procurement policy frameworkspb.sa.gov.au/sites/default/files/procurement policy... ·...

Version 2.5

Date Issued November 2014

Review Date November 2016

Principal Contact State Procurement Board

Telephone 8226 5001

www.spb.sa.gov.au

Procurement Policy Framework

Procurement Policy Framework of 22 Issue Date: November 2014 Version 2.5 Review Date: November 2016

Contents Overview .............................................................................................................. 3

Scope ................................................................................................................... 3

State Government Policy Framework ...................................................................... 3

State Government Procurement Structure............................................................... 4

Key Procurement Principles.................................................................................... 5

Compliance with Board Policies and Guidelines ....................................................... 7

Stages of the Procurement Process ........................................................................ 7

State Procurement Board Policies and Guidelines .................................................... 9

Further Information and Resources ...................................................................... 11

Appendix 1 – List of Board Policies and Guidelines ................................................ 12

Appendix 2 – State Government Procurement Policy Framework ............................ 13

Appendix 3 – Glossary of Procurement Terms ....................................................... 14


Overview

As part of the State Procurement Board’s (the Board) role in facilitating strategic procurement, Section 12 of the State Procurement Act 2004 (the Act) requires the Board, inter alia, to “develop, issue and keep under review policies, principles and guidelines relating to the procurement operations of public authorities”.

This framework sets out the overarching policy for the operation of procurement in the Government of South Australia.

By reading this policy framework, procurement practitioners should develop an understanding of the:

governance structure of state government procurement; requirements of the Act; key procurement principles which drive government procurement; Board’s purpose and functions; and Board policies and guidelines that underpin government procurement operations.

Scope

This policy framework applies to all public authorities as defined in the Act. It is not applicable to local government bodies or universities.

Under Section 19(1)(a) of the Act a public authority (including every member or officer of the authority) is bound to comply with any applicable policies, principles, guidelines, standards or directions issued or given by the Board. Prescribed public authorities are not bound to comply with policies, principles, guidelines, standards or directions issued by the Board. However, prescribed public authorities are bound to comply with any directions given by the responsible Minister on the advice or recommendation of the Board.

State Government Policy Framework

Various legislation, instructions and/or agreements may be applicable to procurement operations. These include, but are not limited to:

state and commonwealth legislation; international treaties and obligations; Treasurer’s Instructions; Department of the Premier and Cabinet Circulars; the South Australian Strategic Plan; and national standards.

In particular, procurement practitioners must be familiar with Premier and Cabinet Circular (PC) 027 - Disclosure of Government Contracts which sets clear requirements for the disclosure of all contracts, including goods and services contracts.


State Government Procurement Structure

Overview of Roles and Responsibilities State Procurement Act 2004 The Act outlines the overarching framework that regulates and supports the procurement operations of public authorities across government. The Object of the Act is to advance government priorities and objectives directed towards:

a) Obtaining value in the expenditure of public money; b) Providing for ethical and fair treatment of participants; and c) Ensuring probity, accountability and transparency in procurement operations.

The Act establishes the State Procurement Board, which administers the Act by having regard for, and seeking to further, the Object of the Act. Minister for Finance The Minister for Finance (Minister) oversees the administration of the Act and is responsible for ensuring the Board consists of persons who together have, in the Minister’s opinion, relevant procurement, commercial or industry experience, expertise or knowledge. The Minister may also provide directions to the Board, which must be tabled in Parliament. State Procurement Board The Board operates strategically in a devolved procurement environment, working collaboratively with public authority principal officers to achieve effective procurement outcomes. The Board has the following functions under the Act:

facilitate strategic procurement by public authorities by setting the strategic direction of procurement practices across government;

develop, issue and keep under review policies, principles and guidelines relating to the procurement operations of public authorities;

develop, issue and keep under review standards for procurement by public authorities using electronic procurement systems;

give directions relating to the procurement operations of public authorities;

investigate and keep under review levels of compliance with the Board's procurement policies, principles, guidelines, standards and directions;

Procurement Policy & Governance (Department of Treasury & Finance)

State Procurement Act 2004

Minister

State Procurement Board

Principal Officers of Public Authorities


undertake, make arrangements for or otherwise facilitate or support the procurement operations of public authorities;

assist in the development and delivery of training and development courses and activities relevant to the procurement operations of public authorities;

provide advice and make recommendations to responsible Ministers and principal officers on any matters relevant to the procurement operations of public authorities; and

carry out the Board's functions in relation to prescribed public authorities and any other functions assigned to the Board under this Act.

Procurement Policy and Governance, Department of Treasury and Finance (DTF) Procurement Policy and Governance, DTF, is the administrative unit responsible for supporting the operations of the Board and the general administration of the Act. Principal Officers of Public Authorities The principal officer of a public authority is responsible for the efficient and effective management of the procurement operations of their authority, subject to and in accordance with the policies, principles, guidelines, standards and directions of the Board. This responsibility also extends to delegates of the principal officer.

