New Procurement Guidelines seek to lift council procurement performance

Councils across New South Wales procure billions of dollars of goods and services each year and the quality of procurement processes directly impacts the communities they serve. The Office of Local Government (OLG) has just issued[1] the first instalment of Procurement Guidelines for NSW Local Government[2] (Procurement Guidelines) to help lift the standard. In this article, we review the Procurement Guidelines and consider what councils need to do to implement them.

Recap on regulation of local government procurement

Councils procurement is closely regulated, with a general requirement to tender under s 55 of the Local Government Act 1993 (NSW) (the Act) for higher value procurements, subject to limited exceptions. The tender process is prescribed in detail in Part 7 of the Local Government (General) Regulation 2021 (NSW) (the Regulation), with detailed interpretive guidance provided by the OLG in Tendering Guidelines for NSW Local Government[3] (Tendering Guidelines).

Development of the Procurement Guidelines

The Procurement Guidelines were prepared by the OLG to provide ‘best practice’ guidance to councils on procurement generally, and with a view to eventually replacing the Tendering Guidelines, which are focused on tendering and are  considered outdated.[4] A working group was formed by OLG to develop the Procurement Guidelines (Working Group) which is expected to lead the development of further procurement guidance materials to supplement the Procurement Guidelines over time.[5]

Councils must consider the Procurement Guidelines, along with the Tendering Guidelines before undertaking a relevant procurement[6].  The Tendering Guidelines provide more granular detail about the tendering process than the Procurement Guidelines presently do and it is expected that the Tendering Guidelines will eventually be withdrawn once the further guidance materials are released by the Working Group to supplement the Procurement Guidelines.

Procurement framework

The Procurement Guidelines consider procurement in a more holistic sense, adopting the same Plan, Source, Manage approach used in the New South Wales Procurement Policy Framework[7]  which goes beyond tendering to consider other forms of procurement (e.g. those below the tender threshold) and other steps in the procurement lifecycle. This provides a standard framework for council procurement processes and is a positive development.

Many councils already attempt to adopt this sort of lifecycle approach, although in our experience the ‘Plan’ and ‘Manage’ phases could be implemented more effectively. The importance of planning cannot be overstated. It is the root of success and failure in a procurement process and can often be rushed in response to external pressures.

The Procurement Guidelines focuses on the ’Plan’ and ’Source’ elements of the framework, although we expect that there will be  further guidance on the ’Manage’ element in future.

Principles of best-practice procurement

The Procurement Guidelines define several principles of best-practice procurement which provide overarching objectives for council procurement activities and more prescriptive guidance on how these factors are embedded in everyday procurement processes.

• Value for money
• Fair and open competition
• Probity and transparency
• Innovation
• Economic development, social outcomes and sustainability

Guidance on probity issues is important, noting the significant interest that the Independent Commission Against Corruption (ICAC) has taken in local government procurement over recent years.

It is helpful to have innovation in procurement emphasised, although we note that it does not address Early Contractor Involvement (ECI) processes which are increasingly common in construction procurement and difficult in a local government context.

There is guidance on pursuing economic, social development and sustainability outcomes through procurement. It specifically highlights the obligations of councils to avoid modern slavery in procurement. It also addresses local preference policies which many councils have, noting the key tension between local support and achieving best value for money.

Internal governance

Key internal governance issues for council are highlighted, including the need to manage conflicts of interest, the benefit of segregation of duties throughout the procurement process and the importance of the Audit Risk and Improvement Committee (ARIC) of council to include review of procurement practices as part of the audit work plan. In our experience ARIC oversight is a key way to drive process improvement in an inherently sensitive area.

Procurement policy and resourcing

The Procurement Guidelines emphasise the need for councils to have a fit-for-purpose procurement policy and procedures and provides guidance on key attributes. It also emphasises  the importance of a capable procurement function, which is adequately resourced to do the role council requires of it, noting some of the key determinants of success, such as training on the governance and legal issues councils must face in undertaking procurement.

What councils need to do now

Councils should use the release of the Procurement Guidelines as an opportunity to review:

• procurement policies, implementing procedures (e.g. probity and conflicts of interest policies, alignment with codes of conduct) and template procurement documents
• the procurement function, including the number and seniority of staff, the reporting lines and authority of procurement leaders and availability of external support, and
• the ARIC charter to ensure review of procurement activities is part of the work program.

The Procurement Guidelines are a helpful step in promoting more consistent and higher quality procurement outcomes across the sector. We will continue to monitor further guidance issued by the Working Group and provide updates as they become available.

We regularly advise councils across NSW on procurement matters and draw on experience gained from our work  across multiple jurisdictions. We would be pleased to discuss the implications of the Procurement Guidelines and opportunities to strengthen council procurement capability and performance.

[1] Circular 26-11 Procurement Guidance for Local Government (13 July 2026: NSW Office of Local Government) [Link].

[2] Procurement Guidelines For NSW Local Government (July 2026: NSW Office of Local Government) [Link].

[3] Tendering Guidelines for NSW Local Government (October 2009: NSW Office of Local Government) [Link].

[4] Circular 25-19 Procurement Guidelines for NSW Local Government (27 August 2025: NSW Office of Local Government) [Link]

[5] See note 1.

[6] Section 23A of the Act.

[7] NSW Government Procurement Policy Framework (December 2024: NSW Procurement Board) [Link].