CCF WA’s Local Government Contracting Survey shows most contractors believe councils will achieve better value through open tenders for civil construction works rather than using the WALGA Preferred Supplier Program (PSP).

While many contractors saw potential in the PSP concept to deliver value for money by streamlining local government works procurement, there were widespread concerns with the way it operates.

Currently, contractors pay WALGA a commission of 1% of the value of civil works contracts won through the PSP. Despite contractors having to factor in this extra cost, WALGA tells councils they will receive cheaper prices through the PSP. The survey results challenge this claim, with 88% of respondents saying councils don’t receive better value using the PSP. As one survey respondent commented: “The 1% must come from somewhere”.

The PSP commission on a $10 million contract can mean that either the contractor or the LGA (depending on who ultimately absorbs the extra cost) effectively makes a $100,000 donation to WALGA.

Two-thirds of survey respondents believe a fairer, more transparent system would be for WALGA to charge LGAs a fee for using the PSP. A fee-for-service payment structure would allow LGAs to make an informed decision, weighing the cost of using the PSP against any internal administrative savings.

Other findings from the report include:

Most respondents (69%) said LGAs are generally ineffective at communicating their forward pipeline. While there are some welcome exceptions, the general lack of pipeline communication means contractors are often given inadequate time to plan their workflows and allocate resources.

The quality of project designs and tender documentation prepared by LGAs is highly variable. Many respondents noted that the quality of designs and documentation often depends on the consultant engaged by the council, which creates a risk as the experience and qualifications of consultants varies widely.

While some LGAs clearly communicate their tender evaluation processes and reasons, there is generally room for improvement. An earlier CCF WA report, Transparency in Western Australian Local Government tender evaluation (July 2022) looked at this issue in detail. CCF WA has welcomed proposed legislative reforms to improve transparency (amendments to Section 5.23) and we look forward to their implementation.

LGAs are mostly regarded as fair and reasonable in their management of contracts and payments. A resounding 93% of respondents rated contract management and payment practices as always or usually fair and reasonable, although about half noted occasional issues. These issues tend to stem from the lack of certainty created by poor designs and documentation.

CCF WA has shared the survey report with all Local Government CEOs and Mayors/Presidents, Local Government Minister Hannah Beazley, and new Local Government Inspector Tony Brown. We hope this survey can be a catalyst for much needed changes in this important sector.

Click here to download CCF WA’s 2025 Local Government Contracting Survey.