Topic 2: Local Jobs First Policy
Policy objectives
- Create jobs for Victorian workers, including apprentices, trainees, and cadets
- Support local businesses and SMEs to participate in government projects
- Build a skilled workforce for the construction and infrastructure sectors
- Strengthen regional economies and communities through local content and training
- Encourage ethical and sustainable procurement practices
Victoria’s Local Jobs First Policy uses government projects to create jobs, support local businesses and build a skilled workforce. It applies to all Victorian government projects above certain thresholds and is mandatory for suppliers bidding on State funded projects.
The policy includes two main components:
- Victorian Industry Participation Policy (VIPP)
- Major Projects Skills Guarantee (MPSG)
Victorian Industry Participation Policy (VIPP)
Policy objectives
- Increase local content in goods and services procured by local SMEs
- Promote economic growth and employment opportunities for local SMEs
- Encourage collaboration and supply chain engagement with local SMEs
Eligible projects
The VIPP Act applies to government departments and agencies with regional projects that have a head contract value between $1 Million and $50 Million and metropolitan projects with a head contract value between $3 Million and $50 Million. This means the eligible projects must consider competitive local suppliers, including SME’s.
Note
- VIC Government engage ICN to analyses their projects and identify local content opportunities on their projects. ICN notify the Department of the allocated local content targets for the project and the Department then specify the targets in the tender documentation. Head Contractors then respond to the targets in their LIDP.
- Local content carries a 20% weighting criteria in tender responses. Made up of:
- 10% for the Local Industry Development Plan
- 10% for local job outcomes
- Local Industry Development Plans must be signed off by the Industry Capability Network (ICN)
Local content calculations
Head contractors calculate local content to propose what can be delivered on the project. Depending on the project, the minister may choose to or must set minimum local content requirements. Calculations for new and retained jobs determine the Annual Employee Equivalent (AEE).
Local content
- Head contractors are required to propose the local content that can deliver on the project such as:
- Procurement spend with local businesses
- Procurement spend with Aboriginal businesses
- Procurement spend with SMEs based in regional areas
- New and retained jobs
- New and retained jobs for apprentices
- On Standard projects, the Minister responsible for Local Jobs First may set minimum local content requirements
- For Strategic projects, the Minister must set local content requirements so that at least 90% of the project’s total value comes from local suppliers, materials and labour
New and retained jobs
- New and retained job numbers must be provided in Annual Employee Equivalent (AEE)
- Annual Employee Equivalent (AEE) = The total paid hours of the contract / total full time working hours paid yearly to a full time employee
- VIC Government specifies 1,976 as the total full time working hours paid yearly to a full time employee (38 hours per week for 52 weeks)
Example: New jobs
Keller estimates that 2 new jobs will be created on Project XYZ. One of the jobs will include an estimated 2,000 hours to be worked on the project and the other job will require an estimated 1,500 hours to be worked on the project.
- Total paid hours of the contract = 3,500 (2,000 + 1,500)
- Total full time working hours paid yearly to a full time employee = 1,976
- Annual Employee Equivalent = 1.77 new jobs created due to the project (3,500/1,976)
Example: Retained jobs
Keller estimates that 25 existing employee’s jobs will be maintained because of Project XYZ. Each employee is estimated to work 600 hours on the project.
- Total paid hours of the contract = 15,000 (600 x 25)
- Total full time working hours paid yearly to a full time employee = 1,976
- Annual Employee Equivalent = 7.59 retained because of the project (15,000/1,976)
Key terms
Understanding the key terms within the Victorian Industry Participation Policy is necessary for meeting its requirements. These definitions explain relevant terms within the Policy and what is being measured. These terms provide the foundation for knowing what the Policy expects and how compliance will be assessed.
