Agency B Procurement Process
Business Process Map
Event
Analysis and Review of Commonwealth
Procurement Processes for procurements
under $80,000
Client
Department of Finance and
Deregulation
Date
Version
30 May 2011
FINAL 1.0
ThinkPlace Team
Raffaella Recupero
Mark Thompson
AUSTRALIA  NEW ZEALAND
LEVEL 1 UNIT 3 GREEN SQUARE KINGSTON 2604 P +61 6282 8852 F +61 2 6282 8832 WWW.THINKPLACE.COM.AU
Agency B Proposed Procurement Process
About this document
This document contains a business process map for
procurements under $80,000, which specifies the requirements
set out in Agency B’s Chief Executive Instructions (CEIs),
operational guidelines and other internal guidance, as well as
the overarching requirements of the Commonwealth
Procurement Framework.
ThinkPlace has worked with a small group of people in Agency
B to develop this document.
Contents
Intent Statement
Agency B CEI snapshot – current state
3
4
Business process maps
Role statements
Map Levelling
Level 0 map
Level 1 map
5
6
9
10
11
Process analysis
Process issues, pressure points and suggestions for improvement
16
17
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 2
Agency B Proposed Procurement Process
Intent
A standardised, simple and safe process for all FMA agencies conducting procurements that fall under the $80,000 threshold
SYSTEM IN FOCUS
The FMA Act and Regulations set the framework for the proper
management of public money and public property in the
custody and control of the Commonwealth.
The Commonwealth Procurement
Guidelines (CPGs) articulate the
Government’s expectations for all
department and agencies conducting
procurement.
Agencies have evolved their procurement policies and
practices within the context of the agency’s organisational
structure, delegations, approval processes etc.
Under the FMA Act, 104 FMA agency CEOs
have devolved authority to manage public
money within their agency.
Agency specific policies and procedures are
contained with large and complex volumes of
CEIs, departmental policy documents and
protocols.
CURRENT STATE
APPROACH FOR BRIDGING THE GAP
FUTURE STATE
Where are we now?
 Analysis of ‘2008-09 AUSTENDER statistics indicate 85,000
contracts (over $10,000) were awarded. The total value of
these contracts approx. $35bn.
 Of those contracts, about 65,000 contracts falling under the
$80,000 threshold were awarded. The total value of these
contracts was about $12.6bn.
 Over 80% of the total number of contracts correspond to about
4% total value. An APS 5/6 can spend up to 80% their time on
low value contracts
 Low value contracts translate to a high administrative burden
 Agencies have tailored procurement approaches reflect
organisational structure, authority and delegations, approval
processes, risk appetite, level of IT maturity, and resourcing,
reporting processes and systems
 Procurement functions differ in agencies – some functions are
centralised, some are decentralised
 Participating agencyes have undertaken work to review CEIs,
processes and protocols
 Whole of Government CEIs are under development
 Work has also been undertaken to simplify the standard short
form contract, reducing the number of pages from 80 to 6
How do we get there?
Analyse and review Commonwealth procurement practices
currently employed by selected agencies when conducting
procurements under $80,000, identifying issues, pressure points
and opportunities for improvement, and on that basis making
recommendations for simplifying and streamlining processes.
What do we need to do?
What would success look like?
 A better practice model for procurements under the threshold
that:
− Standardises the process across FMA agencies
− Makes it easier for staff to know what to do and how
to conduct procurements
− Reduces administrative burden
 Finance will be able to use the project findings and
recommendations as a basis for presenting a better
practice model to FMA agencies, where appropriate.
 The project will influence agency CEIs and processes
Who do we need to
involve?
 Finance’s
Procurement Policy
Branch
 Procurement Policy
Areas and
representatives from
line areas
What do we need to
consider?
 Avoid overengineering or over
prescribing
 Aim to set a
benchmark
 Impact on
behavioural change
DRIVERS FOR CHANGE
What is the problem/ opportunity?
 Agency procurement processes are complex, confusing,
and onerous for staff
 Requirements vary from agency to agency – processes are
not standardised across government
 Suppliers are frustrated
Focussing question
How can we standardise and streamline the process for
procurements under the $80,000 threshold, making it less onerous
FMA agencies, while also maintaining the integrity of the FMA
Act?
