Ministerial Directions and Instructions for Public Construction Procurement

Summary

The mandatory framework for public construction procurement in Victoria. Issued under the PDCMA 1994 Part 4 s.8. Effective 1 July 2018, updated July 2023. Replaces the former Ministerial Directions No. 1, 2, and 4.

This is the construction parallel to the VGPB supply policies for goods/services.

Three-Tier Instrument Structure

Precedence (Direction 11.2)

Clear hierarchy when instruments conflict:

1. International Agreements and other Acts or statutory rules prevail over these Directions (interpret to resolve if possible)
2. These Directions prevail over VGPB Supply Policies for public construction
3. Partnerships Victoria Requirements prevail over these Directions (if agency complies with PV including obtaining all approvals)
4. National Alliance Contracting Guidelines prevail over these Directions (if agency complies with Guidelines including obtaining all approvals)

Agencies complying with these Directions may also need to comply with VGPB supply policies for non-public construction procurement. The Accountable Officer of each Agency decides whether to align internal governance frameworks for procurement across both tracks.

The DTF legislation, policy and public construction page sets out how these Directions fit within the broader governance framework.

Application

Must comply: All Agencies subject to Standing Directions 2018 (departments and public bodies under FMA s3).

Excluded Entities (Direction 1.3.3): - School councils (Education and Training Reform Act 2006) - Incorporated committees of management (unless listed) - Class B cemetery trusts (Cemeteries and Crematoria Act 2003) - VicSES registered units - CFA volunteer brigades

Excluded Entities are not free to ignore the framework — their Portfolio Department must establish appropriate requirements consistent with the guiding principles (Direction 1.3.4).

Procurement Thresholds (Direction/Instruction 3.2)

All thresholds GST inclusive. Updated from original 2018 values.

Thresholds must be reviewed at least every 5 years, taking account of PCPC advice.

Limited Tender Exceptions (Any Value)

Limited tender is permitted at any value where: - Extreme urgency (life safety, OHS, security, essential service loss, asset protection) - Previous open/selective tender received no conforming bids - Single/limited supplier (patents, technical reasons, artwork) - Additional works requiring technical interoperability with original supplier - Extensions within original contract objectives - Third-party property approval required - Design competition selection - Market-led proposals - Utility asset installations with specification changes - Exceptional circumstances certified by Responsible Minister or Accountable Officer (Instruction 3.2.2(j))

International Agreement Thresholds (Instruction 2.1)

Where international trade agreements apply (ANZGPA always applies; other agreements for listed agencies):

Contract Disclosure Thresholds (Instruction 5.2)

Probity Plan Threshold (Instruction 4.2.2)

Probity plan mandatory before beginning a tender when: - Procurement likely to exceed $10M (GST inc), or - Procurement is complex or otherwise high-risk

Mandatory Evaluation Criteria (Instruction 3.7.3)

Four mandatory evaluation criteria in all construction tenders: 1. Value for money — primary determinant after all criteria including price 2. OHS management — 12 criteria (organisational OHS policy, governance, advisors, consultation, awareness, training, hazard control, contractor management, emergency response, incident procedures, enforcement history, workers comp). Required for Works >$750K / Services >$300K. May be evidenced by approved assurance systems (SafetyMap, AS 4801, CCF Code, ISO 45001) for criteria 1–10; criteria 11–12 always require current evidence. 3. Industrial relations management — Required for Works >$750K; for Services when Fair Jobs Code applies 4. Past performance — appropriate criteria enabling assessment of delivery track record

Pre-qualified suppliers on approved Registers or Supplier Panels need only confirm continuing registration and no material change to previous assessment.

Performance Reporting (Instruction 8.2)

Mandatory shared reporting for contracts: Works $750K+ / Services $300K+ (GST inc). Report at 6-monthly intervals, practical completion, end of defects liability period, and any significant performance issue. Supplier must have opportunity to reply.

Contracting Detail (Instruction 7.1–7.2)

• Victorian Public Construction Contracts mandatory; alternative forms permitted up to $25K (GST inc) or where standard contracts inappropriate
• Policy compliance in contracts (Instruction 7.2.1): PV Requirements, Alliance Guidelines, Fair Payments Policy, VPDSS, IP Policy, DataVic, Supplier Code of Conduct, LJF/VIPP, MPSG, Social Procurement Framework/Building Equality Policy, Fair Jobs Code
• Subcontracting: statutory declarations of payment to subcontractors required
• Prohibited cladding: contracts must prohibit high-risk external wall cladding products
• Geoscience data: ownership transfers to State of Victoria
• Liability caps: cannot exclude liability for third-party claims, wilful misconduct, legal obligations, or abandonment

