able to pick up that work at different times. It’s an important part of keeping the economy ticking over,” Nightingale said.
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