CURRENT - Council Policy - Procurement Policy CPO-CORPS-FI-001 · 2013-09-19 · 2.7.2 Occupational Health and Safety 23 2.7.3 Supply by Contract 23 2.8 Contract Terms 24 2.9 Endorsement

COUNCIL POLICY

TITLE: PROCUREMENT POLICY

DOCUMENT

NUMBER: CPO-CORPS-FI-001

DEPARTMENT: CORPORATE SERVICES

UNIT: CONTRACTS

AUTHOR: Tony McCarthy

Contracts Manager

The Author is responsible for implementing and reviewing the

document.

RESPONSIBLE

OFFICER:

Senior Management Team

Checked Yes No

APPROVED BY: Council

APPROVAL DATE: 23 April 2013

EXPIRY DATE: Not applicable

REVIEW DATE: March 2014

This policy will be reviewed on an annual basis in

accordance with Section 186A (2) of the Local Government

Act and other council changes and/or requirements.

AVAILABILITY: Staff – Unit only Yes No

Staff – Department only Yes No

Staff – Organisation wide Yes No

Public Yes

No Internet Yes No

ADVISE

AVAILABILITY:

Media Release Yes No

Sou Wester (Author to prepare article)Yes No

Email designated Groups & Staff Yes No

REFERENCES:

(If applicable) • ‘Good Practice Guide – Public Sector Procurement, Turning Principles into Practice’; Victorian Auditor General,

October 2007

• Australian Standards Code of Tendering AS 4120-1994 • ‘Guidance on Occupational Health and Safety in Government Procurement’; Australian Safety and

Compensation Council 2006

• Victorian Competitive Neutrality Policy 2000 • Municipal Association of Victoria (MAV) ‘Model Procurement Policy’ June 2009

• Local Government Act 1989 (Section 186 and 186A, 208A)

• Local Government (General) Regulations 2004 No 130 –

Part 4, Clause 10 • Trade Practices Act (particularly Section 45 of Part 1V) • Organisational Policy – Purchase Order & Invoice Payment Authorisation Limits (DPO-CORPS-F1-001)

• Instrument of Delegation by the Council to the Chief Executive Officer

• Victorian Local Government Best Practice Procurement Guidelines 2013 Local Government Victoria 2013

• Charter of Human Rights and Responsibilities Glenelg Shire Council, Records Management Policy OPO-CORPS-RECM-

001

COUNCIL POLICY Page 1 of 35 PROCUREMENT POLICY

1. Purpose

The purpose of this document is to clearly set out the requirements in the conduct of Councillors, employees, independent panel members and

associated external parties when procuring and /or contracting goods and

services on behalf of Glenelg Shire Council.

2. Council Policy

This policy document has been developed to articulate the principles

underpinning Council’s procurement methods and decisions, and to assist

Council employees and suppliers in understanding and implementing those

procurement principles.

The Procurement Policy promotes the development and application of

prudent and responsible practices and systems; provides for open and fair

competition; demands strong internal controls and accountability

mechanisms; encourages high levels of probity and lack of bias in obtaining

products, works and services; encourages Occupational Health and Safety

(OHS) considerations in procurement decisions; demands ethical behaviour;

provides for management of risk in all phases of the procurement cycle;

promotes environmentally sound procurement outcomes; and provides the

Council with a best value for money outcome encompassing the optimum

combination of quality, quantity, risk and supply timeliness.

The following document outlines the Procurement Policy and requirements for

all relevant parties.

3. Records Management

All Council records created and managed as a result of implementing this

policy will be managed in accordance with the Council’s Records Management Policy.

No Council records are to be destroyed without consideration of the

requirements of the Act(s) that govern the functions relevant to this policy.

Prior to destruction, advice must be sought from the Records Management

Unit, with consideration to the requirements of the appropriate Retention and

Disposal Authority (RDA).


