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Guidance on the Mandatory Procurement Procedures - FMG 13

Published January 2005

The purpose of the Guidance on the Mandatory Procurement Procedures is to assist Australian Government departments and agencies (agencies) in implementing the requirements of the Commonwealth Procurement Guidelines (CPGs) and specifically the Mandatory Procurement Procedures.

Full Publication

Guidance on the Mandatory Procurement Procedures - January 2005 PDF version [ 1.4 MB]
Guidance on the Mandatory Procurement Procedures - January 2005 ZIP version [ 4.7 MB]

Table of Contents

1. Purpose
2. Background and Context
3. Steps in a Procurement
4. Planning the Procurement
5. Selecting a Procurement Process
6. Preparing to Approach the Market
7. Approaching the Market
8. Evaluating Submissions
9. Concluding the Process

• Appendix A: Multi-Use Lists
• Appendix B: Panels
• Appendix C: Definitions

1. Purpose

The purpose of the Guidance on the Mandatory Procurement Procedures is to assist Australian Government departments and agencies (agencies) in implementing the requirements of the Commonwealth Procurement Guidelines (CPGs) and specifically the Mandatory Procurement Procedures.

Value for money is the core principle underpinning Australian Government procurement. This means that Australian Government officials need to be satisfied that the best possible outcome has been achieved taking into account all relevant costs and benefits over the whole of the procurement cycle¹.

This operational guide promotes the achievement of value for money by providing practical information on managing procurement processes that lead to agencies entering into a purchasing agreement with a supplier or suppliers. This information meets the requirements of the Government's procurement framework while also facilitating the delivery of good business outcomes. Therefore, this guide is an adjunct to the CPGs and will best serve the reader if they are familiar with the CPGs.

Advisory

This guide is designed to assist officials with a detailed knowledge of procurement processes who need an occasional reference source, as well as those officials only occasionally involved in a procurement process who need a step-by-step guide. As this document is only a guide it, therefore, primarily focuses on general situations.

When dealing with a circumstance that is not directly addressed by the guidance, the officials will need to use judgement, and if necessary, seek advice from an appropriate source.

Some agencies maintain their own operational guidance. In cases where agency guidance and this guide provide different advice, the official should follow the agency's guidance as long as it complies with the CPGs. If an agency adapts this guide to its own procurement protocols, it should make clear that the adapted guide does not carry the authority of the Department of Finance and Administration (Finance).

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Footnotes:

1. Depending on the property or service being procured, agencies may also include environmental, social and other costs in their calculations of the whole of procurement cycle. For further information refer to the Guidance on Complying with Legislation and Government

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2. Background and Context

The operations discussed in this guide are primarily directed at covered procurements. Covered procurements are defined in the CPGs as "a procurement, other than one that is specifically exempt, where the value of the property or services being procured exceeds the relevant procurement threshold."

The covered procurement thresholds are as follows:

• $80,000² for procurements for Financial Management and Accountability Act 1997 agencies (FMA agencies);
• $400,000 for procurements, other than procurements of construction services for relevant Commonwealth Authorities and Companies Act 1997 (CAC) bodies; and
• $6 million for procurements of construction services.

The estimated value of the procurement needs to be determined according to the CPGs, and must include any taxes or charges (including Goods and Services Tax (GST)).

All Financial Management and Accountability Act 1997 (FMA Act) agencies and their officials are subject to the CPGs when performing duties in relation to procurement. Relevant bodies subject to the Commonwealth Authorities and Companies Act 1997 (CAC Act) are bound in their procurements by the Finance Minister's (CAC Act Procurement) Directions 2004.

Where a procurement is not a covered procurement, an agency does have more discretion in its procurement procedures. However, the agency must still comply with the requirements of the procurement policy framework and other Government policies that interact with procurement. It can be to an agency's advantage to use this guide for a non-covered procurement as the operations described here are better practice.

As stated above, this guide describes general situations and officials may be required to exercise their own judgement in certain situations. If so, such decisions should be taken in line with the principles articulated in the CPGs. Officials should also consider early in the process whether they will need legal advice and at what stage of the procurement process advice should be sought. Such assistance may be prudent, for example, if an official is required to write a contract.³

A record of the procurement process should be created in order to facilitate scrutiny of the factors and principles that informed certain decisions. Documentation of decisions can play a particularly helpful role in this regard. The appropriate mix and level of documentation depends on the nature and risk profile of the procurement being undertaken.

In all cases, the agency should ensure that there is sufficient documentation to provide an understanding of:

• the reasons for the procurement;
• why a particular procurement method was used;
• the process that was followed;
• all resulting decisions, including the basis of those decisions; and
• any associated authorisations.

Documentation relating to a procurement process must be retained for a minimum period of three years after the award of a contract, or from the date that it is decided the procurement process is to be terminated. The Archives Act 1983 [] also sets out other minimum retention period requirements in relation to Commonwealth records, including procurement documentation. Contact your agency's records management area for advice on retention periods for particular issues under consideration.

Officials must be aware of and comply with Financial Management and Accountability Regulations [] (FMA regulations) that have a bearing on the procurement process. Regulations which specifically support the spending of public money are:

• FMA regulation 8(2) requires that any official who takes an action that is not consistent with the CPGs must make a written record of his or her reasons for doing so;
• FMA regulation 9(1) requires that an approver⁴ of a proposal to spend public money must be satisfied that the proposed expenditure is in accordance with the policies of the Commonwealth, will make efficient and effective use of the money and, if the proposal is one to spend special public money, is consistent with the terms under which the money is held; and
• FMA regulation 12 specifies that, where approval of a proposal to spend public money is not given in writing, the approver must make a record of the terms of the approval in a document as soon as possible after giving the approval.

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Footnotes:

2. FMA regulation 3 defines an approver as a Minister, a Chief Executive, or a person authorized by legislation to approve proposals to spend public money.
3. Note that many agencies have specific requirements and procedures for seeking legal advice.
4. FMA regulation 3 defines an approver as a Minister, a Chief Executive, or a person authorised by legislation to approve proposals to spend money.

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3. The Steps in a Procurement

There are six major steps that are generally followed when procuring a property or service. Within each of these steps there are also a number of decisions or actions that are usually taken. These are outlined in the following diagram.

The Six Major Steps Involved in Procurement

Steps	Examples of Decisions/Actions
Planning the Procurement	Defining the outcome in function terms Defining specifications Researching the procurement market Identifying risks Developing a business case
Selecting a Procurement Process	Determining whether to use an open, select or direct source tender
Preparing to Approach the Market	Developing a procurement plan Developing a request document Seeking appropriate legal advice Developing a submission evaluation plan Creating a submission evaluation committee
Approaching the Market	Notifying the market Publishing request document modifications Publishing clarifying answers
Evaluation of Submissions	Fairly and impartially evaluating submissions Appropriately documenting decisions Advising participants of the decision
Concluding the Process	Negotiating and signing the contract Publishing the awarding of the contract Properly handling complaints Fulfilling reporting requirements Storing all records

The remainder of this document is structured as a step-by-step operational guide for the reader with each chapter of this guide representing a step.

The chapters describe both the step to be taken at that particular stage of the procurement process as well as the information needed to support the associated decisions and actions.

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4. Planning the Procurement

Index

• Defining the Outcome
• Defining Specifications
• Researching the Market
• Identifying Risks
• Time-Lines
• Internal Due Diligence
• Delivery Options
• Identifying Alternative Opportunities
• Identifying Industry Regulation and Licensing Requirements
• Policies that Interact With Procurement
• The Business Case
• Resources
• Planning the Procurement Checklist

While all procurements require some planning, the degree of planning is dependent on the complexity and size of the procurement. Simple procurements do not generally require detailed planning; whereas, by virtue of their size, covered procurements will generally require a more detailed planning process. In the case of large and complicated procurements, the agency may even consider forming a steering committee and bringing in a variety of expertise from across the agency.

Effective planning may include, where appropriate, researching whether similar procurements are being undertaken in other agencies, thereby increasing the potential for agencies to share procurement costs.

A planning process can assist the agency in deciding whether a procurement is feasible and should be undertaken; thereby allowing for the development of a business case.

This section `Planning the Procurement´, therefore, outlines various issues an agency should consider when planning a covered procurement that will achieve value for money; and how this should culminate in the development of a business case.

4.1 Defining the Outcome

The development of a clear and precise description of the outcome is an important first step in every procurement. By defining the outcome, the agency will be describing what need is to be satisfied and how it is to be satisfied.

This description will then allow the agency to describe the property or service required, quantities required and how the property or service is to be delivered.

4.2 Defining Specifications

Developing specifications for the procurement of property or services is sometimes a complex activity requiring expertise. For example, in the case of highly technical communications procurement it can take more than a year to develop specifications.

The agency should involve the users of the property or services in defining the requirements together with appropriate project officials and technical officials (eg communications, finance). Consideration should also be given to liaison with other agencies that may have procured the same or similar property or services.

Any specifications must be in terms of the performance and functional requirements, rather than design or descriptive characteristics. For example, if a mail service is being sought it should not be specified as a pre-set schedule of routes unless there is a rigid business need to do so; rather it should be specified as `a mail service to 1,000 staff over two sites´.

Similarly, procurements which are technical in nature, should be prescribed by the technical specifications, rather than be prescribed by a particular property or service.

If an agency is procuring printers, for example, it should specify `a printer capable of printing 20 pages per minute´ instead of requesting `a Brand X printer´.

Specifications must be based on existing international standards that apply to the procurement except where:

• the use of Australian standards are required by law;
• international standards fail to meet the agency's requirements; or
• international standard would impose greater burdens than the use of the Australian standard.

It should be noted that many Australian standards are based on international standards and may in some cases be identical.

A good specification will state the requirement clearly, concisely and logically in functional and performance terms unless specific technical requirements are needed. As specifications limit the scope of responses that may be accepted, care should be taken to avoid specifications that discourage suppliers from providing the best solution, which in some cases may be a solution based on an innovative idea and/or technology.