Local content
- Procurement of goods, services, or construction performed by Victorian or ANZ-based businesses less international content, including
- Fees, margins, profits
- Tax, tariffs
- Insurances, certification
- Freight, transport
- Engineering, planning, commissioning, manufacturing
LIDP
- A plan showing how local industry will be engaged
LJF
- Local Jobs First Policy
Retained job
- One Annual Employee Equivalent (AEE) that has been working for the employers before signing a project contract and is now working in tasks related to the project. May also be referred to as an existing employee
New job
- One Annual Employee Equivalent (AEE) that has been specifically employed for the project
Victorian Management Centre (VMC)
- An online system hosted by the ICN and used by agencies and suppliers for LJF project registration, reporting and completion
Trainees
- A worker undertaking an entry-level role under a training contract with an employer that combines training with paid employment
SMEs
- Small to medium-sized enterprises
Cadet
- A worker undertaking an entry-level role that combines formal tertiary training with paid practical work experience
Apprentice
- A worker under a training contract with an employer that combines structured training with paid employment and must be:
- Undertaking a course that relates directly to their role on a LJF project and is consistent with the training contract and
- Registered with the Victorian Registration and Qualification Authority (VRQA)
Reporting
Reporting responsibilities are shared between head contractors and subcontractors, with each required to complete specific tasks to demonstrate compliance and track progress under the Victorian Industry Participation Policy.
The head contractor is required to:
- Track supplier engagement and report every six months throughout the project lifecycle via the Victorian Management Centre (VMC)
- For significant changes to the LIDP, the head contractor must work with the ICN to identify local alternatives
- Submit a Project Completion Report
Subcontractors are required to:
- Meet the contract terms set out in the contract with their subcontract
- Report their supplier engagement and apprentice, trainee and cadet hours to the head contractor with their payment claim throughout the project
Evidence
Evidence must verify procurement spend with Aboriginal-owned subcontractors, small and medium enterprises, and local businesses, as well as apprentice, trainee, and cadet hours contributed on- and off-site.
Local content
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Procurement spend with Aboriginal-owned subcontractors and suppliers
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Procurement spend with small and medium enterprises
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Procurement spend with local businesses
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Procurement spend with businesses not majority Indigenous-owned, even if they employ Indigenous staff
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Procurement spend with unverified claims of Indigenous ownership (not certificated with Supply Nation or equivalent)
- Procurement spend with large businesses or overseas businesses
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Copies of subcontract or supply agreements
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Invoices and payment records
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Supply Nation certification or equivalent
- Confirmation of SME status of contractors or suppliers
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Project name
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Business details, name, structure, ownership
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Dates the services were provided
- Cost of services or supply provided
Apprentice, trainee and cadets
- On-site work hours worked by apprentices, trainees and cadets
- Off-site work that contributes directly to the project (e.g. manufacturing parts for the site)
- On-site or off site work completed by employees not enrolled in a formal traineeship or apprenticeship qualification
- Timesheets
- Payroll reports
- Site sign in sheets
- Project name
- Employee name
- Dates worked
- Daily start and finish times
Non-compliance
Failure to comply with the Victorian Industry Participation Policy can create significant risks for head contractors and Keller. Understanding these risks is vital to protect business and contractual performance.
Risks
Consequences of non-compliance are detailed below.