CONTENTS

1. PRINCIPLES 5

1.1 Background 5

1.2 Scope 6

1.3 Purpose 6

1.4 Treatment of GST 6

1.5 Definitions and Abbreviations 7

2. EFFECTIVE LEGISLATIVE AND POLICY COMPLIANCE AND CONTROL 10

2.1 Ethics and Probity 10

2.1.1 Requirement 10

2.1.2 Conduct of Councillors and Council Employees 10

2.1.3 Tender Processes 11

2.1.4 Conflict of Interest 11

2.1.5 Fair and Honest Dealing 11

2.1.6 Accountability and Transparency 12

2.1.7 Gifts, Hospitality and Conflict of Interest 12

2.1.7 Gifts, Hospitality and Conflict of Interest (continued) 12

2.1.8 Disclosure of Information 13

2.2 Governance 13

2.2.1 Structure 13

2.2.2 Standards 14

2.2.3 Methods 14

2.2.4 Responsible Financial Management 14

2.3 Procurement Thresholds and Competition 15

2.3.1 Requirement 15 2.3.2 Minimum Spend Competition Thresholds 15

2.3.3 Deployment Flowcharts 19

2.4 Delegation of Authority 19


2.4.2 Delegations 20

2.5 Internal Controls 21

2.6 Commercial Information 22


2.7 Risk Management 22

2.7.1 General 22

2.7.2 Occupational Health and Safety 23 2.7.3 Supply by Contract 23

2.8 Contract Terms 24

2.9 Endorsement 24

2.10 Dispute Resolution 25

2.11 Contract Management 25

3. DEMONSTRATE SUSTAINED VALUE 25

3.1 Integration with Council Strategy 25

3.2 Achieving Value for Money 26


3.2.2 Approach 26

3.2.3 Role of Specifications 26

3.3 Performance Measure and Continuous Improvement 27

3.4 Sustainability 27

3.4.1 General 27

3.4.2 Sustainable Procurement 27

3.5 Diversity 28

3.6 Support of Local Business 28

3.7 Local Australian and New Zealand Supplier Preference 28

4. APPLY A CONSISTENT AND STANDARD APPROACH 28

4.1 Standard Processes 28

5. BUILD AND MAINTAIN SUPPLY RELATIONSHIPS 29

5.1 Developing and Managing Suppliers 29

5.2 Supply Market Development 29

5.3 Communication 29

6. CONTINUOUS IMPROVEMENT (BEST VALUE) 30

6.1 Best Value Principles 30

6.2 Factors that may be considered in applying Best Value Principles 30


7. ENFORCEMENT OF THE POLICY 31

7.1 Breaches of the Policy 31

7.2 Reporting Breaches 31

7.3 Penalties for Breaches 31

8. APPENDICES 32


1. Principles

1.1 Background

Council:

• Recognises that:

o Developing a procurement strategy and adopting appropriate

best practice contracting and procurement principles, policies,

processes and procedures for all goods, services and works

undertaken by the Council, will enhance achievement of

Council objectives including responsible procurement; bottom-

line cost savings; supporting local economies; achieving

innovation; and better services for communities.

o The elements of best practice applicable to local government

procurement incorporate:

� Principles covering ethics, value for money, responsibilities

and accountabilities;

� Guidelines and tools giving effect to those principles;

� A system of delegations (i.e. the authorisation of

employees to approve and undertake a range of functions in the procurement process);

� Procurement processes, with appropriate procedures

covering minor, simple procurement to high value, more

complex procurement; and

� A professional approach.

• Requires that contracting, purchasing and contract management

activities:

o Support the Council’s corporate strategies, aims and

objectives including, but not limited to, those related to good

governance, ethical behaviour and responsible financial

management;

o Achieve value for money and quality in the acquisition of

goods, services and works by the Council;

o Can demonstrate that public money has been well spent;

o Promote open and fair competition in its procurement

activities; and


o Include a stringent Risk Management strategy in its

Procurement objectives.

