Questions on Notice
February Meeting of Council (8/2/2012)
Re: Stokes Bay Road Tender Process
Kangaroo Island Council has the responsibility of ensuring that any procurement process is open to all and transparent and that its decisions are seen as fair and justified, as required under Section 49 of Local Government Act 1999.
Since the release of information contained in Report Item 15.8: Stokes Bay Road Tender Process at the January 2012 Council Meeting, I have received a number of enquiries from civil contractors and community members relating to the manner in which Council offered the Stokes Bay Road Upgrade work to the successful earthmoving contractor, in particular whether or not this was done in full compliance with Council’s current Procurement Policy which applied to this project. My questions are:
Cr Liu’s Question 1
Why didn’t Council invite ‘open tenders’ for the Stokes Bay Road project in order to allow all local earthmoving contractors to submit tenders?
Council’s Answer 1
In consideration of factors within the Kangaroo Island Council Procurement (Incorporating Contracts and Tenders and Sale and Disposal of Land) Policy-File 18.8.2.7 Issued September 2010, the following was considered:
1. The Select tender is available as an option for procurement greater than $50,000.
2. Item 5.4 acknowledges there are considerable participation costs in the preparation of tenders for projects of this scale and nature.
Local contractors who had submitted to the Kangaroo Island Council Expression of Interest for Plant Hire 2012, and who had a demonstrated capacity to undertake a project of this scale and nature were recommended to the consulting engineer for participation in the procurement process.
Question 2
I understood that from reading Item 15.8 of the agenda, 5 civil construction companies were selected to tender the work on 28/9/2011.
Did Council call for ‘expression of interest’ in accordance with Council’s Procurement Policy to short list ‘select tenders’ for this project? If so, when did Council approve the short list of 5 for tendering process (please provide reference number of Council’s resolution on this decision)?
Answer 2
The five companies recommended to the consulting engineer to invite to tender had a demonstrated capacity to undertake projects of this scale and nature. Additionally, these five companies had undertaken contracted work for this Council in a demonstrated and satisfactory manner previously.
Further, the Kangaroo Island Council Procurement (Incorporating Contracts and Tenders and Sale and Disposal of Land) Policy-File 18.8.2.7 Issued September 2010, lists “Invitation to Tender” as an option as opposed to other procurement processes in which Expression of Interest could be considered as the optimum method.
In this instance the Select Tender, via Invitation to Tender was considered the most appropriate option.
There is no requirement for the Council Body to approve a short-list for the tender process – this is an operational matter.
Question 3
Have all local earthmoving contractors been given the opportunity to submit ‘expression of interest’ to tender this work? If so, how many of these local earthmoving contractors were placed in the short list for tendering?
Answer 3
Open “Expressions of Interest” were called for Plant Hire for 2012 during 2011. Some Local contractors submitted returns to this process. On this basis, and with knowledge of the scale & nature of the project, those companies with a demonstrated capacity to undertake the project were considered capable of completing the project and meeting all conditions within the project specification document.
Question 4
Were the tenders received opened in accordance with Clause 5.17 of the Procurement Policy (ie opened in the presence of at least two staff as nominated by the Chief Executive Officer, with each page detailing prices being signed and dated by the staff present)?
Answer 4
Tonkin Consulting was engaged to produce a tender document, and include project specifications that align with the completed design for the project, and undertake the Invitation to Tender process. Once tenders were received, Tonkin Consulting were engaged to open and review tenders, and deliver a report on the tender selection process and a recommendation to Council staff of the outcomes of the tender process.
As Council Staff were not involved in the opening and review of the tenders the process described within the Policy was not followed by Council Staff. Tonkins have a process for the receipt, open and review of tender documents for their staff to adhere to (for exactly the same reasons as our Policy / Procedure has) and we have been assured by Tonkins that this process has been followed. As our process exists to prevent Council Staff from deliberately or unwittingly releasing / prejudging tenders received, the act of retaining an independent body such as Tonkins to carry out this work adds an additional layer of probity to the process.
Question 5
Item 15.8 of the Report stated that the tenders closed at Tonkin’s office on 19 October 2011 and a report was delivered to Kangaroo Island Council Officers on 26 October 2011.
Had this report ever been provided to Council for consideration before the formal acceptance of the recommended tender? Did the Mayor and the CEO receive full authorization from Council for the signing and sealing of all necessary contractual documents as required under the Local Government Act? If so, what is the reference number of this ‘resolution’?
Answer 5
Following delivery of the report, Council staff conducted post tender negotiations with the preferred tenderer only (as is normal accepted practice) and was able to negotiate the contract sum to a number below the allocated Council and Local Government Transport Advisory Panel budget for the project.
It was reported to Council, at the 9 November 2011 Ordinary Meeting of Kangaroo Island Council/Asset Services reports/Item 22, page 34 – “Stokes Bay Road tender assessment & recommendation received from Consulting engineer, with further qualifications sought from preferred tenderer.” At the time of writing the report for that meeting the process was being finalised.
Subsequent to that, the ASGM & ASPM considered the final negotiated contract sum and requested the CEO approve a requisition and Purchase Order (by delegation) to the successful contractor.
At the 14 December 2011 Ordinary Meeting of Kangaroo Island Council [h]eld at Parndana, Cr Chirgwin requested information regarding the number of tenders received and a review of the tender documents, the information was supplied at Ordinary Council Meeting held 18 January 2012.
Cr Liu’s Question 6
Council Report Item 15.8 stated that a purchase order was issued on 9/11/2011 approved by the CEO in accordance with Council’s Procurement Policy.
Did the CEO have delegated authority to accept a tender over $1M under the Procurement Policy on behalf of the Council, having regard that this tender is required under the Procurement Policy 5.5 to be referred to Council for approval, being that the decision making responsibility for procurements over $50,000 rests on the Council?
Council’s Answer 6
The project funding for the Stokes Bay Road Stage 4 upgrade was included in the 2011/2012 budget consideration. This budget was ratified by Council at the Special Meeting held on 30 June 2011. The final negotiated contract sum was lower than the approved funds and therefore no further reference to Council is required. During the budget process a number of capital project items were identified as approved in principle, pending production of a report to Council for ratification prior to works commencing – the Stokes Bay Road Stage 4 Upgrade was not one of these projects.
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Cr Ken Liu
Kangaroo Island Council
P O Box 80, KINGSCOTE SA 5223
Ph: (08) 8553 2823 Mobile: 0428 322 005
Email: kenDOTliuATbigpondDOTcom