Debarment Regime: Guide for suppliers

What the Regime does

The Regime establishes grounds, process and governance that allows us to work with suppliers to improve business practices, and in the worst cases of wrongdoing, prevents suppliers from working with us.

The Regime applies to suppliers that supply, and subcontract to supply, goods, services, community services, and works to the WA Government. 

Finance’s Director General is the decision maker responsible for debarment investigations and determining whether a supplier may be:

• excluded (suspended or debarred) from doing business with the State, or
• invited to enter a supplier undertaking with the State instead of being excluded.

In this guide, a reference to an excluded supplier means a supplier that is either suspended or debarred.

How we apply the regime

The Regime is applied across government to State agencies bound by the Act. 

The regime commenced on 1 January 2022 but is retroactive so it may affect contracts in place before 1 January 2022.

Components of the regime

The Regime comprises:

• the Act which sets the broad parameters for the debarment regime
• the Regulations which set the processes for the debarment regime.

Who is a supplier?

A supplier is a person or organisation that directly or indirectly supplies or proposes to directly or indirectly supply goods, services or works to a State agency.

A supplier:

• holds a contract with a State agency or subcontracts under a contract with a State agency, or
• makes or proposes to make an offer to a State agency to supply goods, services or works as a contractor or subcontractor.

Suppliers may be excluded because of their own conduct or that of their senior officers.

Affiliates of debarred supplier may also be excluded.

Senior officers

The term ‘senior officer’ includes people such as company directors and secretaries, other office holders, partners of a partnership, or a person who is responsible for or participates in important decisions that affect the supplier’s business or financial standing.

There are limitations on the scope of senior officer conduct that is relevant to debarment, for example:

• the senior officer must have been acting for the supplier, or
• the supplier must have been aware or ought to have been aware of the conduct of the senior officer, or
• the supplier must have been convicted of an offence or had a penalty imposed on it because of the senior officer’s conduct.

Affiliates

An affiliate is an entity that:

• controls or is controlled by the debarred supplier
• is a related body corporate of the debarred supplier
• has a senior officer who is also a senior officer of the debarred supplier
• is the successor (whether immediate or not) to, or of the whole or part of the business of, the debarred supplier.

Affiliates of a supplier may also be excluded if the decision maker is satisfied it is in the public interest.

Exclusion under the Regime means the suspension or debarment of a supplier or an affiliate of the supplier.

Exclusion

Exclusion under the Regime means the suspension or debarment of a supplier or an affiliate of the supplier.

There are 3 categories of debarment conduct. The consequences that follow for debarred suppliers and affiliates under each category are the same, but the grounds and duration are different. 

Only Category A debarment conduct is a ground for suspension.

The information below provides a summary. However, please refer to the Regulations for the full list of conduct for which suppliers may be excluded.

If you would prefer to see the information summarised in table format, please visit Debarment Regime: exclusion table. 

Suspension

The decision maker may suspend a supplier prior to the making of a debarment decision if:

• the supplier is under investigation for Category A debarment conduct by the supplier or one of its senior officers, and
• suspension is in the public interest.

The supplier may be suspended for an initial period of 12 months. The decision maker may extend the suspension by 6 month increments, up to a maximum of 5 years if:

• an official investigation or proceedings in relation to the underlying conduct is pending or still in progress, and
• the decision maker has not yet made a debarment decision.

The decision maker may terminate the suspension of a supplier at any time and must terminate the suspension if:

• an official investigation or proceedings in relation to the underlying conduct is discontinued, withdrawn or dismissed, or
• the decision maker decides not to debar the supplier.

Suspension of affiliates

An affiliate of a supplier may also be suspended, if:

• that entity is under investigation as an affiliate of a debarred supplier or that entity will become an affiliate when the principal supplier is debarred,
• that entity is a ‘supplier’ as defined in the Act, and
• suspension is in the public interest.

The affiliate may be suspended for the same duration as the principal supplier.

Category A debarment conduct

Category A debarment conduct captures the most serious offences and contraventions covered by the Regime.  Schedule 1 of the Regulations lists specific legislative provisions that are  Category A debarment conduct.

Before a supplier can be debarred for Category A debarment conduct, the decision maker must be satisfied that:

• the supplier or a senior office of the supplier has been convicted of an offence or had a penalty imposed with respect to the conduct, or
• the conduct occurred and the supplier has not denied that conduct in submissions made to the decision maker, and
• debarment is in the public interest.