4.3 Researching the Market

Researching the market assists the procurement official to understand how the market works, competition within the market, recent developments, supply issues and innovation opportunities. It should also reveal key potential suppliers and whether the market contains sufficient expertise to deliver the property or service in a form that accords with the prescribed outcome.⁵

Market research can occur through a number of methods including contact with other Australian Government agencies via formal networks, such as the Procurement Discussion Forum⁶, or via informal networks.

The agency's level of confidence in being able to successfully procure within a reasonable time to a reasonable cost and standard will depend on several factors such as:

• the complexity of the proposed procurement;
• a mix of property or services not being available from a single supplier, thereby requiring a consortium to be formed;
• the maturity of the market;
  - a new industry may be largely comprised of suppliers, which do not have a long record of on-time delivery.
• the size of the market;
  - a very small market of suppliers may not be able to guarantee a competitive procurement environment.
• the availability of alternative products and services; and
• the presence of any statutory planning requirements.

At the end of this process, the agency should have a good knowledge of the current market and use this information, inter alia, to determine the type of approach to the market that is most appropriate to the particular circumstances (see Selecting a Procurement Process).

In addition, as explained in the following section, this process will also assist the agency to identify risks associated with the procurement.

4.4 Identifying Risks

Risk is the chance of something happening that will have an impact upon objectives and outcomes. Risk management involves the systematic identification, analysis, treatment and, where appropriate, acceptance of risks. Risk management is integral to efficiency and effectiveness, enabling agencies to proactively identify, evaluate and manage risks, opportunities and issues arising out of procurement-related activities. As a general principle, risks should be borne by the party best placed to manage them.

Most procurements contain some sort of risk and, while risk cannot be eliminated, in most cases it can be managed. The various planning activities that the agency undertakes, as outlined in this chapter, will identify risks and strategies to mitigate some of these risks. Risks can relate to a number of factors including the immaturity of the market, highly specialised products, experimental stage of product development, limited suppliers, dependence on specific personnel or supply chain issues. As well, there can be risks associated with internal agency matters. The level of attention given to mitigating any particular risk will depend on its potential impact on the procurement. These risks need to be assessed and mitigating strategies identified where possible. If the risk cannot be controlled then, at the least, awareness can be used to inform a strategy.

In the procurement context, there are risks associated with the procurement process itself and risks associated with the property or service once it has been procured.

Risks associated with the procurement process relate to events, issues or features of a property or service that could jeopardise the successful delivery of the procurement outcome. Throughout all stages of the procurement process agencies need to be cognisant of risks and their potential impacts. In the case of risk associated with the property or service after it has been procured, agencies need to be aware of any liabilities that the property or service may carry.

The main elements of the risk management process are described in the Australian and New Zealand Standard AS/NZS 4360/2004 Risk Management. These elements generally deal with ensuring that there is adequate communication and consultation at each stage of the risk management process, where risks are identified, assessed and evaluated. After risk management processes are implemented, risks are continually monitored and reviewed to ensure the effectiveness of risk treatment measures. Taking these steps will assist the agency to assess the relative priority of each identified risk and provide options for reducing potential for the risk crystallising.

The consideration given to each of these steps will depend on the size and complexity of the procurement. For example, there may be limited sources of supply for a highly technical product that is critical to an agency's service delivery. The purchasing objective, therefore, may be to seek to secure a continuous supply of that product. An example of a key strategy may be to work with suppliers that have capability in the area to develop alternative products that will meet the agency's needs.

Where assessment and evaluation processes identify procurement risks that are not acceptable, the agency must implement risk treatment strategies. For each unacceptable risk the agency should investigate:

• reducing the likelihood of the risk occurring;
• reducing the severity of the consequences should the risk eventuate;
• transferring the risk to another party in part or full; or
• avoiding the risk.

As stated above, risks should be borne by the party best placed to manage them. That is, the Australian Government should generally not accept risks, and therefore potential liabilities, which another party is better placed to manage. This policy is articulated in Finance Circular 2003/02 and the accompanying guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort.

Where, after due consideration, an agency has made the decision to accept a risk which would otherwise reside with a supplier, it should be recognised that the Australian Government is also accepting additional costs. These may be direct costs associated with purchasing insurance to cover the risk and/or indirect costs through carrying additional contingent liabilities. The supplier's direct and indirect costs are correspondingly reduced. Therefore, the decision to accept a limitation of a supplier's liability should be reflected in a commensurate adjustment in the contract terms in favour of the Australian Government. Prior to accepting any such risk, the agency should check whether they have sufficient insurance coverage.

Mechanisms should also be established to ensure that the agency is able to monitor contract performance and the management of those risks it has accepted. In these circumstances, agencies should assess whether they should seek more direct involvement in the administration of the contract in order to ensure that the Australian Government's interests are adequately protected.

An agency may consider limiting a supplier's liability to the Commonwealth. Forms of limiting the supplier's liability include the use of indemnities and liability caps. Agreements that include specific statements in relation to the capping of supplier's liability to the Commonwealth or a Commonwealth indemnity require consideration under the FMA regulations.⁷ Where it is apparent that market conditions will require some form of limitation of a supplier's liability to the Commonwealth, agencies must include an assessment of the limitations as part of its value for money consideration.

More generally, it may only become apparent that there are issues with a supplier's liability when potential contractors respond to the draft contract in the tender process. For this reason, agencies may consider including an evaluation of proposed liability arrangements within the evaluation criteria and a statement in the request document that any request for additional limitations of liability during contract negotiations will be expected to be accompanied by a commensurate adjustment in the contract terms.

Further information on risk management can be found in the publication Australian and New Zealand Standard AS/NZS 4360/2004 Risk Management.

Security Considerations in Procurement

The consideration of security risk is a vital component of risk management in all aspects of a procurement. The unauthorised use of resources, including official information, for the profit, personal or political interest of individuals is an unacceptable security risk to the Commonwealth.

Where an agency engages an external service provider, there is potential for unauthorised access to security classified information by parties other than Australian Public Service employees.

When an agency adopts an outsourcing approach to service provision, accountability for the performance of the service or function and responsibility for outcomes remains with the agency.

Agency management is expected to ensure that:

• the services provided by service provider(s) on behalf of the agency are delivered at the required standard; and
  
• official resources, especially security classified information, are secured from unacceptable risk.⁸

Agencies must develop an agency security plan, which identifies security and service delivery risk and how to manage these risks.⁹

Consideration of security issues associated with outsourcing/procurement should take place during the planning phase of the procurement. The necessary security requirements must be determined and published in the request document and will also form the basis of contract clauses and ongoing contract management of the service provider and their employees. The Attorney-General's Department's Protective Security Manual provides guidance on identifying, assessing and treating security risk, which will assist agencies in developing strategies for managing security risks in procurement.¹⁰

While the responsibility to perform certain government functions or services can be transferred to the service provider, accountability for the results cannot. An agency will remain accountable to its Minister, and through the Minister to the Parliament, for the efficient and secure performance of the functions devolved to it by the Government. This agency responsibility includes the management of security risk in procurement when utilising external service providers.

4.5 Time-Lines

In developing the procurement time-line it is important to allow adequate time to undertake the various tasks necessary to perform the procurement. The agency will need to determine which tasks are dependent on, or interdependent of, others and if the tasks can be conducted concurrently. The agency will also need to consider the minimum and maximum timeframe available within which to conduct the procurement and the existence of any time constraints. The agency also needs to be aware of whether some of these issues have already been addressed during the development of the Annual Procurement Plan.¹¹

If possible, it is prudent to incorporate a time buffer in the time-line in order to cope with unforeseen delays or circumstances. Cyclical or seasonal considerations may also be relevant for some procurements. However if there is a strict deadline, it will be necessary to ensure that all steps of the procurement process can be conducted within that timeframe.

Suppliers may also require minimum delivery lead times that the agency should be aware of. As a general rule, the more complex the procurement, the longer the time that potential suppliers will require to develop adequate responses.

4.6 Internal Due Diligence

The agency should review the current legal, policy and operational arrangements that impact on the procurement. Therefore, internal due diligence is an essential component in managing risk in the procurement process. Accordingly, an agency will need to research all appropriate internal documents and material to ensure sufficient information is available to inform the procurement process and deliver the required outcome.

This research could include:

• identifying contracts which may be part of the property or service;
  - eg outsourcing information technology (IT) may include novating existing contracts to the new provider.
• identifying licences, intellectual property or other obligations which may be affected;
  - eg will licences for software need to be changed to enable access by a provider or need to be novated?
• providing statistics on property or service requirements.
  - eg potential payroll service providers will need to know the number of staff, number of transactions and types of transactions.

4.7 Delivery Options

The agency needs to consider the most suitable means of acquisition and delivery of its property or service. The usual acquisition options are buy, hire or lease.¹²

When buying, the agency has the advantage of ownership but bears the risk of maintenance, obsolescence and eventual disposal. Purchases can also require regular deliveries on a monthly basis, or as needed, in lieu of keeping stock in the workplace.

Hiring involves renting equipment where there is not a fixed term and the agency has no expectation of ownership or residual value. The agency is billed for time used on a regular basis.

Leasing involves the renting of equipment for a fixed term (as decided by the agency) with regular monthly, quarterly or yearly payments. Computers, network hardware, end user cabling and installation costs are examples of property and services which are leased. At the end of the lease, there is usually the option to continue leasing (often at a reduced rate), return the property, or offer to purchase the property at fair market value. When leasing property the agency does not own the property and may be more easily able to keep pace with the latest developments.

When considering hiring or leasing arrangements, expert input will usually be required. Therefore, in these circumstances the agency should seek the advice of its Chief Finance Officer.

4.8 Identifying Alternative Opportunities

After the outcome has been defined, agencies should also research the procurement plans of other agencies to identify whether there are opportunities to improve on either the procurement's outcome or value for money prospects.

The agency should also be aware of whole of government arrangements and endorsed suppliers. For similar procurement needs, costs and duplication can be reduced through cost sharing between agencies. This will require an agency to research the forthcoming or realised procurements of other agencies. In all cases, however, agencies remain responsible for their procurement and its outcome.

