The Northern Territory Government is changing the way it evaluates tenders.
From October 2011, key changes include a number of procurement features in line with the Territory 2030 commitment to improving the government procurement process.
Procurement reforms will streamline and simplify the tendering process and increase the transparency and quality of the government tender evaluation methods.
The reforms will protect and maintain local development and value adding (LDVA) during evaluation.
These initiatives will apply across all forms of government procurement including construction, goods, services and consultancies.
| Treatment of Price |
The Territory Government has historically used a comparative price ratio to adjust non-price elements (such as past performance or timeliness) to derive an overall assessment score.
Generally the result is a price weighting of 20%, which can be disproportionately low for many procurement needs, particularly commodity items such as tissue paper and other goods. |
Publish and declare an explicit weighting for price when issuing a Government Request for Tender to more appropriately reflect its significance in the tender assessment.
Price weighting would therefore be tailored to specific needs, for example, for the purchase of tissue paper an 80% weighting might be appropriate where as for routine construction, a 50% weighting on price would be more appropriate. |
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| Local Development and Value Adding (LDVA) |
Local Development and Value Adding is given a minimum mandatory weighting of 20% of the non-price score, which results in a minimum effective weighting of 16% in most assessments. |
Protect and maintain Local Development and Value Adding at a minimum of 16% to avoid any dilution of its significance. |
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Explicit Weighting on Price - Frequently Asked Questions
I have heard that tenders will be assessed only on price in future - is that correct?
No. The Northern Territory Government will continue to look for best value for money in all tender assessments. This means that price and the usual other (non-price) criteria, such as timeliness, past performance and local development and value adding (LDVA) will still be considered in tender assessment, according to the weightings allocated to them.
What does ‘Explicit Weighting on Price’ actually mean?
In the current system, price is considered but is not given an explicit weighting. In the new system, agencies will be able to nominate a weighting on price, between 10 and 80%, just as they now nominate weightings on the other (non-price) criteria, and tenderers will be able to see the relative weightings across the price and non-price criteria and prepare their offer accordingly.
Will the weighting on LDVA be reduced by this process?
No. In the current system, where price is not given an explicit weighting, LDVA is mandated to be a minimum of 20% of the total of the non-price weightings. Price is given an ‘implicit’ or ‘effective’ weighting of around 20% by the calculation process used. This means that LDVA receives an effective weighting of 20% of 80%, or 16%, because of the process used. The new system will protect this effective weighting of 16% in order to ensure this important criterion is not diluted by the introduction of price as a weighted criterion in the new process.
Does the new system only apply to construction tenders?
No. The new system will apply to tenders across construction, goods, services and consultancies.
At what financial levels will the new system apply?
The new system will apply for tenders at Tier 3 and above (from $50 000) upwards. The present system already requires price to be given a ‘significant’ weighting in Tier 1 and Tier 2 tenders (those below $50 000) and this will not change.
Where can I obtain more information about the new system?
If your query relates to the general operation of the new system, please contact Procurement Policy Unit at the Department of Business and Employment on (08) 8999 1410, or procurementpolicy@nt.gov.au
If your query relates to a particular tender that is out to market, please contact the nominated Contact Officer in the agency managing the tender.
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