The decision maker must make the debarment decision within 3 years of:

• date of conviction or the date on which the penalty was imposed, or
• date on which the conduct occurred.

A supplier may be debarred for up to 5 years for Category A debarment conduct.

Category B debarment conduct

Category B debarment conduct captures offences and contraventions under the legislation listed in  Schedule 2 of the Regulations.

Before a supplier can be debarred for Category B debarment conduct, the decision maker must be satisfied that:

• the supplier or a senior officer of the supplier has engaged in Category B debarment conduct, and
• debarment is in the public interest.

The decision maker must make the debarment decision within 3 years of:

• date of conviction or the date on which the penalty was imposed, or
• date on which the conduct occurred.

A supplier may be debarred for up to 2 years for Category B debarment conduct.

Other debarment conduct

Other debarment conduct is conduct by a supplier or senior officer of a supplier that is not Category A or B debarment conduct, but the decision maker is satisfied is of a such a nature that procuring goods, services or works from the supplier would be likely to have a material adverse effect on:

•  the integrity of, and public confidence in, the procurement activities of State agencies, or
• the reputation of the State, or
• the business risk to State agencies.

Other debarment conduct also includes:

• a failure to cooperate with a debarment investigation, and
• debarment under another debarment regime.

Before a supplier can be debarred for other debarment conduct, the decision maker must be satisfied that:

• the supplier or a senior officer of the supplier has engaged in other debarment conduct, and
• debarment is in the public interest.

The decision maker must make the debarment decision within 3 years of:

• date of conviction or the date on which the penalty was imposed,
• date of debarment under the other debarment regime, or
• date on which the conduct occurred.

A supplier may be debarred for up to 2 years for other debarment conduct.

Debarment of Affiliates

An affiliate of a debarred supplier can be debarred provided that:

• the entity falls within the definition of ‘affiliate’ in the Regulations, and
• the decision maker is satisfied that debarment is in the public interest.

The decision maker must make the decision to debar an affiliate within 3 years of the debarment of the principal supplier.

The affiliate may be debarred for a period up to the maximum period for which the principal supplier could have been debarred.

Exclusion creates consequences and obligations for both suppliers and State agencies. If an affiliate is suspended or debarred, the consequences will apply equally to the affiliate.

The consequences will only be waived in exceptional circumstances, where it is in the public interest to do so. A State agency must ensure approval to do so is granted by the decision maker.

State agencies

If a State agency has contract(s) with:

• a debarred supplier, they may terminate the contract(s), or
• a suspended or debarred supplier, they must not extend the scope or duration of the contract while the supplier is excluded.

A State agency must not consider offers received from or award new contracts to:

• an excluded supplier in their own right or as an agent or representative of another supplier, or
• any supplier who will supply the relevant goods, services or works under a subcontracting arrangement with an excluded supplier.

Suppliers

The consequences of exclusion for suppliers are:

• debarred suppliers will be named on the Debarment Register on Tenders WA
• existing contracts with State agencies may be terminated (if the supplier is debarred) and must not be extended, and
• excluded suppliers must not seek or be awarded new contracts in their own right or as an agent or representative of another supplier.

A supplier that is not excluded must ensure that they do not engage excluded supplier(s) as  subcontractor(s) when seeking to supply goods, services or works to State agencies. State agencies cannot consider an offer received from or award a contract to a non-excluded supplier if the supplier intends to use excluded subcontractor(s).

How long is exclusion?

A supplier may be debarred for up to 5 years for Category A debarment conduct, or in any other case for up to 2 years. The decision maker retains the discretion to debar suppliers for a lesser period.

Suppliers may also be suspended pending a debarment decision for Category A debarment conduct while an investigation is ongoing. The initial period of suspension may continue for up to 12 months.  At the expiration of 12 months, if the official investigation or proceeding for the conduct is still pending or ongoing, the suspension may be renewed for periods of up to 6 months. However, the total period of suspension cannot exceed 5 years.

What is a supplier undertaking?

A supplier undertaking is an arrangement between the supplier and government, to which both parties agree. A supplier undertaking may be offered to ‘stay’ any of the consequences of exclusion or suspension.

A supplier undertaking may be offered to a supplier under investigation for any debarment conduct.  The decision maker has the sole discretion to offer a supplier undertaking.