Networking is also a powerful strategy for identifying the potential for sharing costs.

There are several possible ways this can be conducted:

• agencies are to post their Annual Procurement Plans on AusTender, therefore it can be examined for upcoming procurements that share common characteristics with your agency's procurement;
• an agency may have already done an open tender for a similar procurement and developed a multi-use list which allows other agencies to `piggyback´. This may permit your agency to save costs by conducting a select tender.
• similarly, it is possible that another agency may have already gone to market and signed a contract with a supplier to provide a property or service that your agency is interested in. It may be possible to piggyback off that agency's contract to supply the same property or service¹³; and
  - in these circumstances, both agencies' needs should be in strict alignment if value for money is to be achieved.
• your agency may join a whole of government arrangement or cluster.
  - clusters are formed where several agencies go to the market with a single procurement request. For example, a number of agencies have formed a cluster for air travel contracts. As all agencies abide by the same terms in their contracts it is important that there be no difference between agencies in the nature of the property or service being procured.

4.9 Identifying Industry Regulation and Licensing Requirements

Delivery of legal, financial and some technical services requires licences and/or professional recognition. For example if an agency is seeking legal representation or advice, it is vital that the supplier has the appropriate legal and professional qualifications. It is the agency's responsibility to determine whether there are licensing considerations associated with the procurement.

Officials need to consider whether industry regulations and licensing requirements should be `conditions for participation´.

4.10 Policies that Interact With Procurement

There are many other policies and laws that may impact on the procurement that is being undertaken, including those relating to privacy, environmental and occupational health and safety matters.

These can either impact on all procurements or impact on particular types of procurement. The agency, and in particular the procurement approver as part of their FMA regulation 9 responsibilities, must be cognisant of these policies and laws (see Guidance on Complying with Legislation and Government Policy in Procurement¹⁴).

For example, the checklists in the Department of Environment and Heritage Environmental Purchasing Guide [] contain specific advice concerning purchases of key products and services that are of environmental significance to the Australian Government. One of the checklists provides advice on environmental criteria agencies should use when purchasing fax machines. Therefore, when procuring fax machines the agency should be aware of this advice and consider its application when developing specifications and evaluation criteria.

4.11 The Business Case

Once all of the above issues have been researched and considered, the agency will have sufficient information to determine whether the procurement is feasible, the specification requirements, attendant risks and whether there are any viable alternative opportunities which can deliver better value for money.

These issues should then form the basis of a business case explaining why the procurement should be undertaken and how it delivers value for money.

The business case should also set out resourcing requirements, a list of stakeholders and a cost-benefit analysis (which can be calculated from the information which has been collected to this point).

Once completed, the business case should be sent to the appropriate official for approval. In approving the business case, the approving official should also take into consideration FMA regulations 9, 10 and 12.

4.12 Resources

• Attorney-General's Department,
  Protective Security Manual []
  
• Australian and New Zealand Standard AS/NZS 4360/2004 Risk Management
• Department of Environment and Heritage
  Environmental Purchasing Guide []
• Department of Finance and Administration,
  Finance Circular 2004/10, Using the Financial Management and Accountability Regulation 10 Delegation
• Department of Finance and Administration,
  Guidance on Procurement Publishing Obligations
• Department of Finance and Administration,
  Guidance on Complying with Legislation and Government Policy in Procurement

Planning the Procurement Checklist

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Footnotes:

5. If a consultant is hired to research the market on behalf of the agency, this may in itself be a separate procurement exercise subject to the CPGs.
6. The Forums are hosted by Finance and held periodically throughout the year.
7. Finance Circular 2004/10, Using the Financial Management and Accountability Regulation10 Delegation.
8. For some procurements an agency may receive material from a third party which is to be subsequently provided to a contractor. The agency must ensure that it protects any associated personal and commercial confidential information during the transfer of the material.
9. This is a requirement of the Australian Government's security policy as articulated in the Protective Security Manual []
10. The Protective Security Manual is available at http://www.ag.gov.au [].
11. For further information see the Finance document Guidance on Procurement Publishing Obligations.
12. When valuing a leasing arrangement, this should be done on a `whole of life´ basis.
13. This is an option only if the original request document alerted potential suppliers that this could be an outcome of the procurement and if the contract specifies that other agencies can back onto the contract
14. Available from http://www.finance.gov.au (under the Government Finances menu) .

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5. Selecting a Procurement Process

Index

• General Issues
• Open Tendering
• Select Tendering
• Direct Sourcing
• Resources
• Selecting a Procurement Process Checklist

The core principle in the CPGs of value for money applies not only to the outcome of a procurement process but also to the process itself. To achieve value for money the process should be well planned and conducted efficiently and in accordance with relevant government policy. One of the features of a well-managed procurement is that it is supported by a structured and documented process for considering and deciding the procurement methods to be applied. The procurement process supports, at both a general and detailed level, the selection of a property or service and describes the issues that should be considered when selecting the process.

This chapter describes the three types of procurement processes that are available for covered procurements and the conditions under which a particular process is appropriate.

5.1 General Issues

Any procurement process represents an investment with costs arising from the process itself and benefits in terms of the outcomes achieved. In this context consideration must be given to more than a narrow focus on the final deal achieved with a supplier. Rather, consideration should also incorporate features of the procurement process itself. For example, a highly attractive contract that is only achievable through a process that entails unreasonable risk or poor transparency would, in most circumstances, not represent value for money. In this regard one important role of the CPGs is setting out the Government's expectations of agencies when performing duties in relation to procurement.

When deciding which procurement procedures to apply agencies should:

• encourage competition to deliver the most favourable submissions;
• ensure that rules and procedures adopted do not operate to limit competition by discriminating against particular classes of suppliers, particularly in regard to small and medium enterprises, new entrants to the market or foreign suppliers;
• adopt procedures consistent with the complexity of the procurement while also enabling suppliers to develop reliable, informed and competitive proposals;
• consider options for reducing costs to industry in contesting a procurement;
  
  - this particularly applies to multi-stage approaches that allow suppliers to come forward for consideration without requiring investment in a fully developed tender;
• be aware of general industry practices and expectations that should be incorporated into any process to encourage effective competition; and
• recognise any industry regulation and licensing requirements and how they affect the availability of suppliers.

Where a procurement is not a covered procurement, the procurement process does not have to comply with the mandatory procurement procedures in the CPGs. However, in undertaking that procurement, officials must still have regard to the other Divisions of the CPGs and must still comply with their obligations under FMA regulations 8 and 9 [].

For covered procurements the tender processes available are limited to open, select and direct sourcing tendering, with specific rules governing when each must be applied. Within open and select tendering processes there are options for the establishment of multi-use lists and panels. These tender processes are discussed in the following sections. Multi-use lists and panels are briefly discussed at the end of this section and discussed in detail in the Appendices.

Officials should be aware that the CPGs stipulate that a procurement must be treated as a covered procurement where:

• the total maximum value of a contract over its entire duration is unknown; or
• the estimated total value of a property or service that is being procured through multiple parts exceeds the covered procurement threshold, notwithstanding that each of the multiple parts are under the threshold.¹⁵

5.2 Open Tendering

In the absence of mitigating conditions for a covered procurement, agencies must use open tendering for their procurements.¹⁶

Operating an open tender involves publishing a notice on AusTender and, if desired, in other appropriate web-based or print media. The notice must include, at a minimum, the following:

• the name of the procuring entity and other information necessary to contact the procuring entity and obtain all relevant documents relating to the procurement;
• a description of the procurement and any conditions for participation;
• the address for the submission of responses;
• the closing date for the submission of responses; and
• the timeframe for the delivery of goods or services.

Prior to the above step, however, it is permissible for an `exposure draft´ of the request document to be distributed to the market. The benefit of the exposure draft is that it allows industry to provide feedback, thereby providing an opportunity to refine the specifications.

All properly drafted submissions which are received before the close of tender date must be accepted for consideration.

An agency may publish a notice on AusTender [] requesting interested suppliers to express their interest in a procurement. The resulting list of suppliers can then be used as the basis for inviting suppliers to put forward submissions. However, the notice must state that the agency will create a shortlist from the responses received, (this is explained further in the following section).

In most cases an open tender process will be a single stage tender process in which a preferred supplier is selected directly from submissions responding to an open approach to the market. However, multi-stage open tendering is permissible.

Multi-Stage Open Tendering

Multi-stage tender processes can have, as their first stage, an open tender process.¹⁷ This would then be followed by a select tender process. For example, agencies can publish a notice that seeks submissions which are then evaluated through a select tender process.

Multi-stage tendering may be used when an agency is looking for innovative options or the entire procurement specifications are not known at the start of the process. For example if an agency wishes to hire an architect to design a building, the first round could request the submission of innovative architectural ideas. In the second round, a select number of tenderers would be requested to provide a refinement of their submissions according to more closely specified criteria. In contrast with a single stage open tender process, a multistage tender process allows some flexibility for agencies to develop and refine procurement specifications.

The main disadvantage of a multi-stage tender process is the additional time required for multiple (sequential) approaches to the market. However, it has advantages in terms of satisfying requirements for open competition and access for suppliers. Its main advantage, though, is in containing costs and risks for both suppliers and government by limiting the scope of initial submissions to the information required to identify eligible and competitive bidders. Relative to a single-stage open tender process, suppliers remaining in contention have a sharpened incentive to invest in developing reliable and competitive submissions.

Further guidance on use of Expressions of Interest under the CPGs is provided below.

5.3 Select Tendering

In the case of a select tender process, invitations to tender are issued only to those suppliers nominated by the agency (this can be done in AusTender). A select tender process is allowed where the agency has, through an open approach to the market, identified all interested (or potentially interested) eligible suppliers from which the field of participating suppliers is to be selected.

Alternatively, a select tender process may be conducted in situations where an agency has access to a list from an independent accrediting or regulatory authority of all suppliers legally registered or licensed to undertake the procurement (where the procurement is of a type that can be undertaken only by appropriately licensed or registered suppliers). In such cases, all registered and/or licensed suppliers must be invited to tender.

