As 4120 code of tendering pdf

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A S41 20 — 19 94

Au str ali an St an da rd

C o d e of te n d er

This Australian Standard was prepared by Committee OB/10, Construction Industry Practice. It was approved on behalf of the Council of Standards Australia on 28 October 1994 and published on 31 December 1994.

The following interests are represented on Committee OB/10:

Association of Consulting Engineers Australia

Australian Chamber of Commerce and Industry

Australian Institute of Purchasing and Materials Management

Australian Liquor Hospitality and Miscellaneous Workers Union

Construction Industry Development Agency

Construction Industry Engineering Services Group

Law Council of Australia

Master Builders Australia

MTIA/National Construction Council

National Public Works Council

Royal Australian Institute of Architects

Review of Australian Standards. To keep abreast of progress in industry, Australian Standards are subject to periodic review and are kept up to date by the issue of amendments or new editions as necessary. It is important therefore that Standards users ensure that they are in possession of the latest edition, and any amendments thereto. Full details of all Australian Standards and related publications will be found in the Standards Australia Catalogue of Publications; this information is supplemented each month by the magazine ‘The Australian Standard’, which subscribing members receive, and which gives details of new publications, new editions and amendments, and of withdrawn Standards. Suggestions for improvements to Australian Standards, addressed to the head office of Standards Australia, are welcomed. Notification of any inaccuracy or ambiguity found in an Australian Standard should be made without delay in order that the matter may be investigated and appropriate action taken.

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AS 4120—1994

Australian Standard

PUBLISHED BY STANDARDS AUSTRALIA (STANDARDS ASSOCIATION OF AUSTRALIA) 1 THE CRESCENT, HOMEBUSH, NSW 2140

ISBN 0 7262 9426 8

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First published as AS 4120(Int)— 1993. Revised and designated AS 4120—1994.

Code of tendering

AS 4120—1994 4

PREFACE

This Standard was prepared by the Standards Australia Committee on Construction Industry Practice to supersede AS 4120(Int) — 1993, Code of tendering . The previous edition of this Standard was developed and issued to public comment by the Construction Industry Development Agency (CIDA) Code of Practice Working Party and forwarded to the Standards Australia Committee on Construction Industry Practice for endorsement as an Interim Australian Standard. This edition incorporates the following major changes from the previous edition:

(a) Clause 6.1.1 — includes a statement on project funding. (b) Clause 6.1.2 — expands on the objectives of the tender documents. (c) Clause 6.1.3 — includes a statement on the application of pre-qualification criteria.

(d) Clause 6.2.1 — includes a statement on commitment to proceed with project. (e) Clause 6.2.2 — expands on inclusions in the advertisement. (f) Clause 6.5 — clarifies tender requirements and tender evaluation criteria. (g) Clause 8 — includes a statement on commercial in confidence.

NOTES:

1 In developing this Standard, Recommendations 6, 11 and 12, 13 and 20 of the Construction Industry Development Agency’s Report on Security of Payment, were taken into consideration in Clauses 6.1.1, 6.1.2(h), 6.6 and 6.1.2(e) respectively. Recommendation 10 of that Report recommends the use of this Standard. Users may refer to that report for further information concerning CIDA’s Security of Payment recommendations.

2 The Principal should recognize the cost of preparing tenders, especially in the case of certain procurement systems, which require Tenderers to prepare documentation (including design or the preparation of alternative proposals) as part of their tender. In appropriate circumstances this may require the Principal to consider payment to Tenderers to offset these costs.

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Except where the Copyright Act otherwise allows, no part of this publication may be reproduced, stored in a retrieval system in any form or transmitted by any means without prior permission in writing of both the Standards Association of Australia and the Construction Industry Development Agency.