Ten Guiding Principles (Direction 1.2)

Four overarching principles (shared with G&S): Value for money, Accountability, Probity, Scalability

Ten construction-specific principles: 1. Ensuring appropriate competition and contestability 2. Employing appropriate procurement models considering complexity and supplier capability 3. Appropriately planning and managing procurement to deliver objectives 4. Reducing unnecessary burden for all parties 5. Encouraging appropriate innovation and market responsiveness 6. Fostering continuous improvement and building skills 7. Conducting procurement openly and transparently ensuring defensibility 8. Treating all tender participants fairly and equally 9. Conducting procurement efficiently and in a timely manner 10. Undertaking procurement in accordance with relevant legislation, policy, and mandatory requirements

Complete Direction Structure

Section 1 — Purpose and Application

• 1.1 Purpose
• 1.2 Guiding Principles (10 construction principles)
• 1.3 Application (scope, mandated agencies, excluded entities)
• 1.4 Exemptions (+ Instruction 1.4)

Section 2 — International Agreements

• 2.1 Complying with International Agreements (+ Instructions 2.1, 2.2 — ANZGPA)

Section 3 — Tendering Requirements

• 3.1 Tender Preparation and Planning
• 3.2 Competition and Contestability (+ Instruction 3.2 — key thresholds)
• 3.3 Promoting Efficiency in Tender Process
• 3.4 Tender Notices
• 3.5 Tender Open Times
• 3.6 Tender Documentation
• 3.7 Evaluation Criteria (+ mandatory OHS and IR evaluation criteria attachments)

Section 4 — Managing Probity

• 4.1 Probity Requirements
• 4.2 Managing Probity in Public Construction

Section 5 — Transparency

• 5.1 Forward Notices
• 5.2 Publishing Details of Procurement (+ contract/variation disclosure attachment)

Section 6 — Registers and Supplier Panels

• 6.1 Use of Registers and Supplier Panels

Section 7 — Contracting

• 7.1 Contracting Requirements (mandatory Victorian Public Construction Contracts)
• 7.1.6 HVHR projects: amended contracts or alternative forms permitted under HVHR Framework; material departures/amendments approved under HVHR don't need separate approval
• 7.1.7 Partnerships, alliancing, and cost reimbursable contracting: exempt from Direction 7 — must use contracts consistent with those policies instead
• 7.2 Contractual Terms and Conditions (risk allocation, subcontracting, dispute resolution, performance security, security of payment)

Section 8 — Improving Performance

• 8.1 Debrief for Tender Participants
• 8.2 Supplier Performance and Shared Reporting
• 8.3 Complaints
• 8.4 Public Construction Procurement Committee (PCPC)

Section 9 — Standards

• 9.1 Standards for Public Construction (Secretary authority)

Section 10 — Accountability

• 10.1 Responsibilities of Accountable Officer
• 10.2 Delegation

Section 11 — Authority

• 11.1 Authorising Provisions — issued under s.30 PDCMA; effective 1 July 2018; supersedes former Ministerial Directions No. 1, 2, and 4. Instructions wholly incorporated (s.32(e)). Standards also mandatory where relevant (s.29).
• 11.2 Order of Precedence (see Precedence section above)

Exemptions (Direction 1.4)

Exemptions may be time-limited or ongoing, conditional or unconditional, project-specific or class-wide. The Secretary maintains a centralised register. Records must be available for Auditor-General inspection.

Key Bodies

Broader Policy Overlay

Construction procurement must also comply with (per Instruction 7.2.1 and framework overview): - Asset Management Accountability Framework - Social Procurement Framework / Building Equality Policy - High Value High Risk Project Assurance Framework - Investment Lifecycle Guidelines - Local Jobs First — VIPP + MPSG ($20M+ for MPSG) - Fair Jobs Code - Fair Payments Policy - Victorian Protective Data Security Standards - Whole-of-Government IP Policy and DataVic Access Policy - Victorian Supplier Code of Conduct - Partnerships Victoria Requirements - National Alliance Contracting Guidelines - Victorian Public Sector Codes of Conduct (PAA 2004)

Supporting Legislation

Referenced alongside PDCMA (per DTF framework overview): - Financial Management Act 1994 - Audit Act 1994 - IBAC Act 2011 - Public Administration Act 2004 - Building Act 1993 - Building and Construction Industry Security of Payment Act 2002 - Architects Act 1991 - Occupational Health and Safety Act 2004 - Domestic Building Contracts Act 1995 - Planning and Environment Act 1987 - Heritage Act 1995

Key Documents