1.2 Scope

This Procurement Policy has been prepared in accordance with the requirements of Section 186A of the Local Government Act 1989 (the

Act).

This section of the Act requires the Council to prepare, approve and

comply with a Procurement Policy that encompasses the principles,

processes and procedures applied to all purchases of goods, services

and works by the Council.

This policy applies to all Council contracting and procurement activities,

and is binding upon Councillors and permanent and temporary

employees, independent panel members, contractors and consultants

engaged by the Council.

1.3 Purpose

The purpose of this Policy is to:

• Outline the principles and processes to apply in decisions and

practices associated with the Council’s procurement of works,

goods and services;

• Provide policy and guidance to facilitate consistency and control

over procurement activities;

• Demonstrate accountability to residents and rate payers;

• Provide guidance on ethical behaviour in public sector purchasing;

• Demonstrate the application of elements of best practice in purchasing;

• Increase the probability of obtaining the right outcome when

purchasing goods and services;

• Include the framework and controls of risk management in Glenelg

Shire’s Procurement Activities; and

• Include positive procurement initiatives when available such as the

measurement of economic benefit, sustainability factors and social

procurement in evaluation processes when going to the market.

1.4 Treatment of GST

All monetary values stated in this policy include GST, except where

specifically stated otherwise.


1.5 Definitions and Abbreviations

Term Definition

Act Local Government Act 1989.

Commercial in

Confidence

Information that, if released, may prejudice

the business dealings of a party (e.g. prices,

discounts, rebates, profits, methodologies and

process information, etc)

Contract An agreement between two or more authorised persons on behalf of their

organisations to perform a specific act/s

which is enforceable in law. A contract may

be verbal or written or inferred by conduct.

Contractor Respondent (person, firm, etc) whose

tender/quotation offer has been accepted

by the council with or without modification

Contract Owner A Council Officer who is ultimately

accountable for the contract or project. (This

is normally in line with the Financial

Delegations, or Delegations of Council

Contract Manager The person nominated by the council to

manage day to day matters of the contract.

See also superintendent.

Contract

Management

The process that ensures both parties to a

contract that fully meet their respective

obligations as efficiently and effectively as

possible, in order to deliver the business and

operational objectives required from the contract and in particular, to provide value

for money.

Economic

Contribution to the

Glenelg shire Region

Where a tenderer is required to list any

measurable economic contribution which it

currently makes, or would make to the

Glenelg Region if its tender is accepted

Open and Fair

Competition

All suppliers are to be treated fairly in an open

and transparent manner (E.g. Same access to

information, Actions taken without bias)


Term Definition

Prequalified

Contractor

Usually used in selected tendering and

quotations, and in line with Councils

Organisational Policy on Insurance

requirements. A contractor or supplier becomes

Pre Qualified when the following criteria are

met

• Certificate of Currency is provided for the

following:

(a) Public Liability insurance to a minimum of $10 Million where physical/civil/trades

services are provided on Council work

sites

(b) Professional Indemnity insurance to a minimum of 10 Million where intellectual

services to Council are provided (c) Workcover insurance • The contractor has OH&S Systems in

place that is to Council’s standards • Copies of current trade certification,

licences) permits and competencies

relevant to the work required are

provided

• Referee checks indicate suitability and minimal risk exposure and suitability to be

engaged for services to Council

Probity In the context of a procurement process

probity is a defensible process which is able to

withstand internal and external scrutiny – one which achieved both accountability and

transparency, providing tenderers with fair and

equitable treatment.

Purchase Order A form of Contract, which is an official

document used to authorise and record the

purchase of goods or services by a buyer. It is

the prime reference confirming the contractual

situation between the buyer and supplier.

Risk Analysis The process of determining the likelihood and

consequences of an event in the context of

existing risk control measures.

Quotation A document in the form of an offer to supply

goods/and or services, usually in response to a

request for quotation.


