NSW Government procurement reform Part 5 – Local Jobs First

The NSW Government has taken a significant step in its procurement reform agenda with the release of the draft Local Jobs First Bill (Bill)[1] and accompanying Local Jobs First Regulation (Regulation)[2].  Together, they strengthen the focus on local industry development in procurement and lay the groundwork for establishing a supplier debarment scheme in NSW[3].

This article is the fifth instalment in our series exploring the NSW Government’s procurement reform agenda. The series addresses issues raised in the recent Upper House inquiry into government procurement practices (Inquiry)[4] and what this inquiry means for both government officials and suppliers. The earlier articles are available here.

Recap on the local industry development agenda

In September 2024, the NSW Government announced a series of sweeping reforms designed to support local jobs and businesses and encourage the development of local industries following the tabling of the Inquiry’s first report. The announced reforms comprised the following elements, several of which have already been implemented:[5]

• Removing local preference restrictions – rules in the Procurement (Enforceable Procurement Provisions) Direction 2019 (EPP Direction) restricting the ability of NSW government agencies to prioritise local employment and industry development in procurement were removed on 18 October 2024[6], as noted in our part 1 of our series.
• Prioritising local participation - the NSW Procurement Board issued Procurement Board Direction 2024-02 ’Increasing opportunities for local suppliers’ on 9 September 2024[7], which has applied to all NSW Government agencies since 1 January 2025. The direction applies to all procurements of goods, services, or construction valued over $7.5 million and requires agencies to:
  • check if any NSW-based suppliers can supply the goods or services
  • provide NSW-based suppliers with full and fair opportunity to participate in the procurement
  • if a local supplier is not selected, explain why (’if not, why not’), and
  • report quarterly to the Procurement Board on implementation of the direction.
• Guidance on assessing value for money – the NSW Government has called for greater consideration of support for local employment and developing regional economies when agencies assess value for money, as discussed in part 3 of our series. There have been several reforms that touch on this issue and there may be further specific reforms to come.
• Establishing the Local Jobs First Commission – the establishment of the Local Jobs First Commissioner to provide ongoing oversight of local content in the procurement process entrenches the reforms and is the focus of the draft Bill and Regulation.

Establishment of the Local Jobs First Commissioner

The Bill authorises the appointment of a Local Jobs First Commissioner (Commissioner), who will play a central role in overseeing the implementation of local procurement reforms. The key responsibilities of the Commission will include[8]:

• promotion of the procurement of locally produced and manufactured goods and services
• maximising employment opportunities for local workers, apprentices and trainees
• promoting, monitoring and reporting on the Local Procurement Policy (see below), and
• consulting with the Procurement Board, government agencies, and other relevant bodies to ensure effective policy implementation.

The Bill also establishes a Local Jobs First Advisory Board (Advisory Board) to advise the Minister on promoting local businesses, jobs and industry, including in participating in government procurement.[9] The Advisory Board will comprise the Commissioner and up to eight members appointed by the Minister, including representatives of both employer and employee organisations.[10]

The creation of the office of Commissioner, and the broader use of government procurement to promote industry development, has antecedents in the Victorian Local Jobs First Act 2003 (Vic), which established the Local Jobs First Commissioner and enshrined key job creation policies, including the Victorian Industry Participation Policy (VIPP) and the Major Project Skills Guarantee[11]. While the broad policy objective of the Victorian legislation is similar to the NSW Bill and Regulation, there are operational differences. For example, the Victorian legislation offers a staged approach to the engagement of the VIPP, with requirements and thresholds applying to projects over $1 million, $3 million, and $50 million in value[12].

Local Procurement Policy and Plans

The Bill requires the Minister to issue a Local Procurement Policy outlining the Government’s expectations and requirements for sourcing locally produced and supplied goods and services, as well as employing local workers.[13] The objectives of a Local Procurement Policy will include:

• promotion of the use of locally produced and supplied goods and services in NSW Government procurement
• promotion and development of local workers to support economic growth in NSW
• maximising the economic, social and sustainability benefits of NSW Government procurement for the people of NSW
• facilitating the growth in domestic manufacturing industries in NSW
• fostering job opportunities in NSW, including for learning workers, and
• improving access to NSW Government procurement for local small or medium businesses.

To achieve these objectives, the Local Procurement Policy will need to include requirements for:

• use of locally produced and supplied good and services in government procurement
• training and employment of local workers on projects involving government procurement
• compliance and reporting for agencies and suppliers under the legislation or policy
• local procurement plans to be provided by suppliers, and
• other matters determined by the Minister for Government Procurement.