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May be treated as a contract breach
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Possible penalties include:
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Withholding of payments
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Liquidated damages
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Loss of future tendering opportunities
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Non-compliance damages company reputation with both government and community
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Can trigger audits and further investigation
- Contract breach penalties – defined by contract but may include withholding security or retention and damages
- Damage to reputational with both clients and community
- Jeopardise ability to win future contracts off previous performance
Major Project Skills Guarantee (MPSG)
Policy objectives
- Promote employment and business growth
- Increasing access to and awareness of local industry capability
- Expose local industry to global innovation, e-commerce, materials and technology
- Develop local industry’s international competitiveness and flexibility
Eligible projects
- The MPSG is applied to Standard and Strategic projects over with a contract value over $50 million
- As well as meeting the requirements of the VIPP, these projects must meet the following criteria:
- Utilise apprentices, trainees and cadets for at least 10 per cent of the contract works’ total estimated labour hours
- Encouraged to utilise apprentices, trainees and cadets from under-represented groups such as women, Aboriginal people or people with disabilities
Note
- Local content carries a 20% weighting criteria in the Head Contractor’s tender responses. Made up of:
- 10% for the Local Industry Development Plan
- 10% for local job outcomes, include commitments to providing opportunities for apprentices, trainees and cadets
Labour hours
There is no set way that Head Contractors must calculate their labour hours. The two most common methods are:
- The Annual Employee Equivalent used to calculate new and retained jobs in the LIDP
- Deemed hours formula
- Deemed hours = Total labour hours x 10 /100
- Total labour hours = Total contract sum x deemed hours ratio / deemed hourly rate
Example: Deemed hours formula
- Project XYZ is a civil project with a total contract value of $70,000,000
- Deemed hours ratio = 15%
- Deemed hourly rate = $95
- Total labour hours = 110,527 (70,000,000 x (15/100) / 95)
- Deemed hours = 11,053 (110,526.32 x 10 / 100)
Reporting
Reporting responsibilities are shared between head contractors and subcontractors, with each required to complete specific tasks to demonstrate compliance and track progress under the Major Project Skills Guarantee.
The head contractor is required to:
- Submit the LIDP and an Acknowledgement Letter to the agency before contract award
- Track supplier engagement and report every six months throughout the project lifecycle via the Victorian Management Centre (VMC)
Subcontractors are required to:
- Meet the contract terms set out in the contract with their subcontract
- Report their supplier engagement and apprentice, trainee and cadet hours to the head contractor with their payment claim throughout the project
Evidence
Evidence is required to verify apprentices, trainee and cadet participation, and it must clearly show who worked, when they worked, and how their hours contributed to the projects compliance targets.
Apprentice, trainee and cadets
- On-site work hours worked by apprentices, trainees and cadets
- Off-site work that contributes directly to the project (e.g. manufacturing parts for the site)
- On-site or off site work completed by employees not enrolled in a formal traineeship or apprenticeship qualification
- Experienced workers undertaking professional development training
- Timesheets
- Payroll reports
- Site sign in sheets
- Project name
- Employee name
- Dates worked
- Daily start and finish times
Project Process
Keller follows a structured process to meet the requirements of the Local Jobs First Policy across every phase of a project. From tender through to project close‑out, each stage includes clear actions to ensure compliance, demonstrate workforce and procurement outcomes, and strengthen engagement with apprentices, trainees and priority groups.
Getting it right upfront
There is a suite of documents to provide detailed guidance on how to deliver each stage of the project effectively:
- Project Checklist
- FAQ & Troubleshooting Guide
The State Government also has a guide to assist you to comply with the Policy:
During the tender stage we need to demonstrate our capability and track record to secure the job. We review all documentation for references to the Local Jobs First Policy and identify how the head contractor expects us to contribute to the labour hours, procurement spend and apprentice targets . Where targets are not achievable, we highlight these clearly and propose alternative ways we can add value.
1. Check if the Program forms part of the tender documentation
- A key indicator is if the developer is a VIC government department (eg. Development Victoria, Department of Health, Department of Transport and Planning etc)
- Search (Ctrl F) the tender documents for key words such as VIPP, MPSG, apprentice, local business, Aboriginal business etc
2. Can we meet the contractual clauses asking us to contribute to the targets?
- Liaise with the delivery team to assess our capability to deliver the required outcomes
- Identify risks and opportunities associated with contributing to these requirements using the Capability Assessment Template
NOTE: Keller avoids committing to apprentice and trainee targets in our contracts. Engineering and civil construction don’t have formal apprenticeship qualifications, so our scope of works falls outside this framework, and targets are not achievable. Instead, Keller invests in cadetships, delivering practical pathways into the industry, without over committing.
