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

8 things you need to know now about changes to the Aboriginal Heritage Act 2006

The regime which regulates and protects Aboriginal heritage in Victoria is about to undergo a significant change. The Aboriginal Heritage Amendment Bill 2015, which was passed by parliament on 22 March 2016, introduces a suite of substantive and administrative changes to the Aboriginal Heritage Act 2006.

The general scheme of the Act remains in place. The Act will continue to provide a regime by which Aboriginal heritage may not be harmed, other than in accordance with cultural heritage management plans, particular types of agreements or permits granted under the Act (or other exception). The key bodies created or appointed under the Act, being the Victorian Aboriginal Heritage Council and Registered Aboriginal Parties (or RAPs), remain (albeit subject to some new rules and altered roles). The Victorian Aboriginal Heritage Register also remains, but is given some new work to do.

Within that same general scheme, the Amending Act makes significant changes to existing features and introduces some wholly new ones. We highlight just some of these changes, which may be of particular relevance to Victorian Government departments and agencies.
Who to apply to for a cultural heritage permit

The Bill provides that where there is a RAP for an area, applications for cultural heritage permits must be made to the RAP for the RAP to consider and determine. The Secretary to DPC remains responsible where there is no RAP for an area.

New agreements for managing public land

Public land managers will be able to use a new mechanism for managing Aboriginal cultural heritage, called Aboriginal cultural heritage land management agreements. The new agreements are intended to remove the need for public land managers to apply for a cultural heritage permit each time they wish to undertake low impact works which are likely to affect Aboriginal cultural heritage.
The agreements may be made between RAPs and public land managers. Public land managers include a committee of management, the Secretary of DELWP, Parks Victoria, VicRoads, VicTrack, a water authority or a local council. The agreements are only available where a cultural heritage management plan is not required.

When to execute a cultural heritage management plan

The Amending Act allows a person proposing an activity to prepare a preliminary Aboriginal heritage test to determine whether the activity requires a cultural heritage management plan. The test can be submitted to the Secretary, who must then certify the test or refuse to do so.

New rules for access to the Register

The Victorian Aboriginal Heritage Register is the repository of all known Aboriginal places and objects, as well as the repository of details of agreements made and other matters. Access to the Register is restricted to specified persons for specified purposes.
The Amending Act specifies that additional people may access the Register, including public servants responsible for planning permits and planning scheme amendments. At the same time, access to sensitive information will be more closely held, and it will be an offence to use information obtained from the Register for an unauthorised purpose. Finally, Traditional Owners, through RAPs and the Council, will be able to nominate particular information held on the Register to be classed as sensitive and subject to extra protection.

New regime for protecting cultural knowledge 

The Amending Act creates a new category of heritage called 'Aboriginal intangible heritage'. 'Aboriginal intangible heritage' includes any knowledge of Aboriginal tradition, other than cultural heritage or knowledge which is already widely known to the public. Aboriginal intangible heritage needs to be recorded on the Register to be protected.
In simplified terms, it will be an offence for Aboriginal intangible heritage to be used for commercial purposes without the agreement of the appropriate registered Aboriginal party. It will also be an offence to fail to adhere to any intangible heritage agreement once made (but intangible heritage will generally be excluded from the other offence provisions).

New Enforcement Powers

The Amending Act empowers authorised officers, previously known as inspectors, and Aboriginal heritage officers, who are employees of RAPs appointed by the Minister, to issue a 24-hour stop order to protect Aboriginal heritage from acts that harm it, or are likely to. It is an indictable offence to not comply with the stop order. Authorised officers will also be empowered to issue improvement orders, which require the person to remedy a contravention of the Act.

Altered offences

The Amending Act clarifies and alters the existing offences. It will be an offence to act, or omit to act, in a way that knowingly, recklessly or negligently harms Aboriginal heritage. The Bill also introduces a strict liability offence of harming Aboriginal heritage (which carries a lesser penalty than the offences with a mental element).
It also provides that officers of bodies corporate may be personally liable for acts by the body in prescribed circumstances.  With some exceptions, the new provisions may apply to officers of statutory bodies corporate, so it is important to be aware of these changes.

