Council draft policy on local preference policy goes on exhibition | video

Draft local preference policy: Cr Peter Alley: It is very important that we get this right.
Draft local preference policy: Cr Peter Alley: It is very important that we get this right.

Port Macquarie-Hastings Council is urging the community – and particularly business operators – to have a say on a draft local preference policy.

The matter was presented to Wednesday night’s May meeting.

The draft policy incorporates a 5 per cent notional price offset and will go on public exhibition for 28 days from May 24.

In the report tabled to the meeting, councillors were told that local preference policies can operate in a number of ways but generally give advantage to locals over and above other suppliers.

“For this reason, such policies may be favoured by local suppliers,” the report said. “Local preference policies however, carry a number of legal risks depending on their nature.

”Any approach that favours local suppliers is fundamentally unfair to persons other than local suppliers. Some legal risks can be managed by additional rigour in administration and documentation, but unfairness cannot be addressed.

“It is considered that a notional price offset, rather than a weighted local preference/social procurement policy is more transparent, more able to be consistently applied and less likely to dissuade suppliers from tendering.

“On balance, it is therefore considered that of the local preference options, a policy incorporating a notional price offset, represents the least risk to council in comparison to the other forms of an LPP presented in this report.”

Price or notional offset provides a set percentage discount to the pricing submitted by local suppliers to be used in the tender evaluation process. 

It offers a price advantage to local / regional suppliers during the tender evaluation. 

It is no secret that the last time this matter came to council there were some reservations about it. It is important that we get this out (on exhibition) and hear what local businesses and the community think of it.

Cr Peter Alley

For example, if a 5% price offset was applied to a local supplier that submitted a $400,000 tender, the price used in the evaluation/scoring process would be reduced by $20,000 to $380,000. If the tender was ultimately successful ie being the most advantageous to council, a contract would be entered into for the full submitted price of $400,000.

The report said that it should be noted that this could lead to council paying more for goods and services.

Cr Peter Alley said it was important that local business have every opportunity to tender for work for council.

“There are some things that council has already done to enable business operators to bid for work,” Cr Alley said.

“It is very important that we get this right.

“It is no secret that the last time this matter came to council there were some reservations about it. It is important that we get this out (on exhibition) and hear what local businesses and the community think of it.

“We also need to get a briefing to councillors (at the conclusion of the exhibition period) so we can formulate our final decision.”

Cr Rob Turner supported the draft policy and was hopeful of getting a high number of submissions.

“I think this is a really good option for us to do something for our local suppliers. We are one regional city that does not have something like this policy,” Cr Turner said.

Deputy mayor Lisa Intemann said she would encourage local business to become familiar with the details within the proposal.

The recommendation adopted on the night was:

  • Continue to implement the currently adopted integrated strategy to support local business. 
  • Place the draft Local Preference Policy incorporating a 5% Notional Price Offset, on public exhibition for a period of 28 days from 24 May to 21 June 2017. 
  • Request the General Manager provide a briefing to Councillors in August 2017 detailing the submissions received from the public during the exhibition period and a further report to Council.