Key Procurement Principles The Board’s policy framework is aimed at ensuring public authorities achieve procurement outcomes which reflect the Object of the Act, including the following key principles:

a) Obtaining value in the expenditure of public money; b) Providing for ethical and fair treatment of participants; and c) Ensuring probity, accountability and transparency in procurement operations.

Obtaining Value in the Expenditure of Public Money

Procurement outcomes that deliver the best value in the expenditure of public money ensure the optimal use of government resources. The Board’s entire policy framework promotes procurement practices that will result in best value for money outcomes. Compliance with the Board’s policy framework will assist public authorities in obtaining value for money. The achievement of value for money can be driven through each stage of the procurement process, from Acquisition Initiation to Contract Completion (refer to “Stages of the Procurement Process” below).


A key principle of value for money is the recognition that ‘lowest price’ does not always represent the best outcome when evaluating alternative offers. When selecting a supplier, achieving value for money involves determining the extent to which the proposed solutions will deliver the optimum combination of whole-of-life cost and quality (non-cost) factors. Factors which may be considered in assessing value for money include:

fitness for purpose price

quality financial and operational soundness

whole of life costs service, support and warranty

risk/opportunity timeliness

environmental and sustainability issues

contribution to government priorities

flexibility efficiency and effectiveness The Board’s Supplier Selection Guideline provides practical guidance for evaluating proposals and selecting suppliers to ensure best value for money is achieved.

Ethical and Fair Treatment

Providing for ethical and fair treatment of participants refers to conducting all dealings with suppliers in an open, honest and impartial manner and respecting their rights and obligations. Government procurement practitioners must seek to ensure this principle is reflected throughout the procurement process, particularly through:

open and competitive tendering (where practicable and appropriate);

providing suppliers with equal opportunity to supply to government;

straight forward and user friendly tender requests;

clear and easy to understand evaluation criteria and methodology;

consistent processes and feedback on decisions;

access to a timely and effective complaints process; and

effective communication and provision of information to all suppliers.

Probity, Accountability and Transparency The principle of probity, accountability and transparency refers to ensuring the integrity of the procurement process and actions taken by government employees and/or representatives. All procurement shall be undertaken in a manner that ensures:

clearly established roles and responsibilities;

appropriate record keeping and documentation;

the transparency of decisions made;

adherence to the Code of Ethics for the Public Sector and local codes of conduct;

the identification and management of actual or potential conflicts of interest;

the confidentiality of all commercial information; and

that public officers are accountable for their actions.


Compliance with Board Policies and Guidelines The Board’s policies generally set out policy statements and compliance requirements. Where more practical information is required, associated guidelines are developed. In some cases there will not be a separate policy, just a guideline that imparts more detailed information on a subject. Principal officers must comply with all mandatory elements of the policies or guideline (i.e. where the word ‘must’ is used), and are encouraged to adhere to desirable elements (i.e. where the policy or guideline allows for discretion or multiple options).

Where principal officers take action not consistent with the desirable elements of the guideline, they must ensure the key principles under the Act are adhered to and appropriate documentation maintained.

Stages of the Procurement Process The procurement process is defined as a six stage process. This definition provides a guide to the content of relevant Board policies and guidelines and assists procurement practitioners to locate specific advice. Stage 1: Acquisition Initiation

Acquisition initiation involves:

identifying a clear and justifiable need linked to the public authority’s business objectives; reviewing options to satisfy this need (including non-procurement alternatives) to

determine whether the procurement is the best means to deliver a value for money outcome;

confirming availability of funds; and developing and approving a business case (if appropriate).

Stage 2: Acquisition Planning

Acquisition planning involves:

developing and approving an acquisition strategy in an acquisition plan which details the project scope, objectives and strategy (sourcing, evaluation and contract management);

developing the invitation/market approach documents (invitation and bid rules, specification, draft contract terms and conditions and the response documents); and

appointing an evaluation team and preparing an evaluation plan to guide the evaluation process.

Stage 3: Supplier Selection

The supplier selection stage includes:

inviting responses selectively or by advertising the requirement in alignment with the approved acquisition plan;

scheduling and acknowledging responses;

preparing an evaluation report (if required); preparing a negotiation plan (if required); conducting negotiations; developing and approving a purchase recommendation; informing respondents of the outcome of the procurement process; and debriefing respondent(s) as appropriate.


Stage 4: Contract Finalisation

The contract finalisation stage includes:

finalising and executing the contract documentation; publicly disclosing the contract as appropriate; ensuring all project files are finalised; and finalising a contract management plan and/or implementation plan to ensure that the

contract is implemented and managed in an effective manner.

Stage 5: Contract Management The contract management stage includes:

formally handing the contract to the appointed contract manager. implementing and managing the contract in accordance with the contract management

plan and/or strategy; monitoring product and service delivery and performance and evaluating key performance

indicators to ensure value for money identified in the procurement process is achieved over the contract term; and

managing contract variations and contract extension reviews.

