Corrupt or fraudulent suppliers will be blackballed from doing business with the NSW government under proposed changes to procurement laws.

The state government on Sunday said legislation will be introduced to help clean up procurement and protect NSW’s annual $42 billion goods and services spend from dodgy suppliers.

A debarment scheme currently operates in Western Australia and in other international jurisdictions but it will be a first for NSW.

The legislation will give the state government power to strike out a company, or one of its directors or senior managers, for fraudulence, corruption or tax violations.

 Lesser penalties, such as suspension, will also apply depending on the seriousness of the conduct and mitigating circumstances.

The regime will ensure that any debarment actions taken also apply to any subsequent ‘phoenix’ operations, where a new company is created to carry on the business of a previous one that has gone into liquidation, Premier Chris Minns says.

The debarment scheme is part of a series of reforms to modernise the state’s currently ‘muddled and chaotic’ procurement framework, Mr Minns said.

“This includes measures to enhance the integrity of the procurement framework and restore public trust in public spending,” he said in a statement.

Government procurement minister Courtney Houssos said the reforms would ensure public money is spent responsibly and with integrity.

 “This announcement begins crucial reforms to ban dodgy operators and maintain public trust in the way the NSW Government is spending taxpayers’ funds,” she said.

 The Independent Commission Against Corruption (ICAC) recommended a debarment system in its April 2024 Operation Hector report into a Sydney council and TfNSW, which found a former Inner West Council project engineer engaged in corrupt conduct that saw contracts worth more than $1 million awarded to businesses he was associated with.

The NSW Government will undertake extensive consultation with industry and other key stakeholders to develop the regime, Mr Minns said.