Term Definition

Standing Offer

Arrangements (SOA)

A contract that sets out rates for goods and

services which are available for the term of the agreement. However, no commitment is made

under the agreement to purchase a specified

value or quantity of goods or services. Also known as a Schedule of Rates or Umbrella

Contract.

Sustainability

Activities that meet the needs of the present

without compromising the ability of future

generations to meet their needs.

Social Procurement The use of procurement processes and

purchasing power to generate positive social

outcomes in addition to the delivery of efficient

goods, services and works.

Superintendent The person appointed to the person nominated

as the superintendent in a contract for the

purpose of overseeing the council’s interests

Procurement Procurement is the whole process of acquisition

of external goods, services and works. It can include planning, design, standards

determination, specification development,

preparation of quotation and tender documentation, selection of suppliers,

financing, contract administration, disposals,

and other related functions. It also includes the

organisational and governance frameworks

that underpin the procurement function.

Tender Process The formal process of inviting parties to submit a

quotation by tender using public

advertisement, followed by evaluation of

submissions and selection of a successful bidder

or tenderer. Typically involves utilising Australian

standards Contract Conditions, and other legal

conditions to protect the interests of Council.

Value for Money Value for Money in Procurement is about

selecting the supply of goods, services and

works taking into account both cost and non-

cost factors including:

Contribution to the advancement of the

Council’s priorities;

Non-cost factors such as fitness for purpose,

quality, service and support; and

Cost-related factors, including whole-of-life costs and transaction costs associated with

acquiring, using, holding, maintaining and

disposing of the goods, services or works.


Term Definition

Works The Construction, alteration, extension,

resolution, repair, demolition or dismantling of buildings, structures or works that form, part of

Council’s assets whether or not the buildings,

structures or works are permanent. Under this ruling, three quotations are allowed up to the

$200K threshold for design & Construct type

works.

2. Effective Legislative and Policy Compliance and Control

2.1 Ethics and Probity

2.1.1 Requirement

Procurement activities shall be performed with integrity and in a

manner able to withstand the highest form of possible scrutiny.

2.1.2 Conduct of Councillors and Council Employees

(a) General

Councillors and Council employees shall at all times conduct

themselves in ways that are, and are seen to be, ethical and of

the highest integrity, and will:

• Treat all suppliers with equality and fairness;

• Maintain confidentiality of Commercial in Confidence

information such as contract prices or other sensitive

information;

• Present high standards of professionalism and probity;

• Deal with suppliers in an honest and impartial manner;

• Provide all suppliers and tenderers with the same information and equal opportunity; and

• Be able to account for all decisions and provide feedback on them.

Employees who are responsible for managing or supervising

contracts are prohibited from performing any works under the

contract they are supervising.


(b) Members of Professional Bodies

Councillors and Council employees belonging to professional

organisations shall ensure that they adhere to any code of

ethics or professional standards required by that body.

2.1.3 Tender Processes

All tender processes shall be conducted in accordance with this

policy and any associated procedures, relevant legislation, relevant

Australian Standards and the Act.

2.1.3.1 Tender Evaluation

All submissions involving a quote process, selected or public

tender must be evaluated in a consistent manner against the

evaluation criteria and weightings adopted for the tender and

outlined in the tender documentation. The use of a weighted

matrix analysis must be used to analyse and compare tenders

in a detailed and consistent manner.

2.1.4 Conflict of Interest

Councillors and Council employees shall avoid situations in which

private interests conflict, be perceived to conflict, or have the potential to conflict, with their role as an elected representative or

their position as an employee.

Councillors and Council employees shall not participate in any

action or matter associated with the arrangement of a contract (i.e. evaluation, negotiation, recommendation, or approval), where

any conflict of interest is either perceived or apparent.

Councillors or Council employees involved must declare any

conflict of interest to the CEO or relevant Group Manager and

remove themselves from the procurement process.

