Procurement – What you need to know
about Procurement and Contracting
Module 1
Course Objectives
•
Understand DFAT’s procurement framework
–
Legislative framework, delegations, DFAT Procurement Policy
•
Understand the role of risk assessment, value for money and probity
requirements
•
Follow instructions in the Simple Procurement Guideline
•
Know where to go and who to ask for information
Course Structure
The course is divided in to two sessions.
•
Session 1 (morning):
 The Commonwealth Procurement Framework
•
•
Procurement in DFAT
Session 2 (afternoon):
 Procurement in practice
Who are we?
Contracting Services Branch (CVB)
Operational sections:
Policy sections:
•
•
Corporate Procurement
Operations (CPO)
•
Procurement Policy,
Innovation and
Professionalisation (PIP)
Director Peter Sams
•
•
Asia and Other Procurement
(AOP)
•
•
A/g Director Simone Patton
Pacific and PNG Procurement
(PPP)
•
Director Simon Cann-Evans
•
Director Felicity Rowe
Commercial Analysis (CAS)
•
Director Peter Lindenmayer
•
CVB Helpdesk:
•
contracts@dfat.gov.au
Procurement environment
•
the Public Governance Performance and Accountability Act 2013 (PGPA Act)
•
the Commonwealth Procurement Rules (CPRs)
•
DFAT officers conduct simple procurement in accordance with the PGPA Act
and CPRs
•
DFAT Procurement Policy
•
DFAT Simple Procurement Guideline
•
Procurement above the relevant thresholds is undertaken by CVB in close
collaboration with line areas.
Procurement framework
Simple procurements
undertaken by DFAT
follow
Simple Procurement
Guidelines :
Procurement above the
relevant thresholds is
undertaken by CVB in
close collaboration with
line areas.
Australian Government Procurement sits within the Resource
Management Framework
Constitution
Public Governance Performance and Accountability Act 2013
(PGPA Act)
Public Governance Performance and Accountability Rule (PGPA
Rule) this includes the Commonwealth Procurement Rules
Other relevant legislation
Finance Minister’s Determinations
Accountable Authority Instructions (Secretary’s Instructions)
Individual entity details(DFAT policies, guidance, procedures,
processes).
PGPA Act
S15 – DFAT is responsible for ensuring the proper use of resources.
DFAT has 8 guiding principles to help achieve Value For Money
VALUE FOR MONEY
The core rule of the COMMONWEALTH PROCUREMENT RULES is
Value for Money (VFM)
requiring
 comparative analysis of relevant costs and benefits
 focus on the whole-of-life costs of an acquisition, not on least cost at
time of acquisition.
The CPRs are divided into 2 Divisions:
•
Division 1 – applies to all procurements regardless of value and procurements
cannot be exempt
•
Division 2 – applies to procurements above $80,000 in value for goods and
services and $7.5 million for construction
DFAT procurement and contract templates
•
Have been developed to address procurement and contracting risks
specific to DFAT
•
The suite of procurement and contracting templates are specific to aid
and corporate procurement
•
Template documentation is available on the procurement intranet site
–
Home page > Finance > Procurement
–
http://dfatintranet.titan.satin.lo/finance/procurement/Pages/Index.aspx
Planning profile – Procurement thresholds
DFAT Procurement thresholds (GST Inclusive) for non-ICT procurements:
Basic
Simple
Complex
Departmental
Procurement (Corporate)
Under $10,000
Between $10,000 and <
$80,000
≥$80,000
Administered
Procurement (Aid)
Under $10,000
Between $10,000 and <
$500,000
≥$500,000
Construction Services
Procurement
Under $10,000
Between $10,000 and <
$7.5m
≥$7.5million
Procurement from
Panels
Under $10,000
< $3m
$3million
DFAT Procurement
Policy
Basic Procurement
Guidelines
Simple Procurement
Guidelines
Complex Procurement
Guidelines
Where a Simple procurement is not ‘low risk’ CVB must be consulted.
Planning
DO NOT cost / contract split to avoid the threshold limits
Commonwealth Contracting Suite (CCS)
 Is a online system that automates production of procurement documents
 From 1 January 2016, it is mandatory to use the CCS for procurements valued up to $500,000
 The CCS applies to procurements conducted in Australia even if the goods/services are delivered
overseas, except where certain conditions apply:

IT procurements using Source IT templates

Construction procurements

Procurement under $10,000 where no contract is required

Procurement undertaken and delivered outside Australia

Non-procurement financial arrangements such as grants, disposals or investments

Any procurement that is not low-risk

Procurement from a panel or standing offer
 Contact contracts@dfat.gov.au for more information or assistance
 Information sessions are currently being run and time/details can be found on the homepage of the
Procurement intranet site.
Questions
(Refer to Activities workbook – Q1-Q3)
How do the DFAT Value for Money principles help guide the proper use of
resources?
What are the Commonwealth procurement Rules? How do the Rules affect
the way procurement in Government is undertaken?
What are the thresholds for simple and complex procurement?
Why are the thresholds different for Corporate (Departmental) and Aid
(Administered) programs?
DFAT policies
•
DFAT’s Secretary’s Instructions (SIs) includes

•
duties and responsibilities in relation to the PGPA Act, and PGPA Rules
Financial Management Manual includes
 delegations
 processes to manage performance and risks
 separation of duties
Officials undertaking procurement decisions should be familiar with the
-
DFAT Procurement Policy and Simple Procurement Guidelines
DFAT policies cont.
Commonwealth and
DFAT policies and
guidelines that must
be met under the
FMM include:
Commonwealth
Procurement Rules
Commonwealth Grant
Rules and Guidance
DFAT Procurement
Policy
GST requirements
(refer to FMM
Chapter 9.3)
Engagement of
consultants
Information
technology
procurement
Expenditure on
representation
Contingent liabilities,
including guarantees,
warranties and
indemnities (refer to
FMM Chapter 15.7)
Foreign exchange
risk management
guidelines (refer to
FMM Chapter 17)
DFAT policies cont
The FMM contains a Delegate’s checklist .
•
A Delegate must be able to answer ‘yes’ to all questions in the
checklist to approve the commitment of relevant money.
•
The ​Approval to Commit and Enter Into An Arrangement template
minute contains information and instructions to enable DFAT
officers to complete the minute for delegate approval.
International agreements that may affect procurement
planning
Treaties
Information about current treaties and bilateral agreements can be found on
the below link.
http://www.info.dfat.gov.au/Info/Treaties/treaties.nsf/AllDocIDs/0F9AF0445B
552630CA256B6C000A7C91
Bilateral partnerships – These relationships are managed through
government-level agreements or entity level Memoranda of understanding
Note: the Commonwealth Procurement Rules (2.14) take into consideration
international obligations.
Procurement connected policies
 Commonwealth Indigenous Procurement Policy
 Small to Medium Business Enterprises
 30 day payment Rule
 Security
 Child protection in the aid program
 Sustainability and environmental performance
How is Procurement conducted?
A
procurement
project is
similar to
other large
and complex
projects
consisting of :
a number of
discrete
tasks to be
completed
within preplanned time
frames
establishing
a framework
for cost
minimisation
and certainty
of delivery
compliance
with entity
outcomes,
legislative
and policy
drivers.
Procurement Planning
•
A plan should be developed before a procurement process commences.
•
Procurement Plans may involve one or a number of associated contracts, and
should be completed for all complex procurements.
•
Simple procurements require a business case/terms of reference to be
developed.
•
Does your procurement appear on the Annual Procurement Plan?
Governance framework
•
Relevant approvals at the right time will ensure a robust and transparent
process, and demonstrate how VFM is achieved.
•
Template minutes contain advice and assist in completing the relevant
approval minutes:
– Approval to Approach the Market
– Approval of Evaluation Outcome
– Approval to Commit and Enter into an Arrangement
Clearances – through CVB