A supplier undertaking is likely to be offered where the conduct by the supplier may be mitigated or remedied. It’s less likely to be used for Category A debarment conduct.

A supplier undertaking may contain any provisions, but is likely to contain those relating to the:

• removal of particular employees
• remediation of particular conduct, for example, paying overdue taxes
• implementation or extension of compliance or employee training programs.

A supplier undertaking may also require the supplier to:

• furnish particular documents or information to the decision maker
• report to third parties
• be subject to external auditing.

The supplier will be responsible for the costs of fulfilling the requirements of the supplier undertaking.

What happens if a supplier doesn’t comply with a supplier undertaking?

If a supplier doesn’t comply with a supplier undertaking or fails to perform the undertaking to the satisfaction of the decision maker, the consequences that would have been applied but for the undertaking, will be applied.

Who can initiate an investigation?

An investigation may be carried out on the initiative of the decision maker or at the request of another State agency.

The decision maker may investigate whether a supplier should be excluded if the decision maker reasonably suspects that the supplier or senior officer of the supplier:

• has engaged in any conduct for which a supplier may be excluded (for example, Category A debarment conduct, Category B debarment conduct, or other debarment conduct), or
• proceedings have been taken against a supplier or senior office for conduct for which the supplier may be debarred.

How will the decision maker investigate suspected debarment conduct?

The decision maker will not typically investigate the conduct of the supplier but will rely on other entities responsible for the oversight and enforcement of legislation that is included in the Regime. For example, the decision maker will rely on investigations and enforcement action by other government bodies such as the Australian Securities and Investments Commission, Australian Federal Police, RevenueWA and WA Police Force. 

The decision maker must simply be satisfied that the conduct is a ground for exclusion and that it’s in the public interest to exclude the supplier.

Can a supplier make submissions before a decision is made?

Before making a debarment decision, the decision maker must issue a show cause notice to the relevant supplier and give them with at least 7 days to make submissions. If the supplier chooses to make submissions, the decision maker must consider those submissions before making the debarment decision.

The show cause notice must give the supplier notice of:

• the fact that the supplier is under investigation and the reasons for the proposed debarment
• the procedures that apply to debarment, including in relation to supplier undertakings and supplier’s rights to seek review of the final decision, and
• the consequences of debarment.

The decision maker is not required to issue a show cause notice before making a decision to suspend a supplier.

Is suspension or debarment of a supplier in the public interest?

The decision maker must take public interest into account when making the following decisions under the Regime when:

• making a suspension or debarment decision in relation to a supplier and their affiliates
• limiting the consequences of exclusion for a supplier at the request of a State agency
• making a decision to retain, revoke, or amend an exclusion decision at the request of an excluded supplier.

When determining whether debarment of a supplier and their affiliates, and the duration of the debarment, is in the public interest, the decision maker may consider all or any of factors included in the Regulations (see subregulation 7).

Will the supplier be notified at the end of the investigation?

At the conclusion of every debarment investigation, the decision maker must give the relevant supplier notice of their decision to debar or not to debar.

If the decision maker debars the supplier, the notice must include the:

• reasons for the decision
• duration of the debarment, and
• supplier’s rights to have the decision reviewed.

What rights do suppliers have to request a decision review?

An excluded supplier may apply to the State Administrative Tribunal for review of a:

• suspension or debarment decision, or
• refusal by the decision maker to revoke or amend a suspension or debarment decision after a request for reconsideration has been made.

Can a supplier request reconsideration of a decision when circumstances change?

Suppliers that have been excluded are able to ask the decision maker to review a suspension or debarment decision, but only where:

• information that is materially relevant to the decision becomes available that was not available to the decision maker or the supplier at the time of the decision and that could not have been obtained by the supplier with reasonable endeavours, or
• the decision was made because of a conviction for an offence or imposition of a penalty and that has been quashed or overturned, or
• there is a genuine change in management of the supplier since the decision was made, or
• there has been any other change in circumstance that the decision maker considers appropriate to justify reconsideration of the decision.

If an excluded supplier requests that the decision maker revoke or amend a suspension or debarment decision, the decision maker must reconsider the original decision. The decision maker must then give the supplier notice of their decision to retain, amend, or revoke the original decision.

Procurement Assurance

If you have any queries, please email Procurement Assurance.