Stage 6: Contract Completion Contract completion involves: evaluating the outcomes of the contract and closing off the contract as appropriate;

involve implementing transition arrangements (if appropriate); and disposing of assets (if appropriate).


State Procurement Board Policies and Guidelines

The Board’s policies and guidelines have been developed and structured under five themes:

Procurement Governance;

Procurement Reporting;

Government Requirements;

Procurement Context; and

Procurement Process.

A complete list of all policies and guidelines covered by the Framework is detailed in Appendix 1. A diagram outlining the State Government Procurement Policy Framework is provided as Appendix 2, with Appendix 3 containing a glossary of common procurement terms.

Procurement Governance Procurement Governance refers to how procurement is structured and organised in the public authority, including roles and responsibilities of staff, delegations, capability and localised purchasing practices. It also refers to the Board compliance and accreditation programs that ensure appropriate and effective governance arrangements are in place.

The Board’s policies and guidelines focus on the following key areas within Procurement Governance:

Procurement Authority and Accreditation – These arrangements are administered by the Board and determine the extent to which public authorities may operate independently of the Board on a day-to-day basis. Public authorities complete an assessment of their procurement requirements to enable an appropriate authority to be determined and the public authority is then reviewed and accredited to undertake procurement operations; and

Procurement Compliance Program – The program is administered by the Board assess the performance of each public authority in complying with the Act, Regulations and the required procurement policies, principles, guidelines, standards or directions of the Board.

Procurement Reporting Procurement Reporting ensures public authorities understand the nature of their procurement spend to create strategies for managing that spend more effectively.

The Board Procurement Reporting Policy focuses on annual reporting of the year’s procurement activities against a pre-determined set of criteria. Section 23 of the State Procurement Act 2004 states that the Board must, on or before 30 September each year, deliver to the Minister a report on the administration of the Act and the work of the Board during the previous financial year. The Minister must then present copies of the report to both Houses of the Parliament.

Annually, the following information is reported:

total goods and services spend;

future planned procurement activity;

formal supplier complaints; and

information relating to goods and services contracts entered into, including: o the value of the contract; o UNSPSC classification of the contracted good/service; o whether the contract is goods or services based;


o the method used for approaching the market (eg RFT, RFP, EOI etc); and o the location of the contracted supplier (eg metropolitan, regional, interstate or

overseas).

Base Level Procurement Reporting Guideline focuses on annual reporting of the year’s procurement expenditure for base level public authorities.

Government Requirements Government Requirements is directed towards public procurement taking into account the requirements of other across government policies or commitments.

The Board’s policies and guidelines focus on the following key government requirements:

International Obligations – Addresses international trade policies and agreements that potentially impact procurement;

Emergency Situations Procurement – Outlines the requirements of public authorities in relation to procurement being undertaken during declared emergency situations;

Sustainable Procurement – Sets out the requirements for government agencies to observe sustainability principles and objectives in the public procurement of goods and services;

Use of Established Government Facilities – Relates to arrangements for the procurement of goods and services from established government facilities;

Probity and Ethical Procurement Guideline – Provides information and practical advice regarding probity and the ethical procurement of goods and services;

Contract Register Policy – Sets out the requirements for the establishment of contract registers within all public authorities; and

Industry Participation Guideline – Outlines the key requirements of the Government’s Industry Participation Policy and its application to the procurement of goods and services.

Procurement Context Procurement Context refers to the environment in which procurement is undertaken and circumstances or conditions which impact procurement transactions. The Board’s policies and guidelines focus on the following key area within Procurement Context:

Risk Management – Provides detail regarding risk identification and management, risk assessment and planning.

Procurement Process The following policies and guidelines focus on the key stages within the procurement process. The following documents relate to the Acquisition Planning stage:

Acquisition Planning – Relates to understanding the nature of the purchasing requirement and ensuring the most appropriate procurement methodology and process is adopted;

Panel Contracts – Provides information and practical advice for public authorities to establish and utilise panel contracts;

Market Approaches – Provides information and practical advice on common market approaches that can be undertaken when procuring goods or services;

Market Research and Strategy Development – Provides guidance on how to undertake market research and develop an effective procurement strategy; and


Standard Tender and Contract Documents – Aims to ensure that tender and bid documentation meets government requirements, achieves consistency and is appropriate to the nature of the purchase.

The following document relates to the Supplier Selection stage:

Supplier Selection – Relates to the planning and methodology undertaken in selecting suppliers, including evaluation of offers, negotiation and recommending the purchase. This stage includes the consideration of whole-of-life costs including base costs, ongoing costs, maintenance, service and support costs, disposal costs etc.

The following document relates to the Contract Finalisation stage: PC027 - Disclosure of Government Contracts – Provides details on obligations to publicly

disclose a range of contracts.

The following document relates to the Contract Management stage: Contract Management – Involves the development of contract management plans

including measurement of key performance indicators and performance management, conflict resolution and service level agreements.