The flexibility to conduct a select tender process does not set aside obligations to encourage competition and avoid discrimination. This is reinforced by the Mandatory Procurement Procedures of the CPGs that require agencies using select tender processes to select the largest number of suppliers consistent with an efficient procurement process. This is a positive obligation to ensure that a select tender procedure provides a high level of assurance that competitive tension will be maintained through all stages of the procurement process by involving a sufficient number of the most competitive and motivated suppliers in any field.

Agencies should seek to ensure they invite an adequate number of suppliers to participate to ensure competitive tension, making allowance for potential non-response from some suppliers, or other events, limiting the response received in the procurement process.

As stated earlier, documentation provides a record of the procurement and how it was conducted. In the case of a select tender process, agencies must document the decision and supporting reasons for applying a select tender process. This record should also address the basis for selection of suppliers and specifically confirm that select tendering is not being used to avoid competition, protect domestic suppliers or discriminate against any particular class or type of supplier.

In addition to basing a select tender process on a multi-use list (as described below) select tenders can be used where:

• an agency publishes a request for expressions of interest and uses the list of suppliers who lodge a compliant submission as the basis for inviting suppliers to submit tenders; and
  
  - in this case, the notice or documentation requesting expressions of interest must make clear that there will be a limit to the number of suppliers invited to tender and the criteria upon which suppliers will be selected. For example, the expression of interest may state that the top ranked suppliers will then be invited to tender.
• agencies conduct a select tender from a list of all suppliers that have been granted a licence, or comply with specific legal requirements, as determined by an appropriate authority.
  
  - an example of this type of tender is the Australian Government's transactional banking arrangements where there are a limited number of licensed market players.

5.4 Direct Sourcing

Direct source tendering is a more flexible form of select tendering only available in a very restricted set of circumstances (set out in the Mandatory Procurement Procedures of the CPGs). It involves a procuring entity directly approaching a supplier or limited number of suppliers. Typically, but not always, the circumstances prescribed are such that direct sourcing is the only practical alternative available to the agency. An agency applying a direct sourcing process need not apply other requirements of the Mandatory Procurement Procedures of the CPGs in respect of time limits, request document and limitations applying to the awarding of a contract.

However, agencies are specifically cautioned against adopting a minimalist approach to the conduct of a direct sourcing process and should note that the general requirements of the CPGs, such as achieving value for money, still apply.

Some examples of situations where a direct sourcing process is allowed and appropriate under the CPGs are as follows¹⁸:

• a state of emergency caused by an event beyond the control of the procuring entity – for example, a natural disaster;
  
  - use of direct sourcing in cases of such urgency allows the use of processes quicker than would otherwise be possible. This procedure can only be used where competition is clearly inconsistent with the time imperative.
• an unsolicited and highly advantageous time-limited offer which does not relate to a routine purchase from a regular supplier and represents an unusual value for money opportunity for the procuring agency;
  
  - examples include unusual disposals, unsolicited innovative proposals, liquidation and insolvency. Such offers should clearly be unsolicited and should not be accepted if the effect would be to pre-empt the outcome of a procurement process already underway. That is, a supplier should not be able to circumvent an established procurement process through such an offer.
• the property or service can be supplied only by a particular supplier and no reasonable alternative property or service exists; and
  
  - examples are for a work of art or for a product or service for which only a limited number of suppliers have the required intellectual property.
• the procurement is for property or services that can only be met by one supplier because of the need to integrate with existing facilities and/or systems, and no practical alternative exists.
  
  - an example is replacement parts.

5.5 Resources

• Department of Finance and Administration
  Commonwealth Procurement Guidelines
• Department of Finance and Administration
  Guidance on Procurement Publishing Obligations

Selecting a Procurement Process Checklist

 

 

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Footnotes:

15. For further information on valuing procurements see Chapter 8 of the CPGs.
    
16. The mitigating conditions are explained in the sections on select and direct source tenders.
17. The submissions sought in the first round are defined as Expressions of Interest in the CPGs.
18. Chapter 8 of the CPGs lists the conditions under which a direct source tender can be undertaken.

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6. Preparing to Approach the Market

Index

• The Procurement Plan
• Request Document
• Submission Evaluation Plan
• The Submission Evaluation Committee
• Resources
• Preparing to Approach the Market Checklist

Once the decision has been made as to the type of tender process that is appropriate, it is necessary to begin preparing the documents that are required for the market approach.

There are three main documents that should be prepared:

• a procurement plan;
• a request document; and
• a submission evaluation plan.

Where appropriate, a submission evaluation committee should also be formed prior to an approach being made to the market as the committee should be in agreement on the substance of the request document and the content of the submission evaluation plan.

This chapter is structured to describe in turn the purpose of each of the three documents identified above and the role of the submission evaluation committee.

6.1 The Procurement Plan

The procurement plan details the process that will be undertaken. It differs from the business case in that the business case explains why a procurement is being undertaken, while the procurement plan explains how the procurement is to be undertaken.

The procurement plan should cover the following:

• a description of the procurement;
• the conditions for participation;
• the evaluation criteria;
• the type of procurement process to be used;
• an explanation of why an open tender is not being used, if appropriate;
• a probity plan, if appropriate;
• governance arrangements, such as the need for a steering committee;
• the risk assessment;
• indicative time-lines; and
• the submission evaluation plan.

Certain aspects of the procurement plan will already have commenced during the `planning´ phase.

The level of detail in the procurement plan should reflect the size and complexity of the procurement. In the case of simpler procurements, some of the above sections may not be necessary.

For example, a simple procurement may not contain a probity plan, instead relying on probity provisions in Chief Executive's Instructions and/or other agency documentation. Judgements as to whether a procurement is considered large and/or complex can be based on its relation to the size of the agency, resources available and the agency's procurement profile.

The procurement plan should be approved at a level within an agency relative to the value of, risks inherent in, and importance of, the procurement. The process of approval provides a mechanism to inform managers (including the official who will approve any resulting spending proposal) that the necessary processes will fulfill legislative, government policy and internal procedural requirements and produce a value for money outcome.

6.2 Request Document

In essence, the request document provides the `ground rules´ for the evaluation of submissions. It describes to the potential suppliers the specifics of the procurement, the manner in which submissions are to be forwarded to the agency and how the submissions will be evaluated. As well, if there is a possibility that other agencies will access the resulting contract, the request document must include a statement to that effect. If the agencies are known, they should be listed in the document, otherwise a broad statement is required.

The request document will usually be the primary source used by potential suppliers when developing a submission. After reviewing the request document the potential supplier should be able to understand the agency's procurement requirements and how the procurement is to provide value for money for the agency. Therefore, the request document must include all information necessary to permit suppliers to prepare and lodge responsive submissions. However, this obligation does not extend to the release of confidential information, information sensitive to essential security or information that may impede competition.

To fulfil these requirements, the request document should contain:

• a description of the procurement;
• conditions for participation;
• evaluation criteria;
• minimum content and format requirements;
• process rules; and
• a copy of the draft contract.

These are discussed in the following sections.

The request document should also provide a brief overview of the evaluation methodology, such as an explanation of whether submissions are to be short listed before a supplier is chosen.

Description of the Procurement

The request document must describe the property or service which is being procured. This should include:

• the nature, scope and, where known, quantity of the procurement;
• any requirements to be fulfilled, including conformity certification, plans, drawings and instructional materials; and
• whether the agency will require installation, training, after sales support and/or maintenance.

It may also be necessary to describe some procurements in terms of technical specifications. If so, the request document must be prescribed in terms of performance and functional requirements, rather than design or descriptive characteristics. Technical specifications should be based on international standards unless this would not satisfy the procurement's requirements or impose a greater burden than an Australian standard.

Consequently, technical specifications must not refer to a particular trademark or trade name, patent, copyright, design or type, specific origin, producer, or supplier unless there is no sufficiently precise or intelligible way of describing the requirements. Where such a specification is necessary words such as `or equivalent´ must be included in the specification.

The document should also include the timeframes expected for the delivery of the property or service being procured.

Conditions for Participation

Conditions for participation are mandatory requirements which describe minimum standards or essential characteristics that suppliers must meet for their submissions to be considered. Considerable care should be taken when developing and specifying conditions for participation, as the CPGs require that an agency must reject any submission that fails to meet the conditions of participation.

The specification of conditions for participation in the request document should flow directly from the procurement planning process and be limited to assuring the legal, financial, technical and/or commercial capabilities of the supplier to meet the procurement requirements of the case at hand.

Examples of conditions for participation include suppliers having:

• access to certain technical or operational skills, facilities or capabilities;
• relevant licences or professional accreditations/registrations;
• the ability to satisfy nominated security requirements;
• minimum levels of financial assurance in terms of scale, financial viability, insurance policies;
• minimum occupational health and safety standards; and
• prior demonstrated experience or specific capability where such experience is essential to the delivery of the required property and services.

Agencies can also draft the conditions for participation to exclude suppliers on grounds of insolvency, false declarations or significant deficiencies in the performance of any substantive requirement or obligation under a prior contract.

Conditions for participation are not to arbitrarily limit competition by introducing factors that discriminate against a supplier or group of suppliers that would otherwise be competitive and capable in the related procurement process(es).

An agency conducting an open or select tender process must not award a contract to a supplier that does not meet stated conditions for participation. An agency that is uncertain about whether this level of importance is appropriate for a supplier requirement may choose to express the requirement as a priority evaluation criterion.¹⁹

Highly desirable characteristics or qualities should not be listed as conditions for participation. Rather, they can be specified as evaluation criteria.

Evaluation Criteria

Evaluation criteria set the foundations for a fair and equitable assessment of eligible submissions which have met the conditions for participation, if any. The criteria are highly dependent on the particular procurement under consideration and should flow from the procurement planning process.

Some examples of criteria that can be considered, as appropriate, are:

• a demonstrated ability to provide the property or services;
• the financial viability and capability of the supplier;
• any warranties and guarantees offered;
• the potential supplier's ability to manage risk;
• submission price;
• compliance with stated contract conditions; and
• specific criteria to the individual acquisition.