Out of scope
 The project will not to assess how well agencies implement
the CPGs and relevant FMA legislation when undertaking
procurements
 The project will not redesign policy
Timing
April
• Intent, planning
and agency
engagement
• CPG process
modelling
May
• Agency CEI
process mapping
• Case study
development by
agencies
• Case study
analysis
June
• Synthesis
• Design ‘better
practice model’
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 3
Agency B Procurement Process
Snapshot of agency requirements specified by CEIs
PRINCIPLES/ OUTCOMES
•
All procurement must represent value for money
and the efficient, effective and ethical use of
Commonwealth resources
•
All purchases must be made in accordance with
the CPGs and the department’s Procurement
Guidelines (including checklists)
•
All potential suppliers must be treated equitably
•
Offers of gifts or hospitality in connection with, or
in close proximity to, any procurement activity
must not be accepted (transparency)
•
Procurement processes must be accountable,
transparent and able to withstand scrutiny
PROCESS RULES – workflow
•
Tender documentation must be approved by the
delegate before the request for tender is released to
the market
•
All purchases must be approved prior to the
purchase by an appropriate FMA regulation 9
delegate and, if required, an appropriate FMA
regulation 10 delegate
•
Reg 8 requirements met before contract
•
Procurement processes and decisions must be
documented and records must be retained for 7
years after completion for standard contracts and
12 years after completion for tenant leases and
deeds, such as deeds of standing offer
•
Register and ensure contract on contracts register
PROCESS CONDITIONS/ STANDARDS
•
All members of tender evaluation panels must have
received procurement training
•
Procurement arrangements should not contain
contingent liabilities unless they are considered
remote and immaterial.
•
Legal and probity advice must be obtained for
material contracts in accordance with the
department’s Procurement Protocols
•
Declare and manage any actual or perceived
conflicts of interest. For actual conflicts of interest
this may involve removing oneself from the process
•
Maintain complete and accurate records of
procurement activities on file. Sufficient
documentation must be kept on file to provide an
understanding of the reasons for the procurement,
the process that was followed and all relevant
decisions, including approvals and authorisations
and the basis of these decisions
•
Mandatory procurement reporting requirements
apply to the department and are outlined in the
department’s Procurement Guidelines.
Minor purchases (under $20,000)
•
Existing arrangements (corporate contracts, panels
and whole of government arrangements) must be
used where appropriate
•
In the ACT the department’s E-procurement system
must be used to purchase stationery, toner and
copy paper
•
Where e-procurement and existing arrangements
are not suitable, minor purchases are to be made
using corporate credit cards wherever possible.
Medium purchases (from $20,000 to less than
$80,000 including GST)
•
Existing arrangements (corporate contracts, panels
and whole of government arrangements) must be
used where appropriate
•
Where existing arrangements are not appropriate,
medium purchases are to be made by obtaining
and evaluating quotes from the market and
selecting a preferred provider. A minimum of three
quotes should be obtained wherever possible
TOOLS
•
Checklists
•
Procurement Protocols
•
E-procurement system
•
Contracts register
•
Purchase orders
ROLES & RESPONSIBLITIES
Responsibilities are specified for the following roles
Officials
A person who is in or forms a part of this agency. The
term is also extended to mean employees, contractors,
consultants or other Commonwealth or state or territory
government officials who are performing tasks or
procedures for or on behalf of Agency B
• obtain approval from an FMA regulation 9 delegate
provided in writing for medium and major purchases
but can be provided verbally for minor purchases
(but the approval should be written down as soon as
possible after the it was given)
• obtain written approval from an FMA regulation 10
delegate (for insufficient existing administered
appropriation)
• Maintain records
• Register all procurements and consultancies
contracts valued at $10 000 or more (GST inclusive)
on the department’s contracts register and raise a
purchase order
Delegates
• ensure that the requirements of FMA regulation 8
have been met before they enter any procurement
arrangement
• not act as delegate for procurement activities which
they have managed and conducted themselves
• declare any actual or perceived conflicts of interest
• only approve the purchase of goods and/or services
of a nature and value consistent with their delegation
• ensure all procurements and consultancy contracts
valued at $10 000 or more (GST inclusive) are
accurately registered on the department’s contracts
register and that a purchase order has been raised.
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 4
Business process maps
AUSTRALIA  NEW ZEALAND
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Agency B Procurement Process
Role statements
End User (Business Line)
What are my obligations under the
Commonwealth Procurement
Framework?
 Awareness that Reg 9 and 10 have
been adhered to
What is my role? What are my responsibilities?
 Ensure that operational requirements are met
 Identifying procurement need
 Requesting procurement activity
 Using the end result of the procurement
Procurement Officer
Delegate
What are my obligations under the
Commonwealth Procurement
Framework?