The following documents relate to the Contract Completion stage:

Disposal Guideline – Sets out the requirements on public authorities when disposing of goods at the end of the product life cycle;

The following policies and guidelines apply to all or several stages of the procurement process:

Simple Procurement – Relates to procurement transactions of less than $220,000 (incl GST) and the process that should be followed; and

Supplier Complaints – Sets out the complaints process for suppliers and public authorities.

Further Information and Resources For feedback or assistance regarding this guideline, please contact: State Procurement Board Secretariat ph: (08) 8226 5001 fax: (08) 8226 5667 email: [email protected] www.spb.sa.gov.au

http://www.stateprocurementboard.sa.gov.au/


Appendix 1 – List of Board Policies and Guidelines Procurement Governance

Procurement Authority Policy

Procurement Accreditation Guideline Procurement Compliance Policy Procurement Compliance Guideline

Procurement Reporting

Board Procurement Reporting Policy Base Level Procurement Reporting Guideline

Government Requirements

International Obligations Policy Emergency Situation Procurement Policy Sustainable Procurement Guideline Use of Established Government Facilities Policy Probity and Ethical Procurement Guideline Contract Register Policy Industry Participation Guideline

Procurement Context

Risk Management Guideline Procurement Process

Acquisition Planning Guideline Panel Contracts Guideline Market Approaches Guideline Market Research and Procurement Strategy Development (under development) Supplier Selection Guideline Standard Tender and Contract Documents Policy Standard Tender and Contract Documents Guideline Part A – Invitation Documents and Bid Rules Part C – Contract Documents Part D – Response Schedule Contract Management Guideline Disposal Guideline Simple Procurement Guideline Supplier Complaints Policy


Appendix 2 – State Government Procurement Policy Framework

Procurement Governance

Procurement Reporting Government Requirements

Procurement Context Procurement Process

Procurement Authority and Accreditation

Emergency Situations

Procurement

International Obligations

Sustainable Procurement

Use of Established Govt

Facilities

Risk Management

Acquisition Planning

Panel Contracts

Contract Management

Simple Procurement

Disposal Standard Tender & Contract Documents

Market Approaches

Supplier Complaints

Supplier Selection

Board Procurement

Reporting

Procurement Compliance

Program

Base Level Procurement

Reporting

Market Research & Strategy

Development

Probity & Ethical Procurement

Contract Register

Industry Participation

State Government Procurement Policy Framework Value Ethical and Fair Treatment Probity, Accountability and Transparency

Procurement Policy Framework of 22 Issue Date : November 2014 Version 2.5 Review Date: November 2016

Appendix 3 – Glossary of Procurement Terms

Accredited Purchasing Unit (APU)

Accredited Procurement Unit – (also known as a Procurement Governance Committee) is a committee comprising nominated senior officers that

oversee the purchase of goods and services within a prescribed delegation. It is the role of the APU to support principal officers in procurement

decision-making.

Acquisition Planning The planning process undertaken when commencing the procurement

acquisition process. This planning includes understanding the nature of the requirement and selecting the most appropriate procurement methodology

and strategy to meet the procurement objectives. (refer Acquisition Planning Guideline)

Acquisition Plan A document that outlines the procurement methodology and strategy to be

undertaken in procuring the required goods or services. This plan is

approved by the appropriate approving body/person before the procurement strategy is commenced.

Across- Government Contract

Across-government contracts are a form of standing offer developed by a

central agency or an individual portfolio in its role as a lead agency. The objective of these contracts is to achieve strategic outcomes for the public

sector through procurement activity and centralise the evaluation of offers to determine technical compliance; the negotiation of terms and conditions;

and contract development.

ANZ Government Procurement Agreement

An agreement between the Australian, State, Territory and New Zealand Governments, which provides for the equal treatment of Australian and New

Zealand suppliers in the procurement and supply of goods or services.

Bid Rules The rules governing the content, submission and conduct of the tender process. Also known as ‘conditions of tendering’.

Capability Capability describes an individual’s ability to perform tasks or activities effectively. There are a number of distinctive capabilities that public sector

officers working with suppliers need to possess, sometimes labelled as

‘commercial awareness’: the capability to secure value for money in spending taxpayer’s money. Value for money is some composite of the

benefits that are acquired as a ratio of the cost of acquiring those benefits.

Capacity Capacity describes a public authority’s ability to execute specific strategies. For example, if a public authority has four thousand suppliers, and 5% of

those suppliers are critical to achieving the public authority’s strategies and business priorities, the public authority will need sufficient number of

capable contract managers to manage those 200 suppliers. When there is sufficient number of capable managers, the public authority may have the

capacity to sustain that capability in the longer term.

Category Category is a term applied to a distinct grouping of goods or services that are relatively homogeneous. Stationery is a broad category, and within that

category there are sub-categories such as writing implements. Professional

services are an example of a services category, displaying commonalities between sub-categories such as consultancy services and audit services,

and possibly sharing common suppliers.


