Due Diligence

What is Due Diligence in Procurement?

Due diligence in Australian government procurement refers to the investigations a procuring agency undertakes to verify that a preferred tenderer can actually deliver what they have promised. It occurs after evaluation but before contract execution, and can cover financial health, technical capability, legal standing, and past performance.

What Does Due Diligence Cover?

A typical due diligence process in government procurement may examine:

• Financial viability — review of financial statements, credit checks, and assessment of whether the business can sustain operations through the contract period
• Technical capability — verification of claimed experience, qualifications, and resources
• Legal and compliance checks — company registration, insurance validity, work health and safety records, and any legal proceedings
• Referee checks — contacting previous clients listed in the tender response
• Conflict of Interest — confirming no undisclosed conflicts exist between the tenderer and the agency

When Does Due Diligence Occur?

Due diligence is most commonly conducted:

• Before contract award — on the preferred tenderer or shortlisted candidates
• During Prequalification — as part of establishing a Panel Arrangement
• Periodically during contract life — for long-term contracts, agencies may conduct ongoing due diligence

Tips for Tenderers

• Keep your documentation current — financial statements, insurance certificates, and registrations should be up to date and readily available.
• Be transparent — agencies are more concerned by discovering hidden issues than by known risks that are well-managed.
• Prepare your referees — let them know they may be contacted and ensure they can speak to relevant projects.
• Maintain good records — a well-organised business with clear project histories makes due diligence straightforward.