Evaluation of suppliers should be based on the relative importance of each criterion. There are a variety of methodologies that can be used to achieve this. The most commonly used is to weight criteria according to their relative significance using a rating scale. If a rating scale is used, agencies should consider providing the scale to potential suppliers if it will assist them to appropriately focus their responses. This will make the process more transparent, which should limit misunderstandings that may result in complaints.

The request document must clearly identify any criteria that are to be treated as essential in the evaluation of submissions.

Questions about whether a criterion should be listed under the conditions for participation or evaluation criteria can be resolved by determining whether the criterion is essential or highly desirable. If the former, the criterion should be a condition for participation while the latter should be listed under the evaluation criteria and given an appropriate ranking.

Submissions cannot be ranked using conditions for participation, so essential criteria that are to also form part of the value for money evaluation should be listed twice. They should be identified in the conditions for participation so that they are recognised as essential. They should also be separately listed in the evaluation criteria to enable them to be assessed and rated.

Minimum Content and Format Requirements

In relation to submissions by potential suppliers, the agency may impose standards with regard to minimum content and format requirements:

• in relation to minimum content the agency may, for example, require the potential supplier to provide a certificate of insurance or a particular licence to support the submission; and
• in relation to formatting, the agency may require the submission to be provided electronically.

In most circumstances where the potential supplier's submission does not meet the required standard with respect to minimum content or formatting, the agency must automatically disqualify the potential supplier from the procurement process. However, in circumstances where it is considered by the agency that the potential supplier has made an unintentional error of form in the submission, the agency has discretion to allow the submission to be corrected. An agency also has the discretion to not accept any corrections to submissions if it considers such an action is necessary to maintain fairness.

The capacity of the agency to automatically disqualify a potential supplier on the basis that the minimum content or formatting requirements have not been satisfied ensures that the integrity of the procurement process is protected and that deadlines are satisfied.

To assist potential suppliers in meeting the minimum content and formatting requirements, agencies must ensure that they are clearly stated in the request document.

Better practice is to:

• include a checklist for potential suppliers to certify completion of required tasks of the submission;
• investigate the feasibility and appropriateness of unusual requirements as part of researching the market; and
• require potential suppliers to designate the original or a certified copy of the original document to be used as the authoritative document.

Process Rules

The request document should detail the responsibilities of the potential supplier in the lodgement of submissions. For example, the document must provide details of the place that submissions are to be delivered and the deadline for the acceptance of submissions. Adherence to deadlines is important in maintaining the integrity and probity of the tender process. Therefore, late submissions are not to be accepted, unless there has clearly been a mishandling of the tender by the agency. The decision on whether the agency has mishandled the submission must be made before it is opened.

During the time that the tender process is open, the agency must be in a position to answer queries on the procurement. This needs to be done fairly and impartially in a manner that does not create an unfair advantage for any potential supplier. Therefore, the request document should explain the protocols for answering questions and distributing responses.

It is also highly recommended that the request document contain a description of the rules and procedures which are to be followed if it is necessary to modify the request document after the approach to the market has been made.

Similarly, the request document can contain a description of the procedures to be followed when an unintentional error of form is identified between the opening of submissions and the awarding of the contract.

An unintentional error of form is an error that the procuring agency is satisfied:

• represents incomplete information not consistent with the supplier's intentions and, if relevant, capabilities at the time the submission was lodged; and
• does not materially affect the competitiveness of the supplier's bid.

Some examples of `unintentional errors of form´ are:

• corrections of inconsistencies in the submission where the area of error is clear and not critical to comparative evaluation;
• the accidental omission of declarations; and
• an attachment referred to in the body of a submission but omitted from the submission.

Information provided by potential suppliers is to remain confidential prior to the award of a contract and, in respect of unsuccessful tenderers, after the contract award. Therefore, confidentiality arrangements should be clearly articulated in the request document so that all potential suppliers understand how their information will be managed.

Draft Contract

The primary purpose for attaching a draft contract to the request document is to assist the potential supplier to provide a submission that clearly relates to the procurement requirements of the agency.

The agency may require potential suppliers to use the draft contract to indicate compliance against each clause and to clearly state any intention to negotiate alternative clauses. In these circumstances, the agency should use the potential suppliers' level of compliance with the draft contract as part of the published evaluation criteria.

Officials may wish to obtain legal advice concerning the draft contract to ensure that the clauses correspond with the agency's position with respect to all matters relevant to the procurement.

The draft contract may include information and clauses that relate to the following matters:

• the purpose, services, timing and standards of property or services to be provided;
• financial matters which may include pricing, the method of payment, reimbursement of expenses or tax/invoice issues;
• risk management issues including insurance and indemnities;²⁰
• ownership and licences including intellectual property rights, privacy²¹ and confidentiality clauses²², or
• communication management, including the delivering of notices and dispute management clauses.

The draft contract should also identify relevant Australian Government policies that apply to the procurement. In particular, it should identify confidentiality arrangements based on the Government's policy that information should not be kept confidential unless there is a sound reason, informed by legal principle, for maintenance of the confidentiality of that information. Officials should make a specific assessment of whether information should be kept confidential before agreeing to make any contractual commitment of confidentiality²³.

As noted in `Planning the Procurement´, the draft contract should also contain reference to any security obligations that will be placed on the service provider. Agencies should be aware of the security requirements contained in the Protective Security Manual [] and, when necessary, seek assistance to address security issues.

For most covered procurements, other than those for routine property or service procurements, the draft contract should alert prospective providers to the accountability requirements of the Australian Government, including disclosure of information to the Parliament audits Committees. There should also be a provision to enable the Australian National Audit Office to access contractors' records and premises to carry out appropriate audits²⁴.

6.3 Submission Evaluation Plan

The submission evaluation plan is an internal document that maps the processes to be followed when submissions are evaluated. To reduce the risks of a perceived or actual bias in the procurement process, the plan should be developed and finalised before an approach is made to the market. Agencies often require a formal approval process for submission evaluation plans prior to the approach to the market.

The submission evaluation plan must be consistent with the request document and should provide:

• an identification of the procurement method;
  
  - in the case of select and direct source tender processes the submission evaluation plan must also list the reasons why this type of tender process was used.
• a description of the resourcing, including a description of the roles and the responsibilities of the submission evaluation committee;
• protocols for handling submissions;
• the disallowance of late submissions;
• protocols for identifying and handling conflicts of interest;
• rules for submission registration and safekeeping;
• the conditions for participation;
• minimum content and format requirements;
• the evaluation criteria and, where appropriate, the associated weightings to be applied;
• evaluation methodology;
• the nominated approver; and
• an indicative evaluation timetable.

The submission evaluation plan can be varied during the approach to market, however, it must remain consistent with the request document. The plan cannot be materially changed after the tender closing date has passed to ensure there is no basis for allegations that the evaluation methodology was changed after submissions have been viewed.²⁵

6.4 The Submission Evaluation Committee

The role of the submission evaluation committee is to evaluate the submissions received and make a recommendation on the preferred supplier to the approver.

The committee should be structured along the following lines:

• the committee should be comprised of at least three individuals, one of which takes on the role of chairperson;
• each member of the committee should make a declaration that no conflict of interest arises with respect to the procurement, however where a conflict does arise (whether at the commencement or during the procurement process) the relevant member should make a declaration to this effect and include details of the conflict;
  
  - where a member has made a declaration that a conflict of interest exists, the chairperson of the committee should decide whether the member can continue to participate as a member of the committee, or where the member continues to participate on the committee, how the conflict may be managed by the committee.
  
  - the chairperson of the committee should report any convicts of interest, and management strategies to resolve, to the relevant authority (eg chair of the steering committee, probity advisor or internal auditor) as set out in the governance arrangements of the submission evaluation plan.
• members should possess the necessary technical/subject matter skills to effectively assess submission; and
• each member should possess a sound understanding of the requirements to run a fair, unbiased process and to maintain confidentiality and probity.

At the outset, it is critical that the committee agrees on the substance of the request document and the submission evaluation plan as these provide the criteria on which the evaluation will be based. At this early stage, the committee should also agree and formalise a management strategy for dealing with any inquiries on the procurement which arise during the process. This should also be described in the submission evaluation plan.

It is permissible for an external expert(s) to be brought in for the technical part of a submission evaluation. They will be required to agree to abide by confidentiality requirements and will need to make a declaration that they have no conflict of interest. The expert is not, however, a committee member.

6.5 Resources

• Attorney-General's Department
  Protective Security Manual []
• Department of Finance and Administration
  Commonwealth Procurement Guidelines
• Department of Finance and Administration
  Guidance on Complying with Legislation and Government Policy in Procurement
• Department of Finance and Administration
  Guidance on Confidentiality of Contractors' Commercial Information
• Department of Finance and Administration
  Guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort

Preparing to Approach the Market Checklist

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Footnotes:

19. Readers should note that identifying a criterion as non-essential prevents the procuring agency from later treating the criterion as essential during the submission evaluations.
    
20. Refer to Guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort.
    
21. Refer to the Privacy Act 1988 [] and the information privacy principles.
    
22. Refer to Guidance on Confidentiality of Contractors´ Commercial Information, http://www.finance.gov.au (under the Government Finances menu).
    
23. Refer to Guidance on Confidentiality of Contractor's Commercial Information, available from http://www.finance.gov.au (under the Government Finances menu).
    
24. Model Australian National Audit Office (ANAO) access clauses are available from ANAO Access to Contractors' Information.
    
25. An exception is where a modification to the request document necessitates a modification to the submission evaluation plan (see `Approaching the Market´).

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7. Approaching the Market

Index

• Notifying the Market about the Procurement
• Modifying the Request Document and Clarifying Matters
• Resources
• Approaching the Market Checklist

To ensure a procurement process upholds principles of fairness and access for all interested parties, there are procedures which must be followed when an agency approaches the market. These requirements relate to the time that a request/invitation is open and the manner in which the market is to be notified about the procurement.

In addition, issues surrounding the procurement can arise after the AusTender notice has been published and copies of the request document have been issued to potential suppliers. These issues can range from request document errors to the need for clarification of certain matters. Resolving these in a fair and accessible manner requires certain processes to be followed.