The Local Procurement Policy must also apply a 30% weighting to the following factors for any procurement valued at $25 million or above[14]:

• The extent to which the tender proposal involves:
  • locally produced and supplied goods and services
  • inclusion of local small or medium businesses
  • employment of local workers, including learning workers.
• The economic, social, and sustainability benefits the people of NSW.
• Ethical practices in the supply chains. 

Suppliers bidding for contracts valued at $25 million or above will need to submit a Local Procurement Plan demonstrating how they intend to meet the Local Procurement Policy requirements[15].

Government Agencies[16] will need to comply with the Local Procurement Policy where:[17]

• the Premier or Minister has given written notice to the agency
• the supplier is required to have submitted a Local Procurement Plan (i.e. presently those contracts valued at $25m or above), or
• the procurement has an estimated value of at least $7.5 million and less than $25 million, unless the agency determines that compliance is not feasible or contrary to public interest.

We will need to see the Government’s first Local Procurement Policy to fully understand the implications of this reform. It will likely require greater supply chain due diligence, and evaluation committees will need to develop appropriate process and policy to assess the local content and training compliance in tenders. There may also need to be greater engagement with the market pre-tender to ensure suppliers, particularly SMEs, understand the opportunity and can establish compliant supply chain and project management policies.

Supplier Debarment Scheme

A separate reform introduced by the Bill is the establishment of a Supplier Debarment Scheme (Debarment Scheme). The Bill amends the Public Works and Procurement Act 1912 (NSW) (PWP Act) to establish the Debarment Scheme, which will be administered by the Procurement Board. We have provided an overview of the proposed Debarment Scheme in part 4 of our series. Under the Bill:

• Debarment will be triggered automatically following certain convictions, penalties, or adverse rulings against a supplier or a supplier’s principal officer.
• A supplier may be debarred for up to five years.
• Agencies will be prohibited from contracting (or extending contracts) with debarred suppliers (or those sub-contracting debarred suppliers) without authorisation of the NSW Procurement Board.[18]

The specific conduct that will trigger debarment will be detailed in separate regulations, which have not yet been released and will be critical to the breadth of the Debarment Scheme.

The automatic application of the Debarment Scheme is a key difference with the scheme operating in Western Australia, which requires the exercise of an official discretion to debar a supplier[19] (there are no suppliers presently debarred). The key point to watch will be the description of the debarment; these will be set out in future regulations and will determine the scope of the Debarment Scheme.

Public consultation and next steps

The exposure draft of the Bill and Regulations will be open for public comment until February 2026[20]. We will keep you updated as the legislation progresses.

[1] Local Jobs First Bill 2025, public consultation draft [Link]

[2] Local Jobs First Regulation 2025, public consultation draft [Link]

[3] As a historical note, when in opposition Minister Catley introduced into NSW Parliament the NSW Jobs First Bill in 2021, which ultimately lapsed, highlighting longstanding ambitions in this area.

[4] Procurement practices of government agencies in New South Wales and its impact on the social development of the people of New South Wales  - First Report (Parliament of NSW Legislative Council Standing Committee on Social Issues: Report No.63: June 2024) [Link]

[5] Above note 4.

[6] Procurement (Enforceable Procurement Provisions) Direction 2019 (NSW) – amendment, 18 October 2024 [Link]

[7] NSW Procurement Board Direction PBD 2024-02 ‘Increasing opportunities for local suppliers to supply to government’ – 9 September 2024 [Link]

[8] Local Jobs First Bill 2025 (NSW); Local Jobs First Regulation 2025 (NSW); NSW Government, Local Jobs First Bill and Regulation Public Consultation [Link]

[9] Local Jobs First Bill 2025 (NSW) Part 3

[10] Local Jobs First Bill 2025 (NSW) s 13 (2)

[11] Victorian Government, Local Jobs First Commissioner ‘Local Jobs First Act 2003’ [Link]

[12] Victorian Government, Local Jobs First Policy Compliance [Link]

[13] Local Jobs First Bill 2025 (NSW) s 15(1)

[14] Local Jobs First Bill 2025 (NSW) s 15(7); Local Jobs First Regulation 2025 (NSW) s 5.

[15] Local Jobs First Bill 2025 (NSW) s 16 (1); Local Jobs First Regulation 2025 (NSW) s 7

[16] Defined in Part 11 of the Public works and Procurement Act 1912 (NSW) to include a ‘government sector agency’ under the Government Sector Employment Act 2013 (NSW) a NSW Government agency and any prescribed State Owned Corporation.

[17] Local Jobs First Regulation 2025 (NSW) s 6 (1)(c).

[18] Local Jobs First Bill 2025 (NSW) Schedule 3 [Link]

[19] Procurement (Debarment of Suppliers) Regulations 2021 (WA), s 5.

[20] NSW Government, ‘Local Jobs First Bill 2025 – Have your say’ [Link]