STANDARDS ASSOCIATION OF AUSTRALIA CONSTRUCTION INDUSTRY DEVELOPMENT AGENCY

 Copyright

CONTENTS Page

FOREWORD..................................................................................................................................4

1 SCOPE.....................................................................................................................................5 2 APPLICATION.......................................................................................................................5 3 DEFINITIONS.......................................................................................................................5 4 ETHICS...................................................................................................................................5 5 TENDERING PROCEDURES..............................................................................................6 6 OBLIGATIONS OF THE PRINCIPAL.................................................................................6 7 OBLIGATIONS OF TENDERERS.....................................................................................10 8 CONFIDENTIALITY..........................................................................................................11

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FOREWORD

The purpose of this Standard is to encourage high ethical standards in tendering in the construction industry, in the belief that significant benefits will flow to the entire community through the delivery of higher productivity, high quality construction work, better working conditions and elimination of malpractice. It constitutes a statement of the ethics which underline best-practice tendering procedures. It imposes an obligation on all those parties to refuse to condone unethical behaviour by others in the industry. Inherent in adoption of this Standard is a willingness to deal only with industry organizations and personnel whose standards of performance and behaviour conform to those expected by this Standard.

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COPYRIGHT

STANDARDS AUSTRALIA

Australian Standard Code of tendering

1 SCOPE This Standard sets out the ethics and the obligations of the Principal and Tenderers in tendering in the construction industry. A separate Standard covers the selection of consultants providing professional services.

2 APPLICATION This Standard applies equally to Principals, their agents, contractors, subcontractors and suppliers and their associations and professional organizations.

3 DEFINITIONS 3.1 Construction industry—includes all building, refurbishment, maintenance, civil engineering, process engineering, mining and heavy engineering projects. It excludes cottage construction.

3.2 Intellectual property—all copyright, patents and all rights in relation to inventions, registered and unregistered trademarks (including service marks), registered designs, circuit layouts and all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.

3.3 Principal—any party inviting and receiving tenders. A Principal may include a contractor or subcontractor.

3.4 Tenderer—any party submitting tenders, including contractor, subcontractor and supplier.

4 ETHICS This Standard is based on the following principles: (a) Tendering at all levels in the construction industry shall be conducted honestly and in

a manner that is fair to all parties involved.

(b) Parties shall comply with all legislative obligations including those required by trade practices and consumer affairs legislation.

(c) The Principal shall have regard to the costs of tendering and the number of Tenderers, recognizing that the cost of tendering is a significant industry overhead.

(d) Tenderers shall only tender where they intend to carry out the work. (e) The Principal shall call for tenders only after the Principal has arranged funding for the

project and has made a firm commitment to proceed with the project.

(f) The conditions of tendering shall be the same for each Tenderer.

(g) Parties shall not engage in practices such as collusion on tenders, inflation of prices to compensate unsuccessful Tenderers, secret commissions, or any other such improper arrangements.

(h) The Principal and Tenderers shall be prepared to attest to their probity, if necessary by Statutory Declaration or other reasonable means.

(i) Tender documents shall specify the Principal’s requirements as clearly and precisely as possible and, when documents are altered, sufficient time shall be allowed for all Tenderers to review and revise their tenders.

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(j) The Principal shall specify what information in the tender documents is required to be treated by Tenderers as confidential. However, it is acceptable to have public openings of tenders and disclosure of tender prices.

(k) Any party with a conflict of interest shall immediately disclose that conflict of interest. (l) Tenderers shall retain their right to intellectual property submitted with tenders, including

title thereto.

5 TENDERING PROCEDURES The following procedures give practical effect to the principles contained in this Standard.

6 OBLIGATIONS OF THE PRINCIPAL

6.1 Pre-tender 6.1.1 Project definition The Principal shall ensure that the project brief is clear and specific and adequately defines the project for which tender documents are to be prepared. Adequate time shall be allowed by the Principal for project definition, design and documentation. The Principal shall ensure that quality assurance principles apply to the entire process of defining and documenting the Principal’s requirements as well as to the design and construction processes. The Principal shall use best endeavours to select a procurement strategy best suited to the project to be undertaken, bearing in mind the advice of its consultants. The Principal shall arrange adequate finance to carry out the project. An officer of the Principal who is in a position to know, shall provide to the Tenderers particulars of such project funding arrangements.

