The document discusses strategic contracting procedures as an alternative to the default contracting procedures for local councils in Queensland. Strategic contracting allows councils to define their own procurement framework, such as value thresholds for different bidding processes. This provides more flexibility compared to the rigid default procedures. The benefits include reducing costs, improving efficiencies, and better aligning procurement with each council's unique needs and markets. To use strategic contracting, councils must develop contracting plans and manuals. The example of Sunshine Coast Council adopting strategic contracting resulted in streamlined processes, lower expenditures, and improved delivery timeframes while engaging more local suppliers.

1. Procurement in Focus
6 August 2019
Strategic Contracting – make procurements work better for YOU
Co-authored by Paul Muscat of MinterEllison
Gold Coast and Paul Skillen of Sunshine Coast
Council
The concept of Strategic Contracting
Ever thought the procurement requirements for
councils in Queensland were limiting council business
and straining council resources? There is a more
flexible way.
The Local Government Act 2009 (LGA) and Local
Government Regulation 2012 (LGR) combine to
provide councils with a procurement framework.
The LGA requires councils to have regard for the
Sound Contracting Principles for the provision of
goods and services and the disposal of assets. These
principles are sound business-based concepts that
are useful decision-making guides.
The LGR then provides two different sets of
contracting procedures. They are:
 default contracting procedures which define the
framework of requirements council must comply
with before entering into different types of
contracts at set value thresholds. The reference
to default confirms that a council is bound to use
these, unless it decides to adopt and take on the
other option. As a result, they are the procedures
employed by the majority of councils
 strategic contracting procedures which let
councils define that framework for themselves.
While the strategic contracting procedures will not
suit every council, it is certainly worth considering
the benefits and whether they are worthwhile
Benefits
The default contracting procedures are rigid – they’re
a stock standard framework that may be applied to any
council, without regard to a council’s circumstances,
such as its size, procurement capability and maturity,
surrounding industry or contracting complexity. While
they may be applied by any council, it does not mean
they necessarily work in the best and most efficient
way possible for every council. For example, under the
default contracting procedures a council must first
invite written tenders for any contract or contractual
arrangement worth over $200,000 ex GST in any
financial year. This value threshold and the
requirement for written tenders might work for some
councils, but for larger councils (or even remote or
smaller councils with large value contracts) where
many of their contracts each year are worth more than
$200,000 ex GST this framework can be very limiting.
That’s where strategic contracting comes in, allowing
councils to define, for example, their own value
thresholds and requirements for different procurement
processes and types of contracts. Councils could, for
example, define a large contractual arrangement as
one worth over $500,000 ex GST per year, and say
that written tenders are just one of a variety of
procurement routes at the council’s disposal.
Implementing these types of strategic contracting
procedures can allow councils to better match their
contracting requirements to their risk profile, the
experience of their procurement team, and the size of
contracts they are commonly entering into. By doing
so they can minimise unnecessary costs and the use
of sparse resources; ultimately allowing them to enter
contracts in a much more efficient manner.
Negatives
There is an initial cost to establishing strategic
contracting procedures, but once those procedures
are in place, the efficiencies in day-to-day council
procurement procedures results in an overall saving of
cost. However, councils must develop several
documents which will govern their strategic

2. contracting in order to take this approach. This may
make the initial implementation of strategic contracting
procedures somewhat costly. That being said, one of
the major benefits of strategic contracting is cutting
down on unnecessary costs and conducting more
efficient procurements, which will sooner or later
outweigh the initial cost outlay. If a council is confident
that its day-to-day procurement activities could be
conducted in a far more efficient manner if council set
the rules for procurement, a strategic contracting
approach may be worthwhile.
How it works
The statutory regime for strategic contracting
procedures can be found in LGR sections 217 – 222.
It’s worth noting that they may be applied to the
disposal of some valuable non-current assets, but they
cannot be applied to contracts for the disposal of land.
Land disposal must still be governed by the default
contracting procedures in LGR sections 223 – 238.
To take a strategic contracting approach to its
contracts, a council must:
 by resolution, decide to do so after considering
the costs and benefits and giving the public 4
weeks’ notice of the proposed resolution
 make and adopt a contracting plan each financial
year
 make and adopt a contract manual (which will
last more than one year)
Each of these documents are examined in further
detail below.
Contracting plans
A contracting plan is a document for a given financial
year stating:
 the types of contracts that the council proposes
to make in that financial year
 the principles and strategies for performing the
contracts
 a policy about proposed contract delegations
 a market assessment of the relative cost and
difficulty in securing supply for each type of
contract
 the contracts that the council considers will be
significant having regard to the market
assessment
 a policy about making significant contracting
plans
The contracting plan must align with the council’s 5-year
corporate plan and can only be adopted after the council
adopts the annual budget for the relevant financial year.
Significant contracting plans
A significant contracting plan is required if there are any
contracts which the council decides are significant in the
contracting plan. Before each of them the council must
make a significant contracting plan stating:
 the objectives of the significant contract and how
they will be achieved and measured
 any alternative ways of achieving the objectives
and why those alternative ways were not
adopted
 proposed contractual arrangements for the
activity
 a risk analysis of the market in which the contract
is to happen
The objectives of the significant contract must align with
the contracting plan for that year. Significant contracting
plans can be amended, but only by resolution of the
council.
Contract manual
As part of implementing a strategic contracting
framework, council must also adopt a contract manual.
This is a document which sets out the procedures
council will follow and how they will carry out all of the
contracts which result. The contract manual must:
 apply the sound contracting principles
 be consistent with and support the council’s 5-
year corporate plan
 be consistent with the contracting plan
 define how the council will deal with any non-
current assets worth less than $5000 for plant or
equipment, or $10,000 for any other type of non-
current asset
Developing a contract manual is often the most
laborious part of the process of implementing a strategic
contracting procedure, but it also can last longer than
one financial year as long as it still aligns with
subsequent contracting plans. The contract manual
allows councils to tailor their processes and procedures
for all different types of contracts to what is best suited
for them and the markets and industries they may be
engaging with. This provides the main point of
differentiation between the default and strategic
contracting procedures.