3. Showcase our previous performance for Aboriginal employment and procurement, apprentices and local and small businesses
- Submit the Past Performance Template with the tender submission
4. Provide a written statement of how you will contribute the head contractor’s employment and training hours and procurement spend
- Complete the Social Procurement Commitments Template with project‑specific opportunities or Aboriginal employment and procurement, apprentices and local and small businesses
- Flag any targets we cannot achieve and highlight any additional value we can provide. The Social Procurement Commitments Template has prompts to help identify risks and opportunities
- Submit the completed Social Procurement Commitments Template with the tender submission
- In some instances, the tender may require commitments to be written directly into Response Schedules. If this is the case, use the Social Procurement Commitments Template as guidance when drafting responses
5. Liaise with the head contractor throughout the tender phase to ensure clear understanding of requirements
- Document any exclusions or negotiated amendments to the Policy requirements
The contract stage is where tender commitments are formalised. It ensures that negotiated requirements are accurately captured, achievable obligations are confirmed, and any agreed value‑adds are included before project delivery begins.
1. Liaise with Tender team to ensure the contract reflects what was agreed during the tender phase
- If not, request for the contract to be updated to reflect what was negotiated during the tender
- Ensure any requirements we cannot achieve are not in the contract
- We recommend removing contract clauses committing to apprentice and trainee hours in our contracts. You can supplement this by offering to do additional upskilling hours. Refer to the Social Procurement Planning Guide for assistance in providing additional value.
2. Liaise with Project Delivery team to ensure those commitments can still be met and ensure any ways we can add value are in the contract
3. Document any exclusions or negotiated amendments
The planning stage ensures that the contractual targets are embedded into project delivery from the outset. It sets clear responsibilities, establishes processes for compliance, and prepares the team to collect and report accurate data throughout the project lifecycle.
1. Nominate a project lead. This person will be responsible for:
- Conducting a handover with the Contract Negotiation team to understand the targets
- Ensuring the contractual targets are met throughout the project
- Reporting project outcomes to the head contractor in monthly progress claims
2. Write a project plan to ensure smooth compliance throughout project delivery and clarify roles and responsibilities
- Complete the Project Plan Template outlining the Aboriginal employment and procurement, apprentices and local and small businesses, actions required to meet those targets, and reporting methodology
- Use the Social Procurement Planning Guide to identify sourcing to mee the requirements
- The Project Plan is an internal working document used to assist the project team in delivering a compliant project. It is not shared with the head contractor or developer
3. Set up data collection folders and templates
- Use the Folder Structure Guide to implement the data collection process in preparation for the project delivery stage
4. Train the project team on the Policy and its requirements
- Give project staff access to this training module
- Learn more about the Local Jobs First policy in the Supplier Guide
The delivery stage is where plans are put into action. It focuses on meeting the targets, collecting accurate evidence and reporting progress. Strong delivery ensures compliance with the Policy and demonstrates tangible outcomes.
1. Follow the Project Plan
- The project lead is responsible for ensuring the project team follows the Plan
- Deliver employment, training and procurement commitments as outlined in the Plan
2. Collect evidence
- Record labour hours, procurement spend and training outcomes achieved using the Training Tracker and Social Procurement Tracker
- Include subcontractor contributions
3. Report progress
- Submit the Monthly Progress Report Template to the head contractor
The close out stage captures the results of the project and ensures lessons are carried forward. It focuses on reporting achievements, documenting training, workforce participation and procurement outcomes, and refining processes so future projects can build on what has been learned.
1. Provide the head contractor with a final report to showcase project outcomes
- Use the Project Completion Report Template to summarise compliance with targets
2. Draft a case study for use in future tenders
- Refer to the Case Study Template to highlight key achievements and demonstrate capability in meeting employment, procurement and training targets
3. Document achievements and lessons learned
- Use the Project Reflection Template to record successes, challenges and areas for improvement
4. Reflect and adjust
- Apply insights gained to strengthen workforce participation, procurement and training strategies in upcoming projects
- Adjust any templates or processes to improve efficiencies on future projects