Therefore, this chapter discusses the procedures to be followed when:

• notifying the market about the procurement;
• modifying the request document; and
• clarifying certain matters.

7.1 Notifying the Market about the Procurement

In an open tender process the procuring agency issues an open request to the market for the supply of property or services. This is done through the publication of a public request notice inviting interested parties to lodge submissions. The notice must be published electronically on AusTender and may also be published elsewhere. However, the content of any other notices must be identical to the AusTender notice.

As discussed in `Selecting a Procurement Process´, the following information must be included in the public request notice:

• the name of the procuring entity and other information necessary to contact the procuring entity and obtain all relevant documents relating to the procurement;
• a description of the procurement and any conditions for participation;
• the address for the submission of responses;
• the closing date for the submission of responses; and
• the timeframe for the delivery of goods or services.

In the case of multi-use lists it is necessary to run an initial open process to establish a field of suppliers. This field will then be approached in any subsequent select tender processes.

Particularly, the request for application for inclusion on a multi-use list must either be published continuously or re-published annually on AusTender. Agencies may also publish the notice elsewhere, for example on their website. However, this does not remove the requirement for the agency to publish on AusTender.

All suppliers who apply for inclusion on the multi-use list must be included on the list as soon as practicable, provided they have met the procurement requirement.

7.2 Modifying the Request Document and Clarifying Matters

As stated previously, the general principle is that all suppliers are to be provided with an equal opportunity to make a submission. Accordingly, all eligible suppliers must have equal access to the procurement information. Equally important under this principle is that when an agency modifies a request document it must issue a notice or amendment that can be accessed by all.

Therefore, all modifications must:

• be issued to all suppliers that have responded to the AusTender notice or are participating in the procurement process at the time the information is amended; and
  
  - in the case where an agency keeps a register of suppliers receiving the request document, it should send the modification to all these suppliers.²⁶ Where there is no register, the agency should post the modification in the same manner as the original information.
• provide adequate time to allow suppliers to modify and re-submit their initial submissions. This could entail extending the date for delivery of submissions.

As noted previously, in order to reduce the scope for confusion, it is recommended that the request documents describe the rules and procedures relating to the modification of submissions.

In the case of clarifications, answers to potential suppliers' questions should also be provided to all other suppliers - provided that this will not disclose sensitive financial information about a potential supplier or commercial-in-confidence material received by the agency. Therefore, judgement should be used.

If all potential suppliers have access to the internet, additional information provided in response to an individual supplier's enquiry could be posted on a dedicated website during the submission period so that all potential suppliers have the same clarification of the requirements already provided.²⁷

7.3 Resources

• Department of Finance and Administration
  Commonwealth Procurement Guidelines

Approaching the Market Checklist

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Footnotes:

26. AusTender has this capability.
    
27. AusTender has this capability.

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8. Evaluating Submissions

Index

• Receiving Submissions
• Submission Evaluation
• Submission Evaluation Report
• Debrief
• Resources
• Evaluating Submissions Checklist

The evaluation of submissions is the most important aspect of the value for money consideration. When evaluating submissions agencies must apply the procedures and criteria they have outlined in the request document and submission evaluation plan.

A failure to follow the published processes could, in the event of a major breach:

• compromise the outcome;
• give rise to a complaint and/or legal action by disadvantaged suppliers; or
• force the agency to set aside the evaluation and possibly the whole procurement process.

This chapter sets out the procedures which should be followed when evaluating submissions to ensure the evaluation process is properly conducted.

8.1 Receiving Submissions

When receiving submissions, agencies are to employ procedures that continue to guarantee the fairness and impartiality of the procurement process. Submissions should only be received into a secure environment. This can be a tender box or secure electronic system, such as AusTender. Submissions can only be accepted in the manner prescribed in the request documents.

Submissions are not to be opened until after the date and time submissions are due. Upon opening, the agency must record receipt of the submissions. Any submissions received after this point should be considered late and are not to be accepted.

• however, if a submission is received after the procurement's closing date and time because of an agency error, the affected supplier must not be penalised.

Agencies must treat all submissions in confidence and must not convey information to other suppliers.

The submissions should also be checked to ensure that they satisfy all mandatory requirements, such as those for format and content

8.2 Submission Evaluation

In evaluating submissions the submission evaluation committee needs to ensure it rates the submissions against the evaluation criteria rather than other submissions. In order to maintain consistency across all potential suppliers, any additional items beyond the scope of the request document that have been included within a submission should not be considered by the submission evaluation committee.

It is permissible for the committee to clarify any errors of form, such as technical omissions, ambiguities and anomalies, in a submission with the supplier. However, this should not extend to a substantial re-tailoring of the submission.

It is permissible for the committee to make supplier/tenderer and referee site visits where this will assist in the evaluation process.

In the case of the preferred supplier, the submission evaluation committee is strongly encouraged to confirm the supplier's claims with the nominated referees, if the request document has called for the nomination of such references.

8.3 Submission Evaluation Report

Agencies must maintain appropriate documentation of the decision-making process for each procurement. Therefore, it is good practice for the submission evaluation committee to be scrupulous in recording the evaluation process and the reasons underlying its decisions. As a general rule, officials should ensure that there is sufficient documentation to provide an understanding of why the procurement was necessary, the process that was followed and all relevant decisions made, including authorisations, and the basis of those decisions.

As a consequence of the need to maintain proper documentation, the submission evaluation committee is required to draft a submission evaluation report to document the evaluation process and to identify a `preferred supplier´ or `selected suppliers´. The report can also assist in the provision of feedback to unsuccessful tenderers.

The submission evaluation report should contain:

• a summary of the evaluation process;
• a summary of each received submission;
• a summary of the assessment of each submission;
• reasons for any elimination of a submission from further consideration;
• recommendations concerning the preferred submission(s); and
• details of any issues which need resolution during subsequent contract negotiations.

The report is to be signed by the members of the committee and is to be addressed to the approver. The approver is to sign the report if they are in agreement with its recommendations.

As stated earlier, the Archives Act 1983 may also require documentation relating to a procurement to be retained.

8.4 Debrief

Suppliers who make a submission must be promptly advised by the agency of the final procurement decision. If requested, agencies must also provide participating suppliers with a debrief.

In the case of an expression of interest process, unsuccessful suppliers may request a written debrief.²⁸ In the case of tender processes, agencies must provide a debrief when requested (by either unsuccessful or successful suppliers) but debriefs may be oral. In such cases, the debrief should be documented by the agency.

The debriefs should include, as appropriate:

• an explanation of why the submission was unsuccessful;
• areas of weakness or non-compliance in the offer;
• suggestions as to how future submissions can be improved; and
• if the contract has already been successfully negotiated, the name of the successful supplier and total price of the successful submission.

Written records of the debriefing should be appended to the procurement's file.

8.5 Resources

• Department of Finance and Administration
  Commonwealth Procurement Guidelines
• Department of Finance and Administration
  Guidance on Confidentiality of Contractors Information
• Archives Act 1983 []

Evaluating Submissions Checklist

• Have the submissions been fairly and impartially rated?
• Has appropriate documentation of the process been maintained?
• Have potential suppliers of the final procurement decision been advised and offered a debrief?

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Footnotes:

28. In the case of multi-stage offers, agencies may wish to advise potential suppliers immediately that they are no longer in contention, thereby allowing potential suppliers to `stand down´ their bid teams.

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9. Concluding the Process

Index

• Negotiating the Contract
• Publishing the Awarding of the Contract
• Cancelling a Procurement
• Dealing with Complaints
• Reporting
• Storing Records
• Resources
• Concluding the Process Checklist

The final stage in the procurement process relates to the awarding of the contract.

Prior to signature there are still some matters that need attention. For example, it may be necessary to negotiate the final contract and have the procurement's approver execute their responsibilities under FMA regulation 13. It is also possible for certain circumstances to arise which can cause the procurement to be cancelled or a complaint made against the agency.

As final actions, the agency needs to ensure it reports the procurement to the appropriate authorities and properly stores all records.

Therefore, this chapter describes:

• contract negotiations;
• how the public is to be notified about a contract;
• the conditions under which a procurement can be cancelled;
• the suggested procedures to be followed when a complaint is made about the procurement process;
• reporting obligations; and
• records storage.

9.1 Negotiating the Contract

Notwithstanding whether a chosen supplier has totally complied with the draft contract, there can still be matters open for negotiation between the supplier and agency. These must be settled and, if appropriate, incorporated into the final contract before signature.

9.2 Publishing the Awarding of the Contract

Once a procurement has been undertaken, a contract must be awarded to a capable and compliant tender, unless it is not in the "public interest". Details of contracts awarded must be published through AusTender.

The notice must include:

• the name of the procuring agency;
• the name and address of the successful supplier;
• a description of the property or services procured;
• the date of award or contract date;
• the contract value;
• the contract end date;
• the type of procurement process (ie open, select or direct source).

Disclosure, an element of the accountability principle, requires agencies to make their procurement activities visible and transparent. To meet this requirement agencies must publish agency agreements and Commonwealth contracts with an estimated liability of $10,000 or more within six weeks of entering into the agreement. Amendments of $10,000 or more must also be published.

Publication is through the Australian Government website AusTender []. The details of what should be reported are set out in the Guidance on Procurement Publishing Obligations.²⁹

9.3 Cancelling a Procurement

At any time during the procurement process an agency can determine that awarding a contract is not in the public interest. Public interest grounds generally arise in response to unforeseen events or new information which materially affect the objectives or reasons underlying the original procurement requirement as specified in the request document.

Examples of situations in which it may not be in the public interest to award the contract include:

• decision to cancel or vary the programme to which the procurement relates;
• machinery of government changes affecting responsibilities between agencies for programmes to which the procurement relates;
• unforeseen technological or environmental change affecting the business case for the procurement as specified;
• unforeseen technical or operational problems which can be attributed to inadequate, incorrect or inappropriate specifications in the request document;
• discovery of new information materially affecting the policy or operational effectiveness of the continuation of a project and/or procurement as specified; and
• funding is unavailable or insufficient through changes to appropriations or inability to obtain regulation 10 authority where necessary.