Line areas are responsible for procurements that are below the CVB clearance
thresholds.
The relevant financial delegate(s) are responsible for clearing agreements and
approving the procurements.
CVB Clearance Thresholds
Type of Procurement
Threshold (GST inclusive)
Departmental Procurement (Corporate)
≥ $80,000
Administered Procurement (Aid)
≥ $500,000
Construction Procurement
≥ $7.5m
Procurement from Panels (led by line areas)
$80,000 up to $3 million (Corporate)
$500,000 up to $3 million (Aid)
Procurements that are not low risk
Any value
Clearance documentation
For procurements valued equal to, or in excess of, the CVB clearance thresholds
or for procurements that are not low risk, the following documentation must be
submitted for CVB clearance prior to delegate approval as follows:
•
draft Approval to Approach the Market minute (including draft Request
for Tender/Quotation and draft agreement);
•
draft Approval of Evaluation Outcome minute; and
•
draft Approval to Commit and Enter into an Arrangement minute
(including the proposed agreement).
Draft documents must be submitted to CVB using the Agreement Clearance
Worksheet. Clearances may take up to 10 business days depending on the
quality of documentation received, complexity of the procurement and whether
legal clearance is required. Agreement Managers must incorporate any changes
advised by CVB.
Approval to approach the market
Outlines:
MUST be
sought prior to
approaching
the market
How value for
money will be
achieved
The spending
proposal
Method of
procurement
Approval of Evaluation Outcome
Outlines:
•
The selection process used
•
Proposals received
•
Evaluation outcomes
•
Issues for negotiation and risks.
•
Approval of evaluation outcome must be sought prior to commencing
negotiations
Approval to Commit and Enter in to an Arrangement
Outlines:
•
The spending proposal
•
Outcome of negotiation issues (if any)
•
Confirms funding
•
Confirms arrangements (if any) in relation to contingent liabilities (s.60)
•
Seeks delegate approval to commit funding and sign the agreement (s.23)
•
Must be sought prior to entering in to an agreement
Approval to Commit and Enter in to an Arrangement
Agreement managers must seek Approval to Commit and Enter in to an
Arrangement prior to varying or amending a contract
Contract extensions
Where an existing agreement expires and has no (further) options for
extension, it must be treated as a new procurement. The contract cannot be
varied (i.e. extended) beyond its expiry date.
–
CVB can provide further advice.
Questions
(Refer to Activities workbook – Q4-Q9)
Putting the policies into practice
Ethics and probity in procurement
•
Probity is the evidence of ethical behaviour.
•
Defined as “complete and confirmed integrity, uprightness and honesty in
a particular process.”
•
The demonstration of probity is vital to maintaining confidence in Government.
Questions
(Refer to activities workbook – Q10)
What it is Probity?
Where would you find further information on Probity?
Workplace Health and Safety considerations in procurement
•
Workplace Health and Safety (WHS) laws came into effect 1 January 2012.
•
Agreement managers must consider WHS in conducting a procurement risk
assessment.
•
WHS may impact on:
•
–
Contract type
–
Specifications
–
Reporting
See DFAT Guidelines on Work Health and Safety in Procurement and
DFAT’s WHS Management System
Questions
(Refer to activities workbook – Q11-Q12)
What is WHS?
Do WHS duties extend overseas?
How do you currently capture WHS into procurement planning?
What are some key WHS legal duties that we must address in our procurement and
contracts?
Who holds the Primary duty for WHS responsibility?
End of Morning session
Thank you for your participation in this session.
After lunch we will be focusing on the activities you might undertake for a
 simple procurement,
 develop Approach to Market documents including specifications,
 select a procurement methodology and Approach the Market.
We will also be reviewing evaluation criteria, methodology and contract
negotiations.