Category Management The term category management can be used in two ways: as a description

of the procurement process, or as a basis for organising procurement resources. As a description of the procurement process, category

management involves applying the end-to-end procurement process to a

specific range of goods or services. This involves all the pre-award processes such as spend analysis and demand management, sourcing or

tendering and contract negotiation, as well as the post-award processes such as contract management.

As a basis for structuring procurement resources category management usually involves defining the need, sourcing the market, negotiating the

contract and the contract management after the award. In order to ‘scale

the role’ so that different categories represent approximately equal challenge, three key factors are considered: the value of spend in each sub-

category, the diversity of the sub-categories and the challenge in the supply markets.

Certificate of Compliance

A process where the public authority’s chief executive certifies compliance

with the Board’s policies and guidelines. (Refer to the Board Procurement Reporting Policy and the Base Level Procurement Reporting Guideline).

Code of Ethics The code of conduct for the purposes of the Public Sector Act 2009. The

code embodies and builds upon the principles of the Act and seeks to advance the objects of the Act in the pursuit of good governance in SA.

(Refer to: www.espi.sa.gov.au)

Common Use Arrangements

Across government or lead agency contracts for the procurement of particular goods and services that streamline the purchasing process and

eliminate the need for public authorities to undergo a full procurement process by allowing public authorities to undertake secondary procurements

directly from approved suppliers.

Conditions of Contract The part of a contract that defines the rules, obligations and rights of the parties to that contract.

Conditions of Tendering The rules governing the content, submission and conduct of the tender

process.

Conflict of Interest A situation (actual or perceived) where a personal or business interest has

the potential to unfairly affect the proper outcome of a decision or process. A person involved in a procurement process must declare actual or potential

conflicts of interest.

Construction Works Work involved in constructing, erecting, underpinning, altering, repairing, improving, adding or demolishing a building or other structure.

Contract A legally binding agreement (verbal or written) between two or more

organisations, signed by the appropriate authorised persons, to undertake or perform a specific task or activity.

Contract Leakage Contract leakage refers to the volume of business placed with suppliers

other than the contracted suppliers for a given category. For example, there may be an agreement to use a particular graphic design agency for all

design work. The public authority will have tendered the work, and awarded the business for a period of time, both to leverage the public authority’s

total spend, and so that stakeholders do not have to undertake a separate

tender exercise for each individual job. The corollary is that the tenderer will have quoted on the basis of securing all of the public authority’s business. If

another graphic designer is used during the period of the agreement with the contracted design agency, this not only dilutes the ‘clout’ of the public

authority, but also adds to the time and cost of another procurement

exercise. Good practice is to try to minimise contract leakage, or at the very least explore the reasons behind leakage occurring.


Contract Management The process of pro-actively managing a contractual relationship between a

supplier and public authority, including addressing risks and disputes that arise, to achieve the agreed contractual outcomes.

Contract Management Plan

Document outlining strategies for managing a contract including but not

limited to roles and responsibilities, timelines, performance management and financial matters.

Contract Register A listing of each contract entered into by a public authority including

information on its purpose, duration, how much will be spent and who it is with.

Contract Variation A contract variation is an addition or alteration to the scope of the original

contract.

Contractor/Supplier An individual or organisation that has entered into a contract to provide

specified goods, works or services.

Construction Works Work involved in constructing, erecting, underpinning, altering, repairing, improving, adding or demolishing a building or other structure.

Consultant A person or firm who is engaged by a public authority for a specified period

to carry out a task which requires specialist skills and knowledge not available in the public sector. The objectives of the task will be achieved by

the consultant free from direction by the public authority as to the ways it is performed and in circumstances in which the engagement of a person under

normal conditions is not a feasible alternative (Accounting Policy Framework, Department of Treasury and Finance, March 2012, APS 4.6)

Debrief A face to face debrief session should be offered after the contract has been

awarded. The debrief should focus on the supplier’s response in relation to the evaluation criteria as set out in the selection documentation. Refer to

Appendix One, Supplier Complaints Policy.

Demand Management There are three broad opportunities to add value through the procurement process; demand management, sourcing (tendering) and contract

management. Demand management refers to all those activities undertaken to reduce consumption, and to manage what we buy, so that we buy more

effectively. For example, we may have tendered travel so that we have

value for money rates for domestic air travel and accommodation. This is an example of creating value through tendering. But we can also create value

through policy, and through managerial control to ensure that only those journeys that are strictly necessary are made. For example, we might hold a

teleconference rather than travel interstate. Demand management typically

involves budget holders and end users, rather than (just) procurement practitioners.

Deviation (from approved acquisition plan)

A departure from the original approved procurement strategy or process

that requires approval from the original approving authority or its delegate.

Direct Negotiation Direct Negotiation is a procurement process undertaken by directly

approaching and negotiating with one or more suppliers without testing the market.

Due Diligence The process of reviewing and analysing in detail an organisation’s ability to

meet future contract performance requirements. This may include a detailed assessment of the organisation's financial stability, legal risks, technical

capability, resource capacity and infrastructure.

