New to Procurement?

Some Basic Steps

 

Some Tips to Get you Started

What is Procurement?

Procurement is the acquisition of property or services, including entering into and managing contracts, to assist in achieving the objectives of your business area.

A properly conducted procurement is an open and transparent process that provides accountability for the use of public resources and delivers value for money for the Commonwealth.

Who can approve a procurement?

While Australian Government employees or agents of the Australian Government can conduct a procurement on behalf of the Commonwealth, only those with an official financial delegation can approve both the commitment to spend public monies and payment of public monies. Find out who has delegations to approve procurement in your agency.

Approvals, or at least a pre-approval to approach potential suppliers, should be sought before commencing any procurement process.

Who can I talk to about obtaining additional assistance?

You should you seek advice early in the procurement process. Agencies normally have a ‘central procurement area’ set up to assist officials in line areas to undertake procurement.

Additionally, central procurement areas generally carry out certain centralised processes such as procurement advertising and reporting on AusTender. They can assist you with these processes as well.

If your agency’s central procurement area is unable to answer a specific enquiry, they will seek advice from Finance.

If you are unsure about who to contact in your agency, the Department of Finance and Deregulation (Finance) has a register of all agency central procurement contracts. You can contact Procurement Agency Advice for details of contacts in your agency

What do I need to know to undertake a procurement process?

Understand the rules

Find out whether your agency is a Financial Management and Accountability Act (FMA Act) agency or a relevant Commonwealth Authorities and Companies Act (CAC Act) body.

For FMA Act agencies and relevant CAC Act bodies the procurement rules are set out in the Commonwealth Procurement Rules (CPRs). In addition, your agency’s internal Chief Executive Instructions (CEIs) provide rules that complement the CPRs. You should familiarise yourself with both.

The Financial Framework

FMA Act Agencies

When spending official funds, you need to be aware that there are laws that govern the financial affairs of the Australian Government. These are contained in  Financial Management and Accountability Act 1997 (FMA Act) and in its supporting regulations, the Financial Management and Accountability Regulations 1997 (FMA Regulations). In particular, you should familiarise yourself with Section 44 of the FMA Act and FMA Regulations 7, 9 and 10. Following are brief descriptions of these:

• Section 44 of the FMA Act – requires Chief Executives to manage the agency’s affairs in a way that promotes proper use of resources.
• Regulation 7 - requires that officials undertaking procurements must act in accordance with the Commonwealth Procurement Guidelines.
• Regulation 9 - requires someone with a ‘Regulation 9’ delegation to ensure that any spending proposal is a proper use of Commonwealth resources. Note: Regulation 9 approval must be obtained for all procurements. Australian Government credit card and cabcharge holders are Reg 9 approvers and any procurements made with a credit card or cabcharge are therefore approved by virtue of the holder’s delegation.
  
• Regulation 10 – if your contract is likely to commit to expenditure beyond the current financial year, approval must be obtained from someone with a ‘Regulation 10’ delegation.

CAC Act Bodies

CAC Act bodies are subject to the CAC Act Directions and must follow the CPRs when undertaking covered procurements.

CAC Act bodies other than the 19 relevant CAC Act bodies are not required to follow the CPRs when undertaking procurements. If you are undertaking a procurement for one of those bodies you should refer to internal guidance and procedures.

The Commonwealth Procurement Rules

The core principle underpinning Australian Government procurement is value for money. Value for money is enhanced in government procurement by:

• encouraging competition;
• promoting the use of resources in an efficient, effective and ethical manner; and,
• making decisions in an effective and accountable manner.

Division 1 of the CPRs, which applies to all procurements, explains these principles in more detail.

Division 2 of the CPRs outlines additional rules that must be followed for all procurements that are at or above the relevant  procurement thresholds – namely:

1. for procurements by FMA Act agencies, other than procurements of construction services, $80,000;
2. for procurements by relevant CAC Act bodies, other than procurements of construction services, $400,000; or
3. for procurements of construction services, $9 million in all cases.

Information on thresholds and valuing procurements is provided in 9.2-9.7 of the CPRs.

Policies and legislation that interact with procurement

When undertaking a procurement, you must ensure that it is not inconsistent with the policies of the Commonwealth.

A full list of the procurement connected policies (including a brief summary of each) and relevant contacts within the Policy Departments are provided in the Procurement Connected Policies Guide. This guide also contains links to model tender and contract clauses relating to the policies.

Entering into a contract

As part of any procurement there must be some form of contractual arrangement entered into. This does not always mean a long written contract. It can be a simple purchase order, credit card transaction or cab charge voucher.

Is there anything else I need to be aware of?

Whole-of-government coordinated procurement arrangements (mandatory for FMA ACT agencies)

Coordinated Procurement is a government initiative that looks to maximise market benefits and drive efficiencies and savings by acquiring common goods and services under one whole-of-government contract.

Whole-of-government arrangements currently in place and mandated for use by FMA Act agencies cover:

• Telecommunications
• Microsoft Volume Sourcing Arrangement
• Motor Vehicle Leasing
• Government Advertising
• Air Travel and Travel Management Services

The full list of current and upcoming procurement arrangements can be found at Whole-of-Government Procurement - Department of Finance and Deregulation.

If there is a whole-of-government arrangement in place that covers what you are intending to purchase, generally you will need to use it.

Non-mandatory cooperative arrangements

There are a number of non-mandatory cooperative arrangements in place across FMA Act agencies. These arrangements seek to reduce the number of administrative processes and share the procurement and contract management process workload across more than one agency. For example, efficiencies may be derived from several agencies coming together, conducting one procurement process and maintaining one contract in lieu of many. 
Where appropriate, you should explore the possibility cooperative procurement arrangements with other agencies.

Panels

Your agency may have panels of suppliers in place. Panels are usually a group of suppliers, for example legal or accounting firms, that have been selected through a procurement process to provide goods or services at agreed rates and conditions.
By accessing a panel, you can use one of those suppliers without the need to conduct a further procurement process. Your agency Central Procurement Area will normally have a list of panels available for use by your agency, or they may be listed in your agency website.

Where can I learn more?

Your agency’s central procurement area should be able to advise you about internal procurement training.

Finance runs a ‘Procurement Foundations’ seminar on a regular basis. This seminar is targeted specifically for officers new to procurement. Details on upcoming courses and registration can be obtained from Finance by emailing Forum@finance.gov.au.

Finance also hosts the Procurement Discussion Forum (PDF) which provides updates across a wide range of procurement issues.

Membership of the PDF is open to Australian Government officials who have an interest in procurement and/or contract management. To join the PDF mailing list, please email Forum@finance.gov.au.

If you are a member of the PDF, you will also receive the Procurement Bulletin. The bulletin is published following PDF meetings and contains information about that month’s PDF (including presentations), as well as procurement related news and notices.