Aboriginal Ancestral Remains

The Amending Act establishes a new system for managing Aboriginal Ancestral Remains (Aboriginal skeletal material). First, it requires all institutions to report on any remains in their collections to the Victorian Aboriginal Heritage Council within two years of commencement of the Act. This requirement applies to all museums, hospitals and other state agencies and institutions.

Second, the Amending Act requires all remains to be returned to the Council for its management. If the Council, or relevant Traditional Owner, is not able to care for the remains, they are to be deposited at Museum Victoria for safe keeping.

For further information please contact:

Mark Egan
Principal Solicitor
8644 0489

Mary Scalzo
Managing Principal Solicitor
9947 1419

Lease vs Licence - What difference does it make? (Part 2)

Based on the public and personal feedback, our blog topic from September 2015 on the differences between leases and licences certainly seems to have been quite topical.

One reader requested that we provide some more examples for Government practitioners of circumstances where a lease or a licence might be appropriate.  Of course, the particular circumstances of the transaction will determine the form of tenure that is appropriate for the intended use of premises.  With that in mind, we provide some further examples of where a lease or licence might be appropriate for the intended use of the premises.

Lease examples

In short, a lease will be appropriate where the tenant requires exclusive use of land and/or premises for the permitted use.  Where government is the tenant, such uses include delivery of long term projects and services, for example prisons, hospitals and police and court house facilities. 

Where government is the landlord, such uses would include:

• commercial or trading purposes where the operator will undertake a fitout and install furniture, computers, etc;
• sensitive and important community services such as the provision of child care facilities; and
• provision of education services, such as by a TAFE institute.

Licence examples

The granting of exclusive possession and other leasehold rights is not necessary for all land uses.  Common examples of where a licence of land may be appropriate include:

• installation of power line infrastructure by an electricity generation company;
• special event licences for community, cultural or sporting events;
• site investigations for development proposals;
• construction licences or licences for the installation of services and utility infrastructure; and
• cutting or taking away fallen or felled trees for domestic use as firewood.

If you would like further advice regarding land use arrangements and other property issues, the VGSO Property Team is well placed to assist you.  Please contact:

Margaret Marotti
Managing Principal Solicitor
9947 1410
margaret.marotti@vgso.vic.gov.au

Anthony Leggiero
Managing Principal Solicitor
9947 1430
anthony.leggiero@vgso.vic.gov.au

Elizabeth Wortley

Senior Solicitor
9947 1433
elizabeth.wortley@vgso.vic.gov.au

Lease vs Licence - What difference does it make?

The State and its agencies own and manage vast tracts of land in Victoria, much of which offers potential economic or other benefits to the private sector.  For example, the State often makes land and buildings available to a business operator for the purposes of running its business or a community group so it can  hold meetings, workshops and/or training sessions.  Alternatively, the State may wish to make land available for use by the private sector in the furtherance of particular significant policy objectives.

Preliminary considerations

Before deciding on the nature of the tenure which your department or agency should grant over a piece of land, it is important to step back and ask a few questions. For example, you should consider:

·         Who wants to occupy the land and for what purpose?

·         Does the Government want to make the land available to achieve a particular policy objective?

·         Does achieving that purpose require exclusive possession or is a lesser form of tenure sufficient?

·         Does the future tenant need to put up the tenure as security for raising capital so they can finance the project?

·         Will the department or agency or third parties need to access the land while it is occupied?

The answers to these questions will assist with determining which form of tenure you should offer to the prospective occupant and the terms and conditions of that tenure.

When is a lease appropriate?

A lease is an agreement between an owner of land and a tenant which grants a right of exclusive possession to the tenant.  This means the tenant can exclude the whole world, including the landlord, from accessing the land for the term of the lease as long as the tenant complies with its obligations under the lease agreement.  Even if a tenant breaches a condition of the lease and risks 'forfeiting' the lease, a leasehold tenant can apply to the Court for the equitable remedy of relief against forfeiture.  If the tenant is successful, the Court will permit the tenant to remain on the land, subject to prompt rectification of the existing breaches and compliance with other conditions.