However, termination of a procurement process is a serious step with potential legal and management risks that should be considered and addressed before any decision is made. At the least, it can harm an agency's credibility with suppliers that, in turn, may discourage suppliers' participation in future procurements. On the other hand, termination may be compelled in order to protect the integrity of procurement processes and avoid the awarding of a contract in a manner inconsistent with an announced process (including related essential requirements of a procurement).

Termination of a procurement process is not appropriate where it is due to dissatisfaction with the outcome of competitive assessment of suppliers through a submission evaluation process conducted in accordance with the stated rules, conditions and criteria set out in the request document and submission evaluation plan.

Nor can an agency cancel a procurement in order to protect domestic suppliers if a contract is likely to be awarded to a foreign supplier. This would not only breach the Australian Government's international obligations as reflected in Division 2 of the CPGs, but would also breach the principle of non-discrimination.

If an agency cancels a procurement on the basis that it is not in the public interest it should consider providing potential suppliers with reasons.

9.4 Dealing With Complaints

A well-planned and conducted procurement is less likely to attract complaints. Strategies to minimise complaints can assist agencies in avoiding unnecessary conflict and can save agencies and suppliers valuable time and resources. Many complaints arise due to a lack of understanding or poor communication between those procuring and their potential suppliers.

In the event that a complaint is made by a participant in the procurement process, the agency should aim to manage this process through communication and conciliation with the aggrieved party.

All complaints made in writing should be answered in the same way. If verbal complaints are satisfactorily dealt with without the need to correspond in writing then agencies should record the complaint and response.

Conciliation will be facilitated if an agency has in place a fair, equitable and nondiscriminatory complaint handling procedure.

This procedure should:

• be systematic and well understood by the parties involved;
• involve senior management and officials independent of the procurement process, as appropriate; and
• give each party sufficient time to appropriately respond to developments (no less than 10 calendar days unless urgent).

In the first instance the submission evaluation committee should deal with the complaint. Its response should outline the issue that has been raised, what has been examined and an assessment of the complaint. The response should also inform the potential supplier of their options, in case they remain dissatisfied with the agency response.

If the supplier subsequently lodges a request for a further examination of the issue, the agency should conduct a prompt internal independent review. This should be conducted by senior management officers who were not party to the procurement but do have experience with procurement processes.

External review options are available if an independent review of a complaint is necessary. The primary external complaint mechanism is the civil legal system, which can be used to settle disputes through a formal judicial process. The Commonwealth Ombudsman also has limited powers to investigate procurement complaints. The Ombudsman can make recommendations regarding the procurement process and decision but cannot override agency decisions, nor direct that they vary their decision. The Ombudsman aims to resolve disputes by negotiation and persuasion, and if necessary, by making formal recommendations to the most senior levels of Government.

If a matter has been referred to an external body for review, agencies are strongly advised to provide all relevant documents to that body.

Agencies are to also ensure that the initiation of a complaint process does not prejudice the supplier's participation in future procurement processes.

9.5 Reporting

In order to provide broader visibility of procurements, agencies are required to comply with a range of reporting obligations to the Parliament, its Committees and to the public. Officials should seek advice from the Guidance on Procurement Publishing Obligations, their Chief Finance Officer or procurement unit regarding these obligations.

9.6 Storing Records

Once the procurement process is concluded all documents should be collected and filed together, thereby providing a record of procurement activities and how they have been conducted. The records should facilitate an understanding of the reasons for the procurement, the process that was followed and all relevant decisions, including approvals and authorisations.

Filing should reflect appropriate security classifications to manage handling of procurement information. The Protective Security Manual [] identifies security policies, principles, standards and procedures to be followed by all Australian Government agencies for the protection of official resources.

As stated earlier, the Archives Act 1983 [] identifies requirements for Commonwealth records, including dealings with, and access to, such records.

9.7 Resources

• Agency Annual Reports
• Archives Act 1983 []
• Attorney-General's Department
  Protective Security Manual []
• Australian Government
  Government Guidelines for Official Witnesses Before Parliamentary Committees and Related Matters []
• Commonwealth Contracts and Agency Agreements (including Standing Offers)
• Department of Finance and Administration
  Commonwealth Procurement Guidelines
• Department of Finance and Administration
  Guidance on Confidentiality of Contractors' Commercial Information
• Department of Finance and Administration
  Guidance on Dealing With Complaints
• Department of Finance and Administration
  Guidance on Procurement Publishing Obligations
• Department of the Prime Minister and Cabinet
  Requirements for Departmental Annual Reports []

Concluding the Process Checklist

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Footnotes:

29. Available from http://www.finance.gov.au (under the Government Finances menu).

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Appendix A - Multi-Use Lists

Index

• Establishing a Multi-Use List
• Operating a Multi-Use List
• Using a Multi-Use List in an Open Tender Process
• Using a Multi-Use List in a Select Tender Process
• Establishing a Multi-Use List Checklist

A multi-use list is a list of pre-qualified suppliers who have satisfied the application's conditions for participation. An example of a whole of government multi-use list is the Endorsed Supplier Arrangement.

A multi-use list can require inclusion on the list as either:

• an essential criterion or condition for participation in an open tender; or
• as the basis for selecting participants in a select tender process, consistent with the mandatory procurement procedures of the CPGs.

A multi-use list would typically only be developed for property or services that an agency frequently procures. Agencies may need to balance the benefits that may be achieved through operating a select tender process from a multi-use list against alternative methods of procurement such as establishing a panel.

Inclusion in a multi-use list provides certainty for potential suppliers that they have been recognised as meeting conditions for participation. It does not guarantee a potential supplier that an agency will include them in a select tender process.

Establishing a Multi-Use List

To establish a multi-use list, an agency must publish a request for application for a multi-use list³⁰ on AusTender which includes:

• the name of the procuring entity and other information necessary to contact the procuring entity and obtain all relevant documents relating to the procurement;
• a description of the procurement and any conditions for participation;
• the address for the submission of responses;
• the closing date for the submission of responses; and
• the timeframe for the delivery of goods or services.

The request for application for a multi-use list must be published either:

• continuously on AusTender; or
• annually on AusTender.

Agencies may also publish the notice elsewhere, such as in the press. However, this does not remove the requirement for the agency to publish on AusTender, and the content of any other notice must be identical to that of the notice published on AusTender.

An annual process for a multi-use list does not necessarily require the agency to rebuild the list. Rather it requires the agency to, at a minimum, receive and assess new applications for inclusion on the list. That is, if the agency does not wish to re-establish the list it may choose to retain the existing list with the annual AusTender notice providing an opportunity for new potential suppliers to apply for inclusion on the list.

A multi-use list must be established through an open approach to the market, which enables potential suppliers applying for inclusion on a list to demonstrate they meet pre-defined conditions.

These pre-defined conditions, which must be specified in the AusTender notice might include, for example, financial viability or technical capacities. Normally however, the conditions would not extend to value for money considerations.

Conditions are limited to conditions for participation and must be drafted in such a way as to employ the principles of non-discrimination. They can only be assessed as being either ‘met' or ‘not met', rather than being a condition that can be partially demonstrated.

All potential suppliers who apply for inclusion on the multi-use list must be included on the list as soon as practicable, provided they have:

• responded on time;
• fulfilled the minimum content and format requirements; and
• fulfilled any conditions for participation specified in the invitation.

As the list is a pre-qualification process, it should be open to including all potential suppliers who meet the stated conditions. That is, agencies should not seek to limit the number of potential suppliers on the list on the basis of comparative evaluation or assessment against additional criteria.

Operating a Multi-Use List

It is also important that the conditions for participation and rules of operation are clearly articulated to potential applicants. Over-prescribing or under-prescribing such rules will limit flexibility and may limit an agency's ability to deliver value for money outcomes from the operation of the list.

The rules of operation can include items such as:

• a notification that the agency may procure this type of property or service through another procurement mechanism (where appropriate);
• details of who will compile and manage the list (eg who has responsibility for assessing applications for inclusion on the list); and
• a register of which agencies may use the list, if relevant.

Agencies must publish a notice of the creation of a multi-use list on AusTender. After the list has been created, agencies may then use AusTender to advertise the existence of the list (including a short description) and provide a link to the list on the agency's website.

A participant on a multi-use list who ceases to meet the required conditions for participation for inclusion must be removed. A participant on a list may also be removed on the basis of the list's rules of operation.

Using a Multi-Use List in an Open Tender Process

By specifying inclusion on the multi-use list as a condition for participation in an open tender process, an agency can benefit from both the competitive advantages of an open process and take advantage of assessment work already undertaken during the pre-qualification process.

When using this method the list needs to have been open for a sufficiently long period, prior to publication of the request for tender notice, for potential suppliers to have previously applied and been assessed for inclusion on the list.

A request for application for a multi-use list may be combined with a request for tender. The AusTender notice for the open tender process must clearly state that submissions will be used to both establish a preferred supplier for a particular procurement and to concurrently establish a multi-use list for future procurements.

Where an agency wishes to concurrently run an open tender process and establish a multi-use list, the AusTender notice must clearly state that a potential supplier may make any of the following responses to the notice:

• a submission for the current procurement only;
• an application for inclusion on the multi-use list only (noting this response would not include a submission in the current procurement); or
• a response that is both a submission for the current procurement and an application for inclusion on the list.

Using a Multi-Use List in a Select Tender Process

An agency may invite potential suppliers from a multi-use list to tender for a procurement in a select tender process. In this case, the agency may:

• invite all participants on the multi-use list to tender; or
• invite only a number of participants on the multi-use list to tender, provided the invitation is non-discriminatory³¹, and the number of potential suppliers invited ensures competition.

Establishing a Multi-Use List Checklist

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Footnotes:

30. Request for application for a multi-use list is defined in Appendix C.
    
31. Refer to the Encouraging Competition chapter of the CPGs for an explanation of non-discrimination.

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Appendix B - Panels

Index

• Establishing a Panel
• Purchasing from a Panel
• Competitive Approaches within a Panel
• Record Keeping
• Establishing a Panel Checklist

A panel is an arrangement under which a number of suppliers may each supply property or services to an agency without further attracting the operation of the mandatory procurement procedures of the CPGs after the panel has been established.