 Awareness and adherence to
process in accordance with CPGs,
FMA, and internal CEIs and
guidance material
o Value for money
o Economical
o Ethical
o Efficient
o Accountable
o Transparent
What is my role? What are my responsibilities?
 Provide advice regarding procurement and reporting
 Seek approvals
 I support and advice the End User
 I go to the PAU for advice and clarification







What are my obligations under the
Commonwealth Procurement
Framework?
 FMA Reg 9 approval to spend
money
 Understand budget and determine
whether funds are available for
procurement
Ensure Reg 10 is confirmed if required
Determine whether procurement activities meet best
value for money
Confirm all business case and procurement process
meets Agency B CEIs and Procurement Guidelines
Ensure risk evaluation meets procurement type
Provide FMA 44 approval to enter into an arrangement
Ensure suitable records and filing is completed
Provide input into the Annual Procurement Plan
What is my role? What are my responsibilities?
 As above
What are my concerns?
 That the end result meets my needs and works on an
operational level
o Simple streamlined process that doesn’t
cause a high administrative burden
o I want to know who to talk to is the result
does not work – when and how will it be
fixed?
o Can I change the result if it does not
work?
 I only want go through procurement process once,
with minimal effort and resources consumed
What are my concerns?
 Too much paperwork to read through
 Having PAU ringing and confirming my details
 Confusion regarding which tender processes I should
use
o Open
o Direct
o Select
 Alignment of procurement principles to business
needs
 Meeting timeframes set by end user
 Translating business need and requirements
 Budget and resources
 Lack of clarity of my role and responsibilities
 Guidance and advice isn’t always user friendly
 The need to provide an audit trail and documentation
What are my concerns?
 Have we completed the best value for money
procurement method?
 Is the process defensible and accountable and will this
be reported correctly
 Lack of training and understanding of my
responsibilities
 Has due process been followed?
 I rely on the procurement officer to ensure process is
defensible
 Lack of induction -
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 6
Agency B Procurement Process
Role statements
Procurement Advisory Unit (PAU)
What are my obligations under the
Commonwealth Procurement
Framework?
 Provide independent review for
appeals
 Ensure contracts >= $10,000
entered into AusTender
 Ensure data integrity regarding
reporting obligations under CPGs
(i.e. APP, Senate Order, Annual
Reports)
What is my role? What are my responsibilities?
 To provide advice to line areas conducting
procurement so that they meet the obligations of the
FMA/ CPGs while still meeting their business need
 Meeting Departmental reporting requirements –
Annual Plan, Senate Orders, annual Procurement
Plans
 Integrity of data in contracts register
 Rely on contracts register for reporting
 Provide and maintain procurement tools (e.g.
checklists, templates)
What are my concerns?
 Not given full information by Line Area which may lead
to providing incorrect advice
 We do not have visibility/ oversight of what the Line
Area are doing. Should PAU be a process
checkpoint?
 Even if they do seek advice, do they follow it?
 Are delegates supportive of following the procurement
process? Delegates can influence procurement
officers/ end users
Specialist (Legal)
Payment Processing
What are my obligations under the
Commonwealth Procurement
Framework?
 None specifically under the FMA (but
need to adhere to Legal Services
Directions and professional
obligations)
 Compliance with legal services
direction
 Legal signoff for contracts
What are my obligations under the
Commonwealth Procurement
Framework?
 Delegate review of FMA delegation
o 10% sample of payments
under $500,000
 Ensure purchase order referenced in
claim for payment
o Links in with contract register
(PIN allocation)
What is my role? What are my responsibilities?
 To provide legal. Probity advice, as instructed, in
accordance with the law, FMA, CPGs
What is my role? What are my responsibilities?
 Payment of invoices including adherence and payment
to Small Business Circular Requirements
 Recording/ entering existing/ new supplier information
 Adherence to GST legislation
 Record/ audit trail
What are my concerns?
 Officers do not follow advice
 Officers do not provide all details and therefore
compromise advice
 If legal advice is not sought/ factored into the
procurement process, there is a risk to the reputation
of the organisation and possible legal action
What are my concerns?
 Lack of detail on Claim for Payment (CFP) form to
meet payment terms
 Invoices that do not meet GST requirements
 Has appropriate delegate approval been granted
(evidenced by delegate signature on CFP)?
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 7
Agency B Procurement Process
Role statements
Supplier
What are my obligations under the
Commonwealth Procurement
Framework?
 None specifically
What is my role? What are my responsibilities?
 Provide quotes
 Provide good(s)/ service(s), in line with contractual
obligations, including ongoing contract management
 Issue invoices
 Follow up on outstanding payments if required
What are my concerns?