6.1.2 Tender documents Documentation shall be complete, bearing in mind the procurement strategy, so as to enable the Tenderer to prepare and complete its tender. The Principal shall have regard to the costs to the industry and the community at large. For instance, the Principal shall avoid the requirement to price multiple options or repeated rounds of tendering. The tender documents shall conform to the following objectives:

(a) Clearly state the contractual obligations of the parties including, for instance, responsibility for safety matters and industrial relations.

(b) Provide full details of all work required to be covered by the tender. (c) Provide all information known to the Principal which is relevant to enable Tenderers to

evaluate the risks in the project.

(d) The Principal shall ensure that the time allowed for both tendering and construction is reasonable.

(e) Use General Conditions of Contract that are standard in the industry and use Special Conditions only when there are special circumstances warranted by specific site and project requirements. General Conditions of Contract including Special Conditions should observe the principle that the party best able to control a risk should bear that risk.

(f) Clearly identify any Special Conditions required to be included in the contract which are not normally part of the General Conditions of Contract.

(g) Clearly identify any supporting information required from Tenderers.

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(h) Clearly state whether each Tenderer is required to state the Tenderer’s main subcontractors, or a small panel from which those main subcontractors will be selected, for that project.

(i) Nominate a person for the provision of additional information.

(j) Provide positive encouragement to Tenderers to incorporate maximum innovation while still satisfying the Principal’s basic commercial and technical objectives, by allowing them to submit options in addition to a conforming tender.

(k) Avoid Tenderers having to provide undue amounts of design and documentation work prior to the acceptance of a tender, unless the Principal offers to pay for such design work.

(l) Specify the method and time of lodgement of tenders, opening of tenders and public acknowledgment of Tenderers.

(m) Where appropriate, provide guidance to Tenderers as to the process of evaluation of tenders.

(n) Specify the tender validity period. (o) Inform Tenderers of their obligation to comply with this Standard. (p) Clearly state any Code of Practice which is applicable.

6.1.3 Selecting tenderers In determining who shall be invited to tender, the Principal shall, where appropriate, apply pre-qualification criteria and take into account compliance with any applicable Code of Practice. The Principal shall not discriminate against a prospective Tenderer who declines an invitation to tender. The Principal shall be expected to provide equal opportunity to all prospective Tenderers who are able to demonstrate their ability to carry out the work.

6.2 Tendering

6.2.1 General The Principal has an obligation to arrange the project funding before commencing the tendering process. Having called tenders, the Principal recognizes the commitment to proceed with the project.

6.2.2 Call for tenders The Principal shall allow sufficient time between inviting tenders and the closing of tenders, for Tenderers to make site visits and undertake any other work necessary to allow them to respond fully. The Principal shall make the site reasonably available for inspection by Tenderers. Where tenders are advertised, the advertisement shall include the following:

(a) An adequate description of the work required. (b) Details of when and where tender documents may be obtained. (c) Details of when and where tenders shall close. (d) The tender validity period.

(e) Details of any tender documentation deposit or purchase price required, if applicable, and the method of obtaining a refund of that cost.

(f) Whether and, if so, what Code of Practice is applicable. (g) The name, address and telephone number of the Principal’s appropriate contact person. (h) Whether the Principal will be providing an ‘in house’ tender price as part of the tender

process.

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In relation to Clause 6.2.2(h), Principals should have regard to the fact that the practice of a Principal providing an ‘in house’ tender price as part of the tender process is seen as contrary to the normal commitment of a Principal to proceed with the most advantageous tender. Public companies, when contemplating an ‘in house’ tender, should also have regard to the requirements of PART 3.2A of the Corporations Law.

6.2.3 Tendering methods While it is the prerogative of the Principal to use any method of selection, contracts would normally be entered into as a result of one of the following procedures:

(a) Selected tenders The Principal may maintain a register of approved prospective Tenderers whose capability has been confirmed. A small number of registrants is invited to tender on an appropriate rotational basis. The Principal should regularly advertise for prospective Tenderers wishing to be considered for inclusion on the register and regularly review and amend the register.