Emergency Situation Procurement

Procurements undertaken by public authorities in response to an

emergency, in accordance to the provisions of the State Emergency

Management Plan, or formal arrangements outlined in other state or commonwealth emergency service related legislation. (Refer to the

Emergency Situation Procurement Policy).


Established Government Facilities

Government owned and managed agencies, organisations, entities or

statutory authorities that are able to provide goods or services to other areas of government.

Ethical Behaviour Refers to behaviour that is honest, proper and ethical in dealings with

suppliers and other stakeholders. (Refer to the Probity and Ethical Procurement Guideline).

Expression of Interest (EOI)

An EOI (also referred to as a Registration of Interest - ROI) is a formal

market approach and the first step in a multi stage procurement process in a documented acquisition plan. Suppliers are invited to express/register

their interest in providing particular goods or services and the responses evaluated to develop a shortlist for future market approaches or

negotiations, using a more detailed specification.

Evaluation Plan A plan of the processes that will be followed in evaluating the quotes, tenders, proposals, etc, received. It includes timing, membership and

weightings.

Forward Procurement Plan

A plan that details forthcoming purchases of goods or services over a specified timeframe.

Free Trade Agreement (FTA)

A free trade agreement between Australia and other nation/s to which the

South Australian government is a party. The FTA ensures that Australian and certain overseas suppliers are treated equally and not discriminated

against when undertaking procurements over a specified value threshold.

Intellectual Property Any patent, copyright, trade mark (whether registered or unregistered), trade name, business name, company name, trade secret, know how,

discovery, invention, secret process, design, semiconductor or circuit board layout right, improvement in procedure, innovation, confidential information,

any right to register any type of intellectual property right or any other

intellectual property right created, invented, made or discovered.

International Obligations Legal obligations in relation to a range of bilateral free trade agreements

that the majority of public authorities are required to comply with where the South Australian Government is a party to these agreements. (Refer to the

International Obligations Policy).

Lead Agency Contract An arrangement sponsored by a public authority where that authority is the prime user of the good or service and where one or more other public

authorities may also utilise the arrangement.

Life Cycle Costing A methodology for identifying and calculating the total costs and expenses associated with the purchase of goods, related services or integrated

projects. This includes all initial and future costs over the entire life cycle, including design, planning, capital, installation, operating, maintenance and

disposal costs, discounted to reflect the net present value (NPV). Refer to

the Supplier Selection Guideline for more information.

Limitations of Liability Where a limit is placed on the financial consequences of a supplier’s actions.

A limit on liability may only be applied to contracts with a total value of $5

million or less and where there is little likelihood that the Government may suffer financial loss.

Market Approach Strategy

The strategy used for inviting possible suppliers to provide an offer to supply goods or services. Options include a request for three quotes or a

request for tender.

Multi-use list A list of pre-qualified suppliers who have satisfied the conditions for participation for inclusion on the list. A multi-use list is intended for use in

more than one procurement process.


Negotiation A process between two or more parties seeking to reach a mutually

satisfactory agreement on, or settlement of, a matter of common concern. In procurement, this may be the process of finalising the terms and

conditions of an agreement or contract, through discussions between buyer

and seller.

Multi-stage process A combination of market approaches to cull a large number of respondents

and help identify the best service providers in a particular market. The first stage will often limit the number of tenderers to those that can demonstrate

the requisite capability.

Open and Effective Competition

A key principle of public procurement is that value for money can be best achieved when an open and effective competitive environment exists and a

sufficient number of suppliers are given a fair and equal opportunity to bid.

Open and effective competition provides greater transparency and lessens the ability of individuals to engage in corrupt procurement practices.

Opportunity Analysis Opportunity analysis is the periodic review of expenditure with a view to identifying potential opportunities to release value through changes to the

way the goods and services spend is specified, procured, consumed or

managed. Typically, public authorities might conduct an annual review of the spend portfolio, including known future projects, and classify the spends

based upon a number of dimensions. Typical dimensions are ‘scale of benefit’ and ‘ease of realisation’, though other dimensions may be

employed. Spends which present a greater opportunity to add value may

warrant prioritisation in terms of focusing scarce resources, such as time and people.

Opportunity analysis helps guide the public authority on how and where to focus effort, and can help with scheduling priorities and resource allocation.

Panel Contracts A contractual arrangement established with at least two suppliers for the

anticipated provision of goods or services, as and when required over a specified period of time. (Refer to the Panel Contracts Guideline).

Post Contract Review A post contract review is the review at (or near the end of) a contract period

to consider how the contract has performed in relation to the KPIs and the original performance goals of the contract. Were the original procurement

objectives met? Did the supplier/s meet their KPIs? How did the contract change during the agreement? What was learned that might be used to

secure improvement in future contracts?

Contracts typically last for several years, and as a consequence the original

intent of the contract (as defined in the acquisition plan) can sometimes be

forgotten. For example, contracts may have been varied several times, the market circumstances may have changed, and the contract manager may

have changed. A formal contract review helps capture what worked and what did not.