Panels are usually established through a single procurement process and are allowable for covered procurements where:

• a panel will provide value for money;
• the panel is established in accordance with the mandatory procurement procedures of the CPGs;
• there is a panel arrangement with each panel member which clearly specifies:
  
  - the types of property or services which may be purchased under the panel arrangement;

  - a set/indicative price/rate, as appropriate, for the property or services;

  - how the agency will purchase from the panel, including seeking refined offers (eg where there are large procurements from a member or members of the panel).³²

It is acceptable for a panel procurement process to result in a single supplier. This can occur where there are benefits in a single supplier providing the property or service or where only one supplier submitted a bid assessed as meeting the tender requirements.

For the purpose of assessing whether a panel arrangement exceeds set financial thresholds for application of the mandatory procurement procedures of the CPGs, the value of a procurement is the estimated total value of the property or services that may be procured from all members of the panel over the life of the panel arrangements. That is, the threshold is not the amount of each separate contract under the panel. Rather, it is the estimated total of all contracts or deeds of standing offer relating to the panel. It would be rare for the expected total value of the property or services to be procured from a panel to be below the threshold amount.

Although the purchase of property or services from a panel member does not attract the operation of the mandatory procurement procedures of the CPGs, the purchase is a procurement-related task and is still governed by the other elements of the procurement policy framework (eg the requirements to achieve value for money and to have appropriate authority for the expenditure of public money).

Establishing a Panel

Before an agency approaches the market they should consider which process is most appropriate for the outcome they are seeking. Thorough planning before conducting the tender process is essential to achieve the desired procurement outcome. Except under the limited circumstances stated in the mandatory procurement procedures of the CPGs, in all procurements there must be some open approach to the market.

This open stage may be, for example, to seek expressions of interest or to seek applications to participate in a multi-use list. From the responses to this open approach the procuring entity can conduct a select tender process (eg from a multi-use list).

The tendering processes available are:

• Open tender – in order to establish a panel through open tendering an agency must publish a tender notice and issue a request document. All suppliers who meet the stated conditions for participation must be allowed to submit tenders.
• Select tender from expressions of interest – to establish a panel through this method, the appropriate notice must be published. If the agency intends to rank suppliers who respond and only issue invitations to tender and the request document to a certain number of suppliers based on their ranking, this must be stated clearly in the notice. If this is not done then all suppliers who responded to the notice must be allowed to participate.
• Select tender from a multi-use list – agencies may establish a panel through a select tender from an existing or specially established multi-use list. Transparency would be aided by having a clause in the notice inviting businesses to participate in the multi-use list which stated that it may be used to also establish a panel through a select tender process.

Purchasing from a Panel

Officials making purchases under panel arrangements must ensure that they achieve a value for money outcome. For basic purchases this will usually involve contacting the panel member whose panel arrangement covers the property or services sought and who offers the best price, taking into account any other relevant factors such as the timeframe available to do the job and the quality of the property, services or personnel offered.

Where these criteria have been met by more than one panel member, officials may contact panel members whose panel arrangements cover the property or services sought and seek a refined offer for the particular purchase.

Purchases made from a panel member or members must be within the terms of the panel arrangement. The property or services that may be procured under the relevant panel arrangements may vary between panel members. Only the property or services identified in the initial approach to the open market may be included in the subsequent deed of standing offer or contract with the panel member.

Competitive Approaches within a Panel

It is possible to establish a competitive approach within a panel where such an approach would provide value for money. Instances where this may be appropriate are where the agency wishes to procure a particularly large quantity of property or services (eg where an agency has a particular issue which may require a significant amount of legal advice).

In such cases, the initial approach to the open market to establish the panel must have clearly specified that the panel being established may also be utilised for competitive procurement.

Record Keeping

Agencies are required to keep adequate records of the decision making process when establishing and procuring from a panel.

Such records should include as a minimum:

• the rationale for establishing a panel (including consideration of how value for money will be achieved);
• the process for determining which suppliers to include in the panel;
• a record of the evaluation of applicants and the reasons for selecting panel members;
• formal documentation, such as the request document, deeds of standing offer or contracts; and
• a record of purchases of property or services from panel members under the panel arrangement, including the associated assessment of value for money.

The records must demonstrate that the panel is not being used to avoid competition or to discriminate against suppliers of other nations.

Note: Guidance on the publication of details of contracts which arise from panel arrangements is provided in the Finance publication Guidance on Procurement Publishing Obligations.

Establishing a Panel Checklist

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Footnotes:

32. Where it is likely that more complex purchases may be made under a panel, agencies should ensure that the approach to the market clearly states that refined offers may be sought from panel members under certain circumstances. These circumstances and the procedures to be followed must also be outlined in each panel arrangement.

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Appendix C - Definitions

The following definitions apply for the purposes of this Guidance on the Mandatory Procurement Procedures and the CPGs:

Approach to the market

any notice inviting potential suppliers to participate in a procurement including a request for tender, request for expression of interest, request for application for inclusion on a multi-use list, or invitation to tender.

Conditions for participation

minimum conditions that potential suppliers must meet in order to participate in a procurement process or for submissions to be considered. This may include a requirement to undertake an accreditation or validation procedure.

Construction services

procurements related to the construction of buildings and all procurements covered by the Public Works Committee Act 1969 [].

Covered procurement

a procurement, other than one that is specifically exempt, where the value of the property or services being procured exceeds the relevant procurement threshold. Covered procurements must comply with the mandatory procurement procedures.

Deadline for submissions

the precise time and date by which submissions must be received in response to an approach to the market.

Direct sourcing

a procurement process, available only under certain defined circumstances, in which an agency may contact a single potential supplier or suppliers of its choice and for which only a limited set of mandatory procurement procedures apply.

Electronic

for the purposes of this guidance and the CPGs means any information provided on AusTender, and includes documentation provided to a supplier or potential supplier by email, facsimile or otherwise transmitted to the recipient by another electronic means.

Evaluation criteria

the criteria which are used to evaluate the compliance and/or relative ranking of submissions. All evaluation criteria must be clearly stated in the request documentation.

Exempt

a procurement or class of procurement which is exempt from the mandatory procurement procedures set out in Division 2 of the CPGs. Such a procurement is not a covered procurement irrespective of the value of the property or services being procured. Exempt procurements remain subject to other requirements of the CPGs, including the core principle of value for money.

Expression of interest

a response to an open approach to the market requesting submissions from businesses interested in participating in a procurement. The list of potential suppliers who have submitted expressions of interest may be used as the basis for conducting a select tender process.

GST inclusive

means the value of a good or service, including the amount of GST (if any) payable on that good or service.

Invitation to tender

an invitation issued to selected businesses inviting them to submit tenders in response to a select tender process or direct sourcing process.

Mandatory procurement procedures

a set of rules and procedures, outlined in Division 2 of the CPGs, which must be followed when conducting a covered procurement.

Minimum content and format of submissions

criteria that a submission must meet to be eligible for further consideration in a procurement process. These include conditions for participation where relevant.

Multi-use list

a list, intended for use in more than one procurement process, of pre-qualified businesses who have satisfied the conditions for participation for inclusion on the list.

Open tender process

a procurement procedure in which a request for tender is published inviting all businesses that satisfy the conditions for participation to submit tenders.

Panel

a panel may be established by an agency by entering into contracts or deeds of standing offer (panel arrangements) for the provision of identified property or services. Panel is defined as an arrangement under which a number of suppliers, usually selected through a single procurement process, may each supply property or services to an agency as specified in the panel arrangements.

Procurement threshold

a value above which a procurement, unless exempt, is considered to be a covered procurement.

Property

every type of right, interest or thing which is legally capable of being owned. This includes, but is not restricted to, physical goods and real property as well as intangibles such as intellectual property, contract options and goodwill.

Published

listed electronically on AusTender in accordance with Government policy, as stated in the Accountability and Transparency section of the CPGs.

Request documentation

documentation provided to businesses to enable them to understand and assess the requirements of the procuring agency and to prepare appropriate and responsive submissions. This general term includes documentation for expressions of interest, multi-use lists, open and select tender processes, and direct sourcing.

Request for application for a multi-use list

a published notice inviting businesses to apply for inclusion on a multi-use list. The notice must be published on AusTender, either continuously or at least once per year.

Request for expressions of interest

a published notice inviting businesses to register an expression of interest in a procurement.

Request for tender

a published notice inviting businesses who satisfy the conditions for participation to submit a tender in accordance with requirements of the request for tender and other request documentation.

Select tender process

a procurement procedure in which the procuring agency selects which potential suppliers are invited to submit tenders. For covered procurements, a select tender process may only be conducted in accordance with certain procedures and circumstances set out in Division 2 of the CPGs.

Submission

includes any formally submitted response from a potential supplier to an approach to the market. Submissions include tenders, expressions of interest and applications for inclusion on a multi-use list.

Tender

a submission from a potential supplier making an offer to perform a procurement in response to a request for tender or invitation to tender.

Time limit

the minimum time that an agency must allow for potential suppliers to respond to an approach to the market.

Value

the total maximum estimated value of the property or services being procured, as determined in accordance with the rules in Division 2 of the CPGs. The value of the property or services being procured, except where a procurement is exempt, will determine whether a particular procurement is a covered procurement.

Copyright Notice

© Commonwealth of Australia 2005
This work is copyright. You may download, display, print and reproduce this material in unaltered form only (retaining this notice) for your personal, non-commercial use or use within your organisation. Apart from any use as permitted under the Copyright Act 1968, all other rights are reserved. Requests and inquiries concerning reproduction and rights should be addressed to Commonwealth Copyright Administration, Attorney General’s Department, Robert Garran Offices, National Circuit, Barton ACT 2600 or posted at http://www.ag.gov.au/cca []

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Contact for information on this page: Procurement Agency Advice

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6 September, 2011