 Late payments
 Transparency of procurement process
 Time taken to complete procurement process
 Different procurement requirements between agencies
 Competitors having an unfair advantage
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 8
Agency B Procurement Process
Map Levelling
Level 0 – Process phases
This map provides an overview of the entire process end to end,
including the process triggers, process phases, and main
workflows.
Level 0
Level 1 – Process activities
These maps drills down into each of the Level 0 process phases,
detailing the activities that occur.
Level 1
Level 2
Level 2 – Procedural tasks, support products and systems
Level 2 is not generally documented as a map, but rather
references guidelines, operational instructions, instruments and / or
business systems such as databases. These things underpin the
delivery of a process.
Symbols
Trigger
Activity
Document
Decision
Ongoing
Activity
End
Workflow
Database/
Storage
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
Off page
connector
PAGE 9
Agency B Procurement Process
Level 0 – Process Phases
End User
Identify need
Plan
procurement
Business Line
Procurement
Officer
Delegate
PAU

Plan
procurement
Provide inprinciple approval
Receive good(s)/
Provide input and
management
approval (as
req’d)

Approach
market
Provide approval
(as req’d)
service(s) and pay
Assess
submissions
and
negotiate contract
Provide approval
Provide advice and support
(as req’d)
Raise purchase
order and process
payment
Payment
Processing
Specialist
Supplier
Provide advice and support
(as req’d)
Respond to RFQ
Negotiate and
enter into
arrangement
Provide good(s)/
service(s) and
receive payment
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 10
Agency B Procurement Process
Level 1 –  Identify need
Yes
End User
Business Line
Procurement
Officer
Identify
procurement
need
Considerations
Procurement has been
identified as the method
to obtain the good(s)/
service(s)
Check existing
arrangements
Does a
suitable
arrangement
exist?
Use existing
arrangement
❷
No
Requirement
Use existing
arrangements if
they are suitable
Delegate
PAU
Payment
Processing
Specialist
Supplier
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 11
Agency B Procurement Process
Level 1 –  Plan procurement
< $19,999
End User
Business Line
Procurement
Officer
❶
Value &
type of
proc’t?
$20,000 $79,999
Stationary/
office supplies
Other
Use EProcurement
process
Reg 9 approval built-in
Use credit card
process
Note
The business case is scalable. For a simple
procurement it could be an email, for a
more complex procurement it could be a
multipage document
CPG
6.8 &
9
Understand
procurement
need
Develop business
case
Checklists
Understand
procurement
need
Business
Case
proforma
Provide input into
business case (as
req’d)
Seek approval to
conduct
procurement
Review business
case and proposed
procurement method
Delegate
No,
Refine business
case; or
End process
Check that
budget is
available
Approve
(in-principle)
?
Delegation
database
PAU
Provide advice and support
(as req’d)
Payment
Processing
Specialist
Provide advice and support
(as req’d)
Supplier
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 12
Yes
❸
Agency B Procurement Process
Level 1 –  Approach market
No,
Amend specification
documents
End User
Provide input
Provide input
Business Line
Prepare
specification
documents
Procurement
Officer
Identify
potential
suppliers
Seek manager
approval
(as req’d)
Seek Delegate
approval
(as req’d)
Manager
Approve
procurement
approach?
Considerations
This approval could be done
by either the Business Line
Manager or the Delegate.
This largely depends on the
complexity of the
procurement
Approve
procurement
approach?
❷
Delegate
Yes
Issue RFQ
Provide
clarification
(as req’d)
Considerations
For procurements of $20k
- $79,999 a minimum of 3
quotes must be sought.
Below $19,999, there is
no requirement for
quotes.
Yes
No,
Amend specification
documents
PAU
Receive quotes
Provide advice and support
(as req’d)
Payment
Processing
Specialist
Supplier
Provide advice and support
(as req’d)
Obtain RFQ
Understand
specifications
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
Provide quote
PAGE 13
❹
Agency B Procurement Process
Level 1 –  Assess submissions and negotiate contract
Provide
advice
End User
Considerations
The Contract Register is
used as the source of
information for
AusTender reporting
Business Line
❸
Procurement
Officer
Assess
submissions
Select
preferred
supplier
Recommend
supplier to
delegate
Notify successful
supplier and send
draft contract
Negotiate
contract
(as req’d)
Delegate
Grant Reg 9
approval?
Reg
9
Sign
contract?