Members of a tender evaluation panel will sign a Conflict of Interest

Declaration and an Impartiality Declaration prior to the tender

evaluation.

2.1.5 Fair and Honest Dealing

All prospective contractors and suppliers must be afforded an equal

opportunity to tender or quote.


All prospective suppliers/vendors/contractors will be treated (and

will be seen to be treated) fairly in an open and transparent

manner, with the same access to information about the proposed procurement to enable them to submit quotations/prices/tenders

on the same basis.

There must be no bias or perception of bias exercised in

procurement decisions and processes.

Confidentiality provided by existing and prospective suppliers must

be maintained at all times, particularly sensitive material such as,

but not limited to prices, discounts, rebates, profit, manufacturing

and product information.

2.1.6 Accountability and Transparency

A consistent approach to procurement will be taken across the

whole of the Council organisation. This approach will involve formal

delegated authorities and effective adherence of the procurement

processes by senior officers and employees.

All procurement activities are to provide an audit trail for monitoring

and reporting purposes.

2.1.7 Gifts, Hospitality and Conflict of Interest

Councillors and Council employees participating in a procurement

process must not accept any gifts or hospitality that may cause a

conflict of interest or a perceived conflict of interest.

Councillors, Council employees and independent tender panel members must comply with the sections 77A to 80A of the Act

requiring the disclosure of conflicts of interest. A Councillor, Council

employee or independent panel member with a conflict of interest must not participate in the procurement process.

Councillors and Council employees should also avoid the

ambiguous situation created by visiting the premises of a

contractor, organisation, firm or individual uninvited and/or not on

official business.

2.1.7 Gifts, Hospitality and Conflict of Interest (continued)

Councillors, Council employees and independent tender panel

members must comply with the sections 77A to 80A of the Local

Government Act requiring the disclosure of conflicts of interest. A

Councillor, Council employee or independent panel member with a

conflict of interest must not participate in the procurement process.


2.1.8 Disclosure of Information

Commercial in Confidence information received by the Council, Councillors, Council staff or independent panel members must not

be disclosed and is to be stored in a secure location.

Councillors, employees and independent panel members will refuse

to release or discuss, the following:

• Information disclosed by organisations in tenders, quotations or

during tender negotiations;

• All information that is Commercial in Confidence information;

and

• Pre-contract information, including but not limited to

information provided in quotes and tenders or subsequently

provided in pre-contract negotiations.

Discussion with potential suppliers during tender evaluations should

not go beyond the extent necessary to resolve doubt on what is

being offered by that supplier.

2.2 Governance

2.2.1 Structure

The Council shall:

• Establish a procurement responsibility structure and delegations,

ensuring accountability, traceability and auditability of all procurement decisions made over the lifecycle of all goods,

services and works purchased by the Council;

• Ensure that the procurement structure:

o Is flexible enough to purchase in a timely manner the diverse

range of material, goods, works and services required by the

Council;

o Ensures that prospective contractors and suppliers are afforded

an equal opportunity to tender/quote;

o Encourages competition; and

o Ensures that policies that impinge on the purchasing policies

and practices are communicated and implemented.


2.2.2 Standards

The Council’s procurement activities shall be carried out to the professional standards required by best practice and in compliance

with:

• The Local Government Act 1989;

• The Council’s policies, procedures and guidelines;

• The Councillor Code of Conduct;

• Australian Standards Code of Tendering AS 4120-1994; and

• Other relevant legislative requirements such as but not limited

to the Trade Practices Act, Goods Act and the Environmental

Protection Act.

2.2.3 Methods

The Council’s standard methods for purchasing goods, services and

works shall be by some or all of the following methods, and subject

to Council policies, procedures and guidelines relating to:

• Purchase order following a quotation process from suppliers for

goods or services that represent best value for money under

directed quotation thresholds (refer section 2.3.2 (b));

• Under contract following a tender process;

• Using aggregated purchasing arrangements with other

Councils, Strategic Purchasing, MAV Procurement, Victorian

Government, or other bodies; and

• Purchasing (credit) card, including fuel card.