Post Sourcing Review A post sourcing review is a review after the purchase recommendation has

been approved evaluating the extent to which the sourcing or tendering phase of the procurement project met the original procurement objectives.

How many bids were received? How many clarification questions were

asked? Did the evaluation plan achieve its intended goals? Were the procurement objectives stated in the acquisition plan met? Were the tenders

received within budget? Were the responses acceptable? Were there sufficient bidders to secure competition? Was the specification appropriate?

What was learned that might be used to secure improvement in future contracts? All this issues may be addressed to secure learning and

contribute to continuous improvement.


Power/Interest Matrix A matrix based approach to stakeholder segmentation that dimensions

stakeholders in terms of their interest in a project/process and their power or influence over the project.

Prescribed Public Authority

An organisation that has been declared to be a prescribed authority (i.e.

exempt) for the purposes of the State Procurement Act 2004.

Principal Officer Generally comprises the chief executive officer of the public authority as declared by the regulations to be the principal officer of the authority. The

principal officer is responsible for the efficient and effective management of the procurement operations of their authority, subject to and accordance

with the policies, principles, guidelines, standards and directions of the Board. This responsibility extends to the delegates of the principal officer.

Probity Relates to the integrity, openness, honesty and transparency of a particular

process. (Refer to the Probity and Ethical Procurement Guideline).

Probity Advisor A probity advisor is a person who provides independent advice and works actively with the organisation’s procurement team to ensure key probity

issues are considered and actioned during the procurement process.

Probity Auditor An independent auditor who confirms if a procurement process has been

conducted fairly and in accordance with probity principles.

Procurement Procurement can be a process, a department or a job role. Every public authority manages the procurement process whether or not they have

dedicated procurement practitioners. In the context of this category of

principles, procurement refers to the end-to-end process (not only the tendering phase) that begins with defining the need through to contract

management and close out of the supplier, as well as the disposal of the goods.

Procurement Authority The authority to approve a proposed course of action, strategy or

recommendation relating to procurement (acquisition plan or purchase recommendation) to a specified dollar amount as delegated to a public

authority’s principal officer by the State Procurement Board;

Procurement Governance

The overall management structure and organisation for procurement in the public authority, including roles and responsibilities of staff, delegations,

capability and localised purchasing practices.

Procurement Profiling The collection and analysis of procurement spend data to determine purchasing patterns and identify opportunities for better consolidated

buying.


Procurement Strategy Outcomes from the procurement process are closely correlated with quality

and quantity of planning. Procurement strategising occurs at two levels; the first is the overall strategy for the procurement process in the public

authority. What goods and services (categories) do we acquire? How do

these categories relate to the public authority’s overall goals and business objectives? What processes are needed to manage these acquisitions, and

what capability do we need to do this effectively? The development of an overall procurement strategy helps to ensure that the public authority is

capable of managing the procurement process.

The second level of procurement strategy is the development of a

procurement strategy for each key acquisition. What are we buying? What is

the nature of our demand? What is the nature of the supply market? What market approach is most appropriate? How will we manage the supplier/s

once we have made that choice? These decisions need to be made in a timely fashion, and in the light of appropriate information. It is more likely

that acquisition planning and contract management planning will be

undertaken in a compliant and effective way if the public authority has anticipated the capacity and capability needed in advance of planning

beginning. So the development of an overall procurement strategy for the public authority is often key to the development of appropriate processes for

acquiring and managing key acquisitions.

Purchase Order An official document used to authorise and record the purchase of goods, works or services.

Purchase Recommendation

A document that seeks approval of the recommended supplier before the

contract is awarded, as a result of undertaking an acquisition process. It must demonstrate that the acquisition process and practices undertaken

have been consistent with the acquisition plan, Board policies and in a manner reflecting high standards of professionalism, ethics and probity.

Relationship Management

Supplier Relationship Management is the deliberate development of a

portfolio of relationships with suppliers, based on the recognition that not all suppliers are equally significant to government, and government is not

always significant to suppliers. Appropriate relationships need to be developed and managed throughout the procurement life cycle. Accordingly,

contract management is a sub-set of relationship management.

Request for Information An RFI is an informal means of researching the particular good or service and the possible solutions or approaches available in the market. As such,

informal market research and the gathering of intelligence through an RFI

do not require any formal procurement approvals to be sought.

Request for Proposal A formal request where potential suppliers are invited to suggest ways and

means of meeting an identified need, allowing scope for variety and innovation.

Request for Quotation A formal request to obtain offers from one or more suppliers. This is

generally used for low value purchases and therefore not usually advertised publicly.

Request for Tender A publicly advertised invitation to offer based around a clearly defined and

specific statement of requirements.

Reverse Auction A type of auction in which several buyers compete (on a price basis only) for

the right to provide a good or service, with the bid price typically decreasing

over the course of the bidding process. The bid price for each supplier is then inserted into the normal procurement process and all suppliers

considered on a value for money basis.