Yes
Yes
Contract
Register
Sign
contract
CPG
7.12
FMA
s.44
Conduct
reporting
obligations
Provide advice and support
(as req’d)
PAU
❺
CPG
7.23
No
No
Re-evaluate
submissions or refine
requirements
Register
contract on
contract
register
Notify
unsuccessful
suppliers
Finalise
contract
CPG
7.24
Payment
Processing
Sign off on process
(as req’d)
Specialist
Supplier
CPG
6.10
Provide advice and support
(as req’d)
Receive
notification and
draft contract
Negotiate
contract
(as req’d)
Finalise
contract
Sign
contract
CPG
7.12
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
Unsuccessful
suppliers
Receive
notification
Seek
feedback if
desired
PAGE 14
❺
Agency B Procurement Process
Level 1 –  Receive good(s)/ service(s) and pay
* Claim For Payment
Receive
good(s)/
service(s)
End User
Business Line
Receive invoice
Invoice
QSP
Procurement ❹
Officer
Create
purchase order
request
Provide CFP*
and invoice for
signature
Submit
purchase order
request
Document
process and
decisions
CFP Form
Purchase
order
request
Sign CFP
Delegate
CPG
7.9
Not standard practice, but
ideal to ensure delegate
approval can be
substantiated, ensuring
the procurement process
is defensible
Conduct
reporting
obligations
PAU
CPG
7.24
Process and
raise purchase
order
Payment
Processing
Receive CFP
and invoice
Match CFP and
invoice
Purchase
order
Pay invoice
Delegation
database
Considerations
Delegate approval evidenced
by delegate signature on
CFP possible only if provided
Specialist
Invoice
Supplier
❹
Provide
good(s)/
service(s)
Issue invoice
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 15
Process analysis
AUSTRALIA  NEW ZEALAND
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Agency B Procurement Process
Process issues, pressure points and suggestions for improvement
ISSUES
Current problems with the process
PRESSURE POINTS
Elements of the process that affect efficiency
SUGGESTIONS FOR IMPROVEMENT
Outcomes from the workshop
 There is a general lack of understanding of FMA Act
and CPGs, posing a risk to the department for
possible breaches of CPGs and FMA Act
 Need for role-specific training for procurement
officers and delegates, PAU staff, specialists (e.g.
legal), and general admin
 Advice from Finance (DoFD) is not always consistent
 Procurement staff are not always clear on which
process should be used (e.g. open, select, direct,
etc.)
 AusTender issues
− Reporting to AusTender process is not straight
forward
− Selection processes (e.g. select, direct) are a
mandatory field in AusTender, reporting on the
selection process is required only by Division 2
of the CPGs (i.e. why should it be a mandatory
field for < $80,000)
− Data integrity issues
 CPG Principles create cumbersome processes for
<$80,000
− ‘Efficient and effective’ may contradict
‘encouraging competition’
− The ‘value for money’ principle is not well
understood (i.e.. may be interpreted as ‘cost)
 The workflow and documentation is largely
manual, with usage of disparate systems and
databases (e.g. QSP, contracts register,
delegations database) that are not integrated
with the workflow
 Three different approvals are required
− To commence a procurement process
− To approve specifications (incl.
requirements, value, timing, potential
suppliers, etc.)
− To approve spending (Reg 9), before a
contract is entered
 The requirements for Secretary/ Dep. Sec./
CFO approval for consultancies valued at
$20,00 or more may create a bottleneck and
unnecessary paperwork
 The absence of a minimum requirement for
documentation can drive risk averse
behaviours (i.e. raising unnecessary
paperwork that is not commensurate with the
value/risk of the procurement)
 Automate the process workflow and
documentation as much as possible (e.g. end
to end and documentation, from the
development of a business case through to
purchase order and contracts register
 The refresh of the Framework (CPGs,
Circulars etc.) should be informed by this
Review
− Guidance should be provided in “plain
English” and terms should not subjective
or left to interpretation
 Limit the requirements for documentation for
low value procurements
− Provide agencies with one simple form
 Streamline reporting to AusTender
 Streamlining non-covered contracts was a
good initiative but needs more work
 Provide role-specific training for procurement
officers and delegates, PAU staff, specialists
(e.g. legal), and general admin
 PAU do not have visibility/ oversight of what
the Line Area are doing. Should PAU be a
process checkpoint?
ANALYSIS AND REVIEW OF COMMONWEALTH PROCUREMENT
PROCESSES UNDER $80,000 – AGENCY B PROCUREMENT V1.0
PAGE 17
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AUSTRALIA  NEW ZEALAND
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