3. GOLD COAST CONSTRUCTION, INFRASTRUCTURE AND PROCUREMENT TEAM CONTACTS
Paul Muscat Stephen Lewis Craig Tanzer Carla Mazibuko Aaron Williams BJ Doyle Tayla Kamura
PARTNER CONSULTANT SENIOR ASSOCIATE ASSOCIATE SENIOR PARALEGAL LAW CLERK INTERN
T: +61 7 5553 9485 T: +61 7 5553 9400 T: +61 7 5553 9481 T: +61 7 5553 9518 T: +61 7 5553 9546 T: +61 7 5553 9544 T: +61 7 5553 9400
paul.muscat@minterellison.com stephen.lewis@minterellison.com craig.tanzer@minterellison.com carla.mazibuko@minterellison.com aaron.williams@minterellison.com bj.doyle@minterellison.com tayla.kamura@minterellison.com
Strategic contracting in action
Up to and including the 2017/18 financial year, Sunshine
Coast Council (SCC) had always stuck with the default
contracting procedures under the LGR – but not
anymore. Throughout the 2017/18 financial year SCC
set about developing its own procurement framework
that complied with the strategic contracting procedures.
This framework was adopted by Council in that year and
applied to the 2018/19 financial year.
The strategic contracting procedure allowed a myriad of
changes to procurement processes and procedures;
some obvious and others far more subtle. For example,
under the default procedures councils must invite three
quotes for contracts worth more than $15,000 ex GST
and invite written tenders for any contract worth more
than $200,000 ex GST per financial year. Under SCC’s
new strategic framework, they must:
 request at least one quote for contracts worth up
to $25,000 ex GST per year, with local
contractors to be invited wherever possible
 request three quotes for contracts worth
between $25,000 and $250,000, again with a
local preference
 request five quotes for contracts between
$250,000 and $1 Million
 undertake competitive processes for contracts
between $1 Million and $5 Million
 develop a Significant Contracting Plan to
undertake competitive processes for contracts
worth more than $5 Million ex GST per financial
year
SCC identified the values of contracts they were
commonly working with and examined their own risk
profile to decide on the strategic procedures which
would be most beneficial to them.
SCC engaged MinterEllison Gold Coast to ensure that
their strategic contracting procedures met all
requirements and accurately reflected what SCC
wanted to achieve. Strategic contracting provided
Council with control over its procurement activities,
resources and budget, enabling Council to properly
allocate resources and budgets to provide optimal
benefit to the ratepayer, and MinterEllison Gold Coast’s
advice and assistance was vital to the instant success
of the model on the Sunshine Coast.
The Results
To date, SCC’s strategic contracting procedures have
been hugely successful in the way they have:
 streamlined the procurement process, but
maintained its effectiveness;
 reduced contract expenditure and internal costs;
 reduced newspaper advertising costs;
 improved delivery timeframes; and
 allowed for better engagement with local
suppliers, social benefit suppliers and
indigenous suppliers.
All these benefits have far outweighed the initial costs to
SCC to implement the strategic contracting procedures.
As SCC procurement capability continues to transform
and mature, they intend to further evolve the framework
to drive greater value for the Sunshine Coast
community. The next step in that process has been
taken with SCC confirming their adoption of the strategic
contracting procedures for the 2019/20 financial year.
That’s why we strongly urge you to consider if
implementing strategic contracting procedures would be
beneficial to your council’s business.
Please don’t hesitate to contact Paul Muscat (details
below) if you want to discuss whether strategic
contracting is the right choice for you, how you can go
about implementing it, or any other topics or questions.
*Disclaimer The information contained in this update is intended as a
guide only. Professional advice should be sought before applying any
of the information to particular circumstances. While every reasonable
care has been taken in the preparation of this update, MinterEllison
does not accept liability for any errors it may contain.