The rights under a lease will attach to the leased land - if the tenant assigns the lease to a third party, for example if the tenant sells its business, the third party will also enjoy the same right of exclusive possession of the leased premises. 

Another aspect of a lease is that it is capable of being registered on the title to the land.  Registration of the lease also enables registration of any mortgage granted over the leasehold interest.  So if a tenant has granted a mortgage to a bank as security for money borrowed against the lease and the tenant defaults in its mortgage repayments, the bank will be able to access the important statutory powers applicable to a mortgagee in Part IV of the Transfer of Land Act 1958.  These include a mortgagee's power of sale, the power to take possession of the land and a right to seek an order for foreclosure.  As a result, banks may be more willing to provide finance to a tenant with a registered leasehold interest.

These aspects may make a lease an attractive option to someone who wants to operate a business from the premises and needs to raise investment capital for its start up and who also wants the flexibility of later transferring the leasehold interest, along with the business, to a third party. 

Of course, a downside for a tenant is that a higher commercial value is likely to attach to the lease consistently with the powerful bundle of rights held by a leasehold tenant.

When might you grant a licence?

Like a lease, a licence grants a right to a party to access and occupy land subject to the terms of the licence. 

Unlike a lease, the occupant under a licence does not have the right to exclusive possession of the licensed premises - in other words they may have to share occupation with the licensor and third parties or may only be able to use the licensed area at certain times or days.

Another key difference of a licence to a lease is that the rights of a licensee are not assignable to a third party (unless the agreement specifically permits this).  Additionally, a licence interest cannot be registered on title.

Therefore, a licence is likely to be suitable where an occupant needs specific rights to an area of land, water or airspace, but it is not necessary or appropriate for the occupant to have the right to exclude the rest of the world from the premises.  Examples of where licences are commonly used in Government include granting a right to a telecommunications company to install a mobile telecommunications tower on State owned land and allowing community groups to use school buildings and facilities.

As property law experts within Government, the VGSO Property Team is well placed to assist you with land use arrangements and other property issues.  Please contact:

Anthony Leggiero
Managing Principal Solicitor
9947 1430
anthony.leggiero@vgso.vic.gov.au

Elizabeth Wortley
Senior Solicitor
9947 1433
elizabeth.wortley@vgso.vic.gov.au

Operation Fitzroy - learnings for integrity in procurement practices

Between September 2013 and October 2014, IBAC conducted an extensive investigation into alleged serious corrupt conduct by employees of a government department and statutory authority.

The investigation, dubbed 'Operation Fitzroy', involved 15 current and former public officials and government contractors being called to evidence during a series of public examinations conducted in the County Court of Victoria in mid-2014. These were the first such examinations conducted by IBAC since its establishment in 2012.

The IBAC report identifies a need for the Victorian public sector to learn from the findings of Operation Fitzroy and to strengthen measures to ensure integrity in public procurement.

As another year begins, it is timely for government agencies and departments to reflect on the findings of the IBAC report and consider whether their own existing procurement practices are adequate to safeguard against corruption.

Lessons from Operation Fitzroy

Public sector organisations are entrusted with a significant responsibility for public expenditure. With this comes an obligation to have robust measures in place to ensure integrity in procurement practices.

Solid organisational processes, and a good organisational culture, are cornerstones of good procurement practice.

The IBAC report identified a number of factors as contributing to corruption risks. Ensuring that departments and agencies have robust practices in the following areas will help protect against corrupt conduct and ensure integrity in procurement practices.

