Government buyers, are you up to speed on the new Local Jobs First Policy?

New Policy Overview

All Victorian Government departments and agencies procuring goods, services or construction need to consider the State's revised industry participation framework, the Local Jobs First Policy (Policy).

The Policy harnesses the Victorian Government's purchasing power to support Victorian businesses and workers by requiring certain local content and skills thresholds in procurement projects.  The Policy aims to develop local industries, create job opportunities and boost economic development in Victoria.

The existing Victorian Industry Participation Policy Act 2003 has been amended to the Local Jobs First Act 2003 (Act) which now comprises the Victorian Industry Participation Policy (VIPP) and the Major Projects Skills Guarantee (MPSG).

VIPP

VIPP applies to procurement activities funded by the State government and comes in two forms:

1. Standard Projects are those where the procurement activity meets or exceeds either:
   1.1 $1 million in regional Victoria; or
   1.2 $3 million in metropolitan Melbourne or for state-wide activities.
2. Strategic Projects are those where the procurement activity is valued at $50 million or more, excluding maintenance and operational costs.

The value of a project refers to the total budget allocated over the life of the project and not the value of individual contracts, excluding GST.  Depending on the project, VIPP requires that a percentage of a project's value is comprised of content from Australia or New Zealand (Local Content).

Local Content Requirements 

Standard Projects must have a minimum of 10% Local Content while Strategic Projects must meet Local Content requirements of at least:

• 90% for construction projects;
• 80% for services projects or maintenance projects; and
• 80% for the maintenance or operations phase of a Strategic Project. 

Local Content requirements for other types of Strategic Projects will be set on a case-by case basis, on advice from the Industry Capability Network (ICN).

The ICN is a not-for-profit organisation funded by the Victorian Government and can assist parties in sourcing goods and services in local markets ('contestable goods or services').

Non-Contestable Goods or Services

If a good or service cannot be procured locally it is deemed non-contestable.  The cost of non-contestable goods or services may be subtracted from the Local Content requirement of a project.

MPSG

MPSG is a mandatory requirement for Victorian Government departments and agencies funding building, construction, infrastructure, civil engineering or other capital works contracts totalling $20 million or over (inclusive of GST).

MPSG requires a minimum 10% of the total labour hours for a project be performed by either Victorian apprentices, trainees or cadets, or from any combination from these groups.

The total labour hours of a project is calculated using formulas proscribed in the MPSG Guidelines published by Jobs Victoria.  Using the total cost of a project (inclusive of GST) a contractor can determine the amount of labour hours of the project in order to set a specific MPSG.

Tender Process

For projects covered by the Policy, bidders will be required to submit a Local Industry Development Plan (LIDP) for approval by ICN.

An LIDP must detail how a bidder will achieve Local Content and MPSG requirements and assists Government buyers to determine which bidder to award a contract to.

Reporting and Compliance

There are mandatory reporting and compliance requirements for any project covered by the Policy which must be included in procurement contracts.  Model clauses for reporting and compliance, (among other relevant clauses) will be released shortly.

A contractor's failure to comply with VIPP or MPSG requirements will constitute a breach of contract.  All breaches are reported to the Department Economic Development, Jobs Transport and Resources.  Non-compliance with VIPP or MPSG will be considered in any assessment or review of that contractor’s eligibility to tender for Victorian Government contracts in the future.

How we can help -further information

We provide responsive legal services exclusively for the Victorian Government and public sector and our team has extensive experience advising government buyers in a wide range of contexts.

We speak your language, share your values, and we understand the policy and accountability frameworks in which you operate.  Our ability to understand the complexities of government means we provide tailored and independent advice to help you serve the State of Victoria.

For responsive advice on procurement and the new Local Jobs First Policy please contact our team who have a long history of advising the Victorian Public Sector and are best placed to help you find strategic and practical solutions.

Please contact :

Rebecca Radford
Managing Principal Solicitor
9947 1403

Brendan McIntyre
Principal Solicitor
9947 1435

Benjamin Lunardi
Solicitor
9947 1440