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Methods of tendering

All tendering procedures shall conform to the the Project Development and Construction Management Act 1994 (the Act) and regulations issued pursuant to including:

  • Ministerial Direction No. 1 Tendering Provisions for Public Construction (MD1) - effective from 1 July 2008
  • Ministerial Direction No. 2 Contractual Provisions for Public Construction (MD2) - effective from 1 December 1996
  • Ministerial Direction No. 3 Bushfire Preparedness for Public Construction (MD3) - effective from 1 February 2010
  • associated guides and practice notes, published from time to time.

The main methods of tendering are:

  1. Two stage selective tender (also termed public sought expression of interest followed by request for tender).
  2. Tendering by invitation (using the government pre-qualified register to identify short list of tenderers).

Other tendering methods which may apply include:

  1. public tendering
  2. single written tender or three tender submissions for low value work in accord with MD1 and MD2
  3. certificate of exemption - signed by the Minister or accountable officer (Secretary, Department of Health) certifying that special circumstances apply.

The decision of appropriate procurement method will have been ratified by the department following a comprehensive assessment of alternatives. Those likely include lump sum, construction management, design and construct, schedule of rates, public private partnerships and other viable procurement methods where the advantages and disadvantages of each procurement method recommended by the professional team for endorsement by the PCG and approval by the Department of Health and Human Services.

Selective tendering

Selective tendering is the most commonly used tender method for the Department of Health and Human Services capital works projects. It is a two stage tender process commencing with advertisements called expression of interest (EOI) being placed on government website, in a major metropolitan newspaper, and / or local paper for rural projects, inviting tenderers to register their interest in tendering for the project. The advertisement should indicate the selection criteria applicable to the project and state that a shortlist will be made from those registering.

Registrants are evaluated and a short-list of tenderers is identified by a selection panel (SP) normally comprised of consultants and members of the project control group (PCG).

The short list is submitted to the department for approval. The short listed tenderers will be subject to risk and financial assessments, which has an influence on the level of security to be incorporated into the tender documents. For projects greater than $5M it is expected that the financial assessment of the short listed tenderers will be undertaken by a suitable independent financial advisor.

The level of security in the form of a Bank Guarantee set out in the tender documents is to be set in accordance with the risk assessment by the financial advisor.

A request for tenders (RFT) consisting of detailed tender documents is then issued to short listed tenderers in the second stage of the process. The number of tenderers in this situation is usually between three and six. The SP may interview some or all tenderers.

When tendering for construction contractors on lump sum projects from a prequalified panel, it is usual to accept the lowest conforming tender. It is expected that the pre-selection process should have eliminated any cause for rejection of a tenderer on grounds such as capability, experience, quality of service and financial viability. However, there are occasions when this does not occur, e.g. failure to comply with tender requirements (if omissions, non-conformity or any obvious mistake has been made) or there are other criteria not covered by the pre-selection process such as value for money, time to complete works or quality requirements.

This method of tendering is the most suitable for the department's capital works projects that are fully documented.

Public tender

Public tendering is a system by which an invitation to tender is advertised in the press and on the Victorian Government Purchasing Board - Tenders VIC web site.

Builders / contractors are asked to apply for tender documents or are able to download them from the tenders' site.

All applicants registering interest to tender will be issued with tender documents.

This method of tendering may be deemed suitable for small (less than $1M), non-complex and / or remote area projects where it is difficult to obtain contestable tenders.

Tender by invitation

Under this system of tendering, a number of contractors are chosen from a whole of government or agency specific register of pre-qualified contractors, such as the Construction Supplier Register (CSR), or an approved agency register that complies with government guidelines.

The tenderers selected for invitation are approved by the SP nominated by the PCG, having regard to the acceptability and capability of the tenderers to satisfactorily carry out the project.

The tenderers chosen are invited to tender for the project and tender documents are issued to them in the normal manner.

Under ‘Tender by Invitation', except if any omissions or obvious mistake has been made, it is usual to accept the lowest conforming tender, as the pre-selection process should have eliminated any cause for rejection of a tenderer on any other grounds.

This method of tendering is suitable for projects where there is a need to expedite the process, for remote regional works, for construction management type projects, where special expertise is required or where there may be a number of ongoing, linked, small, individual projects.