1. Contract management. Good contract management practices are essential to managing corruption risks. It is good practice, for example, to continue to monitor projects once a tender process is finished and a contract awarded. Adequate performance monitoring, which continues beyond a tender process, may assist in detecting corrupt practices. Controls over sub-contracting arrangements are also important.
2. Supplier due diligence. Due diligence must be conducted on suppliers who are awarded contracts. This enables departments to investigate any connections between individuals within the department, and companies that are being awarded contracts. There should be controls to ensure that suppliers have the necessary skills, qualifications, financial viability and experience to deliver the required goods and services. This will help ensure that value for money is achieved in government procurement practices.
3. Training and expertise. Government employees with procurement responsibilities must have appropriate training, experience and adequate technical knowledge about the goods or services being procured. There should be ongoing processes for employees and contractors to raise concerns about procurement misconduct and corruption. There should also be ongoing education and training for all relevant employees regarding procurement policies and procedures, as well as associated corruption risks, and mechanisms to engage with suppliers regarding procurement policies and procedures, probity obligations, standards and requirements.
4. Management of conflicts of interest. Departments must ensure that there are appropriate processes in place to manage conflicts of interest. This could include, for example, a register of interests in which department employees regularly record any relevant interests, training for identifying when conflicts of interests occur, and processes for referring contentious or difficult conflict of interest issues to management.
5. Management of procurement staff. Managers of procurement officers must be appropriately trained in managing conflicts of interest and other corruption risks, and have appropriate managerial expertise. This will ensure that procurement staff are adequately supervised, and that staff activities are monitored and checked. It will also mean that red flags, which may indicate that improper or corrupt practices are occurring, are identified and acted upon sooner, rather than later. There must also be accountability of those at management level.
6. Recruitment of management staff. There should be processes for screening prospective employees in potentially high-risk positions relating to finance and procurement, and re-screening regularly for appointed employees.
7. Timeframes for delivery of projects. Tight timeframes and a culture of expediency may create corruption risks related to procurement planning, compliance and scrutiny of decisions. Regarding procurement policies as subservient to delivering significant programs of work as quickly as possible may lead to non-compliant or improper behaviour. The tension between meeting project delivery requirements and complying with procurement policies and processes must be monitored and managed appropriately.

The VGSO has a long-standing practice in public sector integrity, government procurement and public sector governance. We can assist you to ensure that your department or agency is protected against corruption risks, and conducts its procurement activities appropriately. With extensive expertise in public sector integrity processes, we can also provide advice and assistance with respect to department and agency responses to inquiries by bodies such as IBAC.

 For queries relating to any of the issues identified in this blog, please contact:

Julie Freeman
Assistant Victorian Government Solicitor
9947 1404
julie.freeman@vgso.vic.gov.au

Alison O'Brien
Assistant Victorian Government Solicitor
8684 0416
alison.o'brien@vgso.vic.gov.au

Sophia Angelis
Solicitor
sophia.angelis@vgso.vic.gov.au

Handy resources for procurement

• Current Victorian Government Purchasing Board procurement policy framework 
• Victorian Public Sector Commission Good Practice Checklist -Supporting Integrity in Procurement

Running short on time? Seven key principles which guide decisions on planning permit extensions

There are seven key principles that guide Departmental responses to a request for an extension of time of a planning permit.  As outlined below, the Victorian Civil and Administrative Tribunal has recently applied these principles in Hotel Windsor Holdings Pty Ltd  v  Minister for Planning (Red Dot) [2014] VCAT 993.  The proponent of the redevelopment of the Hotel Windsor was refused a planning permit extension beyond 10 January 2015.  The permit allows part demolition of the existing hotel and construction of a new 26 storey tower and north wing extension.  If construction is not commenced by 10 January 2015, the developer will have to apply for another permit in circumstances where there have been changes to height controls in the Scheme.  This issue may arise for you or your agency if there has been, or will be, a significant change in planning policy.

The Tribunal in Hotel Windsor considered an application to review the failure by the Minister for Planning to grant an extension of time.  The Minister opposed the extension and submitted that the Tribunal should refuse the Hotel's application for a range of reasons.  One reason was that there had been a change in the planning policy since the permit was last extended.  The recent change to the planning controls specifically targeting the Bourke Hill precinct and the need to protect its low scale have resulted in the introduction of a mandatory height limit of 23 metres (well below the 93 metre development allowed by the permit).  This weighed against a decision to extend the permit and shifted the balance of planning considerations in favour of protection of Bourke Hill as a low scale precinct.