(b) Open tenders The Principal invites by public advertisement without restriction on the number of tenders sought. The Principal would normally require Tenderers to prove they have the necessary competence, resources, industrial relations, quality and safety management and financial capacity to carry out the work. The Principal may maintain a register of prospective Tenderers whose capability has been confirmed.

(c) Preregistered tenders The Principal invites expressions of interest for preregistration for a specific project or specific types of projects. Applicants are evaluated and a small number of those meeting the required criteria are invited to tender.

(d) Invited tenders The Principal invites tenders from a number of prospective Tenderers known to have the ability to undertake a project of the type proposed.

(e) Negotiation The Principal negotiates with a single prospective Tenderer to achieve an acceptable tender. Negotiations shall be carried out in good faith.

6.2.4 Tender inquiries The Principal shall not give to any Tenderer information that is not also given to all other Tenderers. The Principal shall nominate a person with knowledge of the work required to respond to all inquiries from Tenderers. All such inquiries shall be recorded, noting time and date of receipt and the issue discussed. Where an inquiry reveals a significant error, omission, ambiguity or discrepancy in the tender documents, the information provided to resolve the error, omission, ambiguity or discrepancy shall be promptly conveyed in writing to all Tenderers. Where briefing meetings are held for Tenderers, such meetings shall be minuted. The minutes shall be forwarded to all Tenderers, and become a part of the tender documents.

6.2.5 Amendments to tender documents The Principal has an obligation to avoid amendments to the tender documents. Where matters of significance make it necessary to amend tender documents during the tender period, the amendments shall be advised as an addendum forwarded to all Tenderers in sufficient time for all Tenderers to consider the addendum properly and fully before tenders close. Where appropriate, the tender period shall be extended when an addendum is issued.

The addendum shall state clearly that it is meant to be incorporated in the tender documents. Tenderers shall be required to confirm its receipt in writing, and should be required to confirm in their tenders that allowance has been made for each addendum. Minor changes to tender documents may be dealt with in precontract negotiations.

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6.3 Receipt of tenders All arrangements necessary shall be made to safeguard the security and confidentiality of all tenders. No information provided in a tender by a Tenderer shall be divulged by the Principal to another Tenderer at any stage during the tender process or after it has concluded. However it is acceptable to have public openings of tenders and disclosure of tender prices, provided it is advised in advance in the tender documents. Late tenders shall not be accepted, except where it is both clear that circumstances beyond the Tenderer’s control were the cause of lateness and that the integrity of the tendering process will not be compromised by accepting a late tender. Where a late tender is received, the time and date of receipt shall be noted on the document and endorsed by the recipient.

6.4 Closing of tenders It should be accepted procedure for the closing of tenders to be as follows:

(a) Not earlier than 2.00 p.m. (b) Not on a Monday or day following a public holiday. (c) At least one clear day after a weekend, building industry holiday or rostered day off. (d) At least one week after the recognized industry Christmas close down. 6.5 Evaluation of tenders Any tender which does not comply with the tender documents is liable to be rejected. The tender most advantageous to the Principal should be considered for acceptance. The Principal may reject any tender provided the Principal acts honestly and with probity in so doing. Tenderers may be encouraged to offer alternative proposals which shall satisfy the Principal’s requirements. Principals shall specify the conditions under which alternative proposals are to be submitted. Unless otherwise stated, alternative proposals should only be considered when submitted with a conforming tender. Where a Tenderer offers an alternative proposal, comparable prices for the alternative shall not be obtained by the Principal from other Tenderers nor shall the alternative be used as the basis for the re-call of tenders. However with the written consent of the Tenderer submitting the original alternative design or method of construction, the Principal may re- tender or require re-pricing of tenders incorporating alternative designs or methods of construction. If the Principal decides not to accept any tender and to re-call tenders, the original Tenderers shall be advised of the reasons for re-calling and, as a general principle where appropriate, invited to submit a new tender. If a previous tender condition which prevented a Tenderer from submitting a tender is removed, that Tenderer should be permitted to submit a new tender when re-called. Evaluation of tenders and Tenderers should include consideration of the following:

(a) Compliance with pre-qualification criteria and the applicable Code of Practice. (b) Conformity with the tender documents. (c) Value for money.

