Effective date: 1 July 2018
Objective: To explain the process of attestation and outline what would constitute a compliance deficiency and a material compliance deficiency for reporting purposes
Summary
Agencies must establish effective governance frameworks for Public Construction Procurement, that are appropriately scaled to the profile of the Public Construction Procurement undertaken.
The Accountable Officer of a Portfolio Department is responsible for:
- establishing appropriate requirements for the conduct of Public Construction Procurement by Excluded Entities (where the portfolio includes Excluded Entities);
- supporting Portfolio Agencies to perform Public Construction Procurement; and
- reporting matters relating to portfolio entities.
The Agency’s Accountable Officer is required to attest compliance with the Directions in the Agency’s annual report.
The Agency’s audit committee, or equivalent review mechanism, must be satisfied with the attestation of compliance with the Directions.
This Guidance describes governance frameworks for Public Construction Procurement and compliance attestation requirements.
Establish governance framework for Public Construction Procurement
Agencies must develop appropriate and effective governance frameworks to ensure compliance with these Directions. This includes establishing appropriate record management systems.
The framework established is scalable and needs to reflect the size, frequency and complexity of the Public Construction Procurement the Agency undertakes.
Where an Agency does not undertake Public Construction Procurement, it does not need to establish governance frameworks for Public Construction Procurement.
Requirements of the Accountable Officer
General requirements of the Accountable Officer
Ensuring compliance with the Standing Directions 2018 under the Financial Management Act 1994 requires Public Construction Procurement to be managed in accordance with the requirements of the Directions for Public Construction Procurement. The Responsibilities of the Accountable Officer (Direction 10.1) requires the Accountable Officer, to the extent relevant to operations, to:
(a) ensure the Agency is appropriately resourced with staff qualified and skilled to undertake Construction Procurement;
(b) establish appropriate and effective governance frameworks to ensure compliance with the Directions including appropriate record management systems;
(c) ensure responsibility, authority and accountability for Public Construction Procurement is defined and allocated within the Accountable Officer's operating frameworks, including documenting:
(i) who is responsible for monitoring compliance with the Directions and ensuring systems and processes to support the Directions are in place; and
(ii) who is responsible and accountable for decision making and any approvals required under the Directions;
(d) ensure that exemptions from the Directions and Instructions are sought and dealt with appropriately.
Portfolio relationship
Under section 13A of the Public Administration Act 2004 (Vic), the Department Head (Secretary) is responsible for advising the portfolio Minister on matters relating to relevant portfolio entities and for working with and providing guidance to these entities.
Consistent with this role, Department Heads are expected to advise the portfolio Minister if any significant construction procurement issues relating to their relevant public entities arise. This requirement is separate to attestation.
Establish requirements for Public Construction Procurement for Excluded Entities
The Portfolio Department is required to establish appropriate requirements for the conduct of Public Construction Procurement by the Excluded Entities. Refer to Portfolio Department responsibilities for Excluded Entities (Direction 1.3.4).
This is intended to ensure that the requirements, including any accountability requirements, are scalable and appropriate for the nature of Works or Construction Services that Excluded Entities undertake.
Support Portfolio Agencies to perform construction procurement
For Portfolio Agencies that are not Excluded Entities, the Portfolio Department plays a support role, with the Accountable Officer of the relevant Portfolio Department retaining overarching accountability for ensuring Portfolio Agencies implement the Directions. See Agencies that must comply with these Directions (Direction 1.3.2).
This is intended to promote consistency of practice and to allow the Portfolio Department to provide relevant information to the Responsible Minister regarding Public Construction Procurement undertaken across the portfolio.
Annual attestation of compliance with Directions
Standing Directions 2018 made under the Financial Management Act
Accountability for compliance with the Directions is held by the Accountable Officer or the Responsible Body. Attestation is directed by the Standing Directions 2018 under the Financial Management Act 1994 at Standing Direction 5.
Standing Direction 4.2.4 Public Construction Accountability requires the Agency to apply the Ministerial Directions for Public Construction Procurement. Standing Direction 4.2.4 is effective from 1 July 2018.
Standing Direction 4.2.1 Acquisition of assets, goods and services (and the supporting Instruction 4.2.1 and Guidance 4.2.1), covers a range of activities including procuring goods and services (including commissioning), and investing in assets and infrastructure and established performance and financial standards and processes to be met. Standing Direction 4.2.1 is effective from June 2016.
Annual attestation of compliance with Directions
The Directions for Public Construction Procurement are reinforced by the Standing Directions 2018 under the Financial Management Act 1994, which set out a number of relevant matters including the requirement to demonstrate compliance with the Directions for Public Construction Procurement. This takes the form of a public attestation by the Accountable Officer (or board of a public sector agency) published in the Agency’s annual report.
The organisation’s audit committee, or an alternative review mechanism when there is no audit committee, must be satisfied with the view expressed in the attestation before finalising the attestation.
Attestation of compliance with the Directions for Public Construction Procurement is subject to transitional arrangements. For the 2018-19 year attestation against Standing Direction 4.2.4 applies as at 30 June 2019, that is attestation is required for that specific date, instead of applying to the whole financial year 2018-19. This transitional provision provides Agencies an extended period in which to adapt systems and processes to meet the requirements of the Directions. For clarity, attestation against all other Standing Directions applies for the full period 2018-19.
Attestation against Standing Direction 4.2.4 applies as described in the Standing Directions 2018 under the Financial Management Act 1994 – that is attestation is made over the entire period – from the 2019-20 year forward, together with attestation against all other Directions.
The Standing Directions 2018 under the Financial Management Act 1994 also require Agencies to assess any compliance deficiencies and report material compliance deficiencies as part of the attestation.
Useful resources
Compliance attestation checklist
Checklist of mandatory items in the Standing Directions 2018 under the Financial Management Act. It is designed to help with monitoring, reporting on and attesting to compliance.
This checklist details the mandatory requirements to be met to allow for full attestation of compliance with the Directions for Public Construction Procurement.
Agency compliance report template
This template has been developed for use by Agencies reporting annual compliance outcomes against the Standing Directions 2018 under the Financial Management Act to their Portfolio Department.
Relevant yearly Model (Annual) Report
Provides a guide when preparing the annual report, including how to make an attestation
Fact sheet - Comparison of 2016 and 2018 Ministerial Directions for Public Construction
Describes where the 2016 Directions have been incorporated into the 2018 Directions and gives a summary of what has changed.
Integrated procurement framework template
Most Agencies use:
The Accountable Officer may decide to combine these into one integrated framework.
A template is available to help combine these. Go to the Buyers Procurement Group on the Innovation Network and download Integrated procurement framework template.
Tools and support
The Practitioners Toolkit includes key documents, guidance and information about the Ministerial Directions and Instructions for public construction.
For further information about the Ministerial Directions and Instructions for public construction procurement, please contact the Construction Policy Team.