• Procurements of construction services, as defined in the CPRs: Total estimated value ≥ $7.5 million (including GST)

  Has applied to new procurements since 1 July 2024

  ‘Construction services’ in the ESP has the same meaning as in the CPRs. For example, procurements of ‘construction services' include procurements of fitout for new office accommodation and procurements of infrastructure
  

• Procurements of furniture, fittings and equipment: Total estimated value ≥ $1 million (including GST)

  Will apply to new procurements from 1 July 2025

  Applies to office and other buildings, including dining halls, living-in accommodation and gyms

  E.g. – procurements of office desks and chairs, partitioning, beds, dining hall furniture and lighting
  

• Procurements of IT goods: Total estimated value ≥ $1 million (including GST)

  Will apply to new procurements from 1 July 2025

  E.g. – procurements of laptops, mainframes, phones, tablets, servers, printers
  

• Procurements of textiles: Total estimated value ≥ $1 million (including GST)

  Will apply to new procurements from 1 July 2025

  E.g. – procurements of uniforms, carpets, bedding

Note – Relevant Entities are encouraged to apply the ESP to those procurements which have an estimated value close to the applicable threshold in the above.

Contracts or deeds of standing offer that are in place prior to the applicable commencement date (see above) do not need to be amended. However, reporting requirements apply to individual procurements from panels or standing offer arrangements where the procurement meets the relevant thresholds.

Considerations when applying the ESP

Drawing on the ESP and the guidance in the Sustainable Procurement Guide, our top tips for applying the ESP are:

Before the ATM is released

• Ensure your internal procurement documents address the ESP requirements. For example, we suggest you consider:
  • Explaining how environmental outcomes can be achieved from the procurement in the procurement plan;
  • Addressing any applicable environmental considerations in the risk assessment for the procurement;
  • Including clear guidance in the evaluation plan so evaluators understand how to objectively assess tendered responses to environmental sustainability requirements, including how the contents of a Supplier Environmental Sustainability Plan (SESP) will be assessed;
• Ensure your ATM and draft contract contain clauses to address ESP requirements
  • Model clauses are now available from the DCCEEW’s website here or clauses substantively the same as the model clauses;
  • Consider what ratings (eg Green Star), metrics or certifications are applicable to your procurement and that you want to apply;
  • Check that your draft contract allows you to measure and enforce any sustainability commitments;
• Confirm key personnel involved in the procurement, including evaluators, are across the ESP requirements.

After the ATM is released

• Explain the ESP requirements to potential tenderers through an industry briefing:
• Engage expert advisers when appropriate to assist in evaluating tendered responses around ESP, such as to help evaluators:
  • Understand different environmental ratings, accreditations or certifications;
  • Make an informed decision around whole of life costs;
  • Assess any tendered non-compliances;
  • Understand a tenderer’s response to the SESP;
• Formulate negotiated outcomes that are feasible, appropriate and complement contract administration (see further below).

Post contract award

• In debriefings, consider providing specific feedback on a tenderer’s response to the ESP requirements (including the SESP)
  • Why? This helps promote awareness about the ESP, reinforces the importance of sustainability in determining value for money and will help tenderers understand how to improve their responses;
• In administering and managing the contract:
  • Monitor contractor performance, including with any reporting obligations;
  • Enforce ESP commitments;
  • Implement internal reporting requirements.

What should be dealt with in a SESP

The SESP is essentially a tenderer response form designed to address the ESP requirements (see template SESPs available from the DCCEEW's website here).

You should determine whether or not to set a Sustainability Rating for your construction project. That decision will drive which template is selected.

Use the Option A template if the procurement involves third party certifications to verify environmental sustainability. DCCEEW recommends using:

• • Green Star ratings for new buildings, major refurbishments and fitouts (noting that Green Star ratings will also help the Relevant Entity meet requirements under the Net Zero in Government Operations Policy);
  • Infrastructure Sustainability Rating for procurements of roads, pavement, airfields, utilities or other infrastructure.

Use the Option B where sustainability ratings will not be imposed. The metrics and associated data to be specified in the SESP may include:

• Whether NABERS 4-star embodied carbon certification is achieved;
• Data (based on invoices) to show the proportion of products with recycled material compared with the total spend on project materials;
• Data (based on waste invoices) to show the total waste generated and the resources recovered for recycling.

Each template can be modified to suit the features of the procurement. Each template asks tenderers to respond to questions from a technical perspective (such as track record in similar projects), how their organisation is minimising its environmental impact and tenderer experience with innovation to improve environmental sustainability outcomes.

The agreed SESP will then form part of the contract with the successful tenderer.

Contract administration

As a general rule, the metrics in the SESP on contract award will apply for the duration of the contract.

The successful tenderer and the Relevant Entity should meet at agreed intervals throughout a contract to determine any perceived risks to the delivery of the SESP or opportunities for improvement.

Contract administrators should consider extending their usual contract management processes to ESP related requirements (eg diarising any milestones for ESP related deliverables, including those that may be detailed in the SESP; and raise any ESP related issues in relationship meetings).

For procurements of construction services, it is important to consider how non-compliance with ESP related obligations will impact on practical elements of the project, for example - practical completion tests and delays or extension of time claims, or ongoing operating costs or performance of the works as constructed.

Reporting obligations

Relevant Entities and suppliers have reporting obligations:

• Procuring entities need to submit supplier reports to DDCEEW every February and August and contribute to whole of government reporting requirements
• Suppliers need to:
  • Report on all contracts with a Relevant Entity where the ESP applies;
  • Manage their subcontractors performance against the ESP commitments, including reporting and data gathering;
  • Provide a copy of a SESP to DCCEEW upon request.

DCCEEW will aggregate reporting from all Relevant Entities to create a whole of Australian government report against the ESP policy. This report will be published on DCCEEW’s website detailing results against the ESP key performance indicators.

DCCEEW may draw on the data from the metrics reported against the ESP Policy Reporting Framework to establish a baseline environmental sustainability in Australian Government procurements. Such targets may be included in future iterations of the ESP.

Contract administration and proactive report management from suppliers will maximise the benefits of the ESP reporting.

Considering contract variations

While there is flexibility for an entity and successful tenderer to modify the SESP requirements, Commonwealth officials will need to be mindful of the appliable principles and policies around contract variation (see here) before agreeing such changes.

In a construction context, before agreeing to changes in a SESP, Commonwealth officials should be particularly mindful of whether a change in the SESP has a broader effect, eg a time or cost implication or on the quality of the design.

Key takeaways

The ESP is now in effect for new ATMs for construction services valued at $7.5M or higher (including GST).

Procuring officials involved with planning for procurements of furniture, fittings, equipment, IT goods or services or textiles valued at $1M or higher (including GST) in the next financial year may wish to familiarise themselves with the ESP and the associated implementation tools as part of preparing themselves for their procurements.

Relevant officials should build in sufficient time to get across the ESP requirements, communicate them to potential tenderers and ensure they have the appropriate levers in their contracts to enforce any policy related commitments.