(d) Construction period. (e) Technical, managerial, physical and financial resources. (f) Other commitments affecting capacity to carry out the contract.

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Each of these factors may have a varying weighting or priority depending on the Principal and project involved. Tender evaluation criteria should be advised to the Tenderers.

6.6 Negotiation and selection In post-tender negotiations, the Principal shall not engage in unconscionable conduct by trading off different Tenderer’s prices against others in an attempt to seek lower prices. The Principal should first exhaust negotiations with the initially preferred Tenderer, before negotiating with a subsequent Tenderer. If none of the tenders is acceptable, negotiations for an amended tender may be conducted, in the first instance, with the initially preferred Tenderer. The successful Tenderer and the price which was accepted should be disclosed in writing to the Tenderers.

7 OBLIGATIONS OF TENDERERS 7.1 Call for tenders Tenderers shall only submit tenders if they genuinely believe they have the competence and capacity to undertake the work being offered. In the case of selected, preregistered or invited tenders, a Tenderer may decline to tender, and should promptly advise the Principal of this decision.

7.2 Return of tender documents Unsuccessful Tenderers shall return tender documents to the Principal, provided Tenderers are informed of this requirement prior to receiving the documents.

7.3 Evaluation of tender documents Tenderers shall thoroughly familiarize themselves with the documents, and the site upon which the project is to be constructed, and if in doubt seek clarification from the Principal, to ensure that their tenders are complete and reflect a full understanding of the documents and the work required. No Tenderer shall seek or expect to be given information that is not also provided to all other Tenderers.

During the tender period, Tenderers shall promptly advise the Principal of errors, omissions, ambiguities or discrepancies in the tender documents of which they become aware.

7.4 Formulation of tenders No Tenderer shall engage in any uncompetitive behaviour or other practice which denies legitimate business opportunities to other Tenderers or other participants in the tender process including, but not limited to the following:

(a) The payment of unsuccessful tender fees. (b) The payment to any third party of moneys, incentives or other concessions contingent

upon the success of the tender, which do not relate to the provision of bona fide services relevant to the object of the tender.

Tenderers shall observe all relevant statutory and other legal requirements in the formulation of their tenders and shall not—

(i) accept or provide secret commissions; (ii) collude with other Tenderers; (iii) submit inflated tenders (i.e. cover prices) to advantage another Tenderer;

(iv) enter any improper commercial arrangements with any other contractors, subcontractors, suppliers, agents or any other party;

(v) seek to influence contract decisions by improper means; or (vi) accept incentives to provide contracts or services to other contractors,

subcontractors or suppliers which financially disadvantage the Principal.

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7.5 Submission of tenders As a safeguard against malpractice, Tenderers or, where the Tenderer is a corporation, a representative of the Tenderer, shall, if requested by the Principal, demonstrate or attest to:

(a) Whether the Tenderer has entered into any contract, arrangement or understanding to pay any moneys to an association and, if so, the details of the contract, arrangement or understanding.

(b) Whether the Tenderer has entered directly or indirectly into any contract, arrangement or understanding with any other Tenderer, and if so, the details of that contract, arrangement or understanding.

(c) Whether the Tenderer has entered into any contract, arrangement or understanding with anyone else which shall or may have the effect of increasing the tender price of all Tenderers.

(d) Whether the Tenderer has any knowledge of the tender price or cover price or a price which can be used as a cover price of any other Tenderer and, if so, the details of that knowledge.

8 CONFIDENTIALITY All information provided between Tenderers and the Principal shall be treated as confidential information. Both the Tenderer and Principal shall undertake to maintain that information as confidential and commercial in confidence.

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