The Tribunal considered and applied the long-standing principles in Kantor v Murrindindi Shire Council (1997) 18 AATR 285 (Kantor principles).  The Tribunal noted that the implications for redevelopment of the Hotel Windsor were significant.  The Kantor principles are:

• whether there has been a change in planning policy;
• whether the landowner is seeking to warehouse the permit;
• intervening circumstances which bear on the grant or refusal of the extension requests;
• the total elapsed time;
• whether the time limit originally imposed was adequate;
• the economic burden imposed on the landowner by the permit; and
• the probability of a permit issuing should a fresh application be made.

The Kantor principles, while not definitive or exclusive, have been applied by the Tribunal consistently including recently in the case of Naroghid Wind Farm Pty Ltd v Minister for Planning [2012] VCAT 1203 (Naroghid).  In Naroghid, the change in planning policy was the introduction of the 2 kilometre rule.  This new rule requires wind farm proponents to obtain written consent from landowners within a 2 kilometre radius of a proposed turbine.  In Hotel Windsor, the change in planning policy specifically targeted the Bourke Hill precinct and the need to protect its low scale.  Balanced against the countervailing Kantor principles including no evidence of warehousing, intervening circumstances, the adequacy of the time limit and the implications of not granting an extension, the Deputy President found that the request for an extension of time to commence construction of the redevelopment of Windsor Hotel should be refused.

This decision and the Kantor principles may be relevant to you or your agency.  If there has been a change in planning policy, such that a permit may not be granted if it was applied for afresh, then potential requests from developers for extension of the time for the commencement of works are to be expected.  Accordingly, the seven Kantor principles are relevant considerations for agencies preparing  new or amended planning policies.

If you are in the Victorian Government and would like more information about this area of law, please contact:

Eliza Bergin
Principal Solicitor
T: 8684 0267
eliza.bergin@vgso.vic.gov.au

Juliette Halliday
Acting Managing Principal Solicitor
T: 8684 0299

juliette.halliday@vgso.vic.gov.au 

Changes to the Public Private Partnerships guidelines

In May 2013, the Treasurer Michael O'Brien announced significant reforms to the Victorian Government's public private partnership (PPP) guidelines.  The new Partnerships Victoria Requirements, together with the National PPP Policy and Guidelines, apply to the next phase of Victorian PPP projects.

The areas of reform include the following.

Expanding the type of services that can be provided

The Government will consider expanding the type of services that can be provided under the PPP model to include services that were previously delivered by the public sector.  For example, the Ravenhall Prison Project (for which Expressions of Interest are currently being evaluated) will include custodial services provided by the private sector. 

Applying the PPP model to small-scale projects

Projects valued at less than $50 million may use a streamlined PPP model to generate private investment if they have suitable value for money drivers.  Alternatively, projects can also be bundled together to attract the PPP model.

Changing how value for money is assessed

The Public Sector Comparator (PSC) will continue to be used as a benchmark to test value for money for PPP projects.

However, if bidders do not meet the risk adjusted PSC cost expectations through the procurement process, this does not necessarily mean the Government will revert to traditional design and construct delivery.

Government must also now develop a scope ladder alongside each PSC.  Its purpose is to identify any scope items that bidders can remove or add should bids be over or under the PSC. 

Reducing bid costs

The reimbursement of partial bid costs for some PPP projects will be trialed.  Government will communicate its approach for reimbursement for a particular project at the time of releasing the Expression of Interest.  The Government may also consider reimbursing some bid costs incurred by losing bidders in exchange for intellectual property in their unsuccessful bid, on a project specific basis.

The new requirements are also aimed at process improvements, including to:

• minimise information submission requirements; 
• shortlist only two bidders where appropriate; and 
• avoid ‘best and final offer’ processes where possible.

Modified financing structures

The Government will consider making partial capital contributions for some PPP projects.  Normally, construction of PPPs is financed entirely by the private sector and repaid by the Government over the life of the project.  This change in policy is aimed at increasing private sector investment by providing an alternative to full private finance.

Government contributions could be made either as:

• milestone payments during construction (eg for large scale projects); or
• a lump sum payment once construction is complete. 

For more information about public private partnerships, please contact

Julie Freeman
Assistant Victorian Government Solicitor
t 9947 0404
julie.freeman@vgso.vic.gov.au