Risk An event occurring that will have an impact upon the achievement of the procurement, measured in terms of likelihood and consequences.

http://www.businessdictionary.com/definition/auction.html


Risk Management The identification, assessment, allocation, mitigation and monitoring of risks

associated with a procurement.

Risk Management Plan A documented plan that outlines the nature and treatment of risks

throughout the procurement cycle, as appropriate. The level of detail will

be commensurate with the procurement’s complexity and value. (refer to the Risk Management Guideline).

Segmentation Tools Segmentation tools can be used to profile stakeholders, acquisitions or

categories and that can differentiate behaviour based on the criticality and/or contribution of the stakeholder or supplier. Such tools create a

consistent and defensible rationale for behaviour, and help prioritise, manage and focus efforts where they will have most effect.

Selective Tendering Where the procuring agency selects suppliers that will be invited to tender.

Selection may be from a multi-use list, a list of potential suppliers that have previously responded to an expression of interest or a list of potential

suppliers that have been granted a specific licence or comply with a legal requirement. Sometimes referred to as limited tendering.

Specification A clear, complete and concise statement of the description and technical

requirements of a good or service. The specification may be functional, performance-oriented, technical or any combination.

Spend Analysis Spend analysis is the part of the procurement process focused on reviewing

expenditure data to allow exploration of the opportunities which may exist to create value in a category. The key activities include acquiring the data,

cleansing the data, and analysing the data. The term is synonymous with expenditure profile.

Spend Portfolio The spend portfolio is the expenditure profile of a public authority - the total

third party or non-pay spend of a public authority with suppliers of goods and services. In some cases, the key suppliers of services by value may be

other public sector entities, such as other government departments. But

there will also be many hundreds if not thousands of suppliers with whom the public authority spends money across multiple types of spend (or

categories).

Key dimensions of the spend portfolio are the total value of spend, the

degree of concentration and the number of low value suppliers. The degree of concentration may highlight the proportion of total spend represented by

the top ten suppliers, or the top ten spend types (or categories). This may

highlight where the opportunity lies to extract value. The number of low value suppliers may highlight the degree of control of lower value

transactions. For example, if 50% of all public authority suppliers receive less than $10,000 a year, it may highlight that there is an opportunity to

consolidate some spends. Of course, some of these suppliers may be in

regional areas, and as long as the spend allocation is the consequence of deliberate choice, then the public authority will be in control of its spend.

Many public authorities find that there is an opportunity in the spend portfolio to address both higher value spends and lower value spends using

spend analysis to identify the opportunities.

Stakeholders People who are involved in, or impacted by choices that are made during the procurement process. Within public authorities, stakeholders will

include end users as well as decision-makers who review proposed acquisition plans, or officers who manage contracts. Suppliers will have

sales managers or account managers who are responsible for client

relationships, as well as accounts payable staff and staff involved in service delivery.

Standing Offer An ongoing procurement agreement, subject to specified terms and

conditions and based on an estimate of the total value of the order.


Supplier An entity that could provide, is providing or has provided goods, services or

works to, or on behalf of, a public authority or prescribed public authority.

Supplier Selection The process undertaken to ensure appropriate suppliers are selected for

shortlisting or to provide the good or service. (Refer to the Supplier

Selection Guideline).

Supply Positioning Supply positioning is a matrix which segments the spend portfolio by risk

and opportunity. It allows the public authority to develop procurement

strategies for different acquisitions based on a repeatable and consistent methodology.

Sustainability Meeting the needs of the user while also taking into account external and

future costs, including costs to the environment, human health and depletion of resources.

Sustainable Procurement

A process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole of life

basis in terms of generating benefits not only to the organisation, but also

to society and the economy, whilst minimising damage to the environment.

Sustainable procurement refers to the environmental and social features

that are incorporated into the procurement process, including the development of appropriate specifications and the evaluation of suppliers

against these requirements. (Refer to Sustainable Procurement Guideline)

Tender A proposal, bid or offer that is submitted in response to a Request for Tender. It is one of several different market-approach strategies.

Total Contract Value The estimated total value of any contractual commitments that may result

from a single procurement exercise. It incorporates the cost over the potential life of the contract including optional extensions and is inclusive of

GST.

Unsolicited proposal A unique or innovative method, concept, approach or idea received by a public authority, not in response to a formal request and not readily

available in the marketplace.

United Nations Standard Products and Services Code (UNSPSC)

A scheme that classifies and identifies commodities. It supports a strategic

sourcing process and gives a uniform means of capturing spend data.

Classifying goods and services with a common coding system facilitates commerce between buyers and sellers and is necessary for ecommerce.

(refer www.unspsc.org)

Value for Money Achieving value for money involves determining the extent to which the proposed solutions will deliver the optimum combination of whole-of-life

cost and quality (non-cost) factors.

Variety Reduction/Specification Standardisation

The process of reducing the number of solutions in use to meet substantially the same need. Standardisation implies the adoption of a single solution,

but there may be operational reasons why a number of solutions may be used, instead of just one.