Unless other arrangements authorised by the Council or the CEO on

a needs basis as required by abnormal circumstances such as

emergencies.

2.2.4 Responsible Financial Management

The principle of responsible financial management shall be applied

to all procurement activities.

Accordingly, to give effect to this principle, the availability of

existing funds within an approved budget, or source of funds, shall

be established prior to the commencement of any procurement

action for the supply of goods, services or works.


Employees must not authorise the expenditure of funds in excess of

their financial delegations.

2.3 Procurement Thresholds and Competition

2.3.1 Requirement

The Council will from time to time decide and publish in this policy

clear guidelines for minimum spend procurement competition

thresholds. These will be decided by the Council by analysing the

historical size and complexity of the procurement activity and of

proposed procurement activities (refer Section 2.3.2 (b) below for

current competition thresholds).

2.3.2 Minimum Spend Competition Thresholds

(a) Tenders

Purchase of all goods and services for which the estimated

expenditure exceeds $150,000, and building and construction works (works) for which the estimated expenditure exceeds

$200,000, must be undertaken by public tender as per the

thresholds contained in the Local Government Act 1989. (Current limits are in accordance with an Order in Council

made under section 186 (1)).

However, should the CEO consider that the nature of the

requirement and the characteristics of the market are such that the public tender process would lead to a better result for

the Council, public tenders may be called for the purchase of

goods, services and works for which the estimated expenditure is below these thresholds.

(b) Quotations and tender thresholds

The following procurement processes will be applied:

Value of

Purchase

Process

$0 to $5000 • Quotations are encouraged but not

required

• Petty cash reimbursement allowable (up to

$300)

• Corporate Credit card can be utilised

• Purchase order required if not petty cash or credit card


Value of

Purchase

Process

$5001 to

$15,000

• Minimum 2 written quotations requested

from supplier (recorded in DWS, contract

file or attach to invoice)

• Purchase order required

• Risk Analysis on Procurement Project if

applicable

$15,001 to

$149,999 (Goods &

Services)

$15,001 to

$199,999 (Works)

• Possible public tender subject to Group

Manager decision • Minimum of 3 written quotations requested

from suppliers (recorded in DWS, contract

file or attach to invoice)

• Terms and Conditions of Procurement to be

finalised in writing • Risk Analysis on Procurement Project

(Mandatory)Purchase order required

$150,000 &

greater

(Goods & Services)

$200,000 & greater

(Works)

• Public tender mandatory

• Terms and Conditions of Procurement to be

finalised in writing • Risk Analysis on Procurement Project

(Mandatory)

Subject to Council approval

Verbal quotations are not acceptable. Written quotations must

be retained by the requisitioner. All documentation must be registered in accordance with relevant DataWorks policies,

procedures and guidelines.

Employees must not generate multiple purchase orders to the one supplier to circumvent the above procurement limit

processes.

*** All purchase values are GST inclusive.

The value of a purchase contract is the aggregate value of the

contract over the term of the contract. If the term of the contract is

not clear, a default term of 2 years is to be used for cumulative

expenditure.

Exemptions:

There are limited circumstances in which there may be legitimate

reasons for a variation from the requirement to comply with sections

2.3.2 (a) relating to calling for tenders and (b) quotations and

tenders threshold of this Policy. To seek an exemption from this

policy, the exemption must be within one or more categories below:


1. Legal Services - The services are for the provision of legal

advice – these services are exempt under the Local Government (General) Regulations 2004 No 130, Part 4,Clause

10

2. Ministerial Exemption -An exemption from the Minister for Local

Government in accordance with Section 186(5) (c) of the Act

has been obtained for the specified services or works. (refer

Minister for Local Government Circular No 41/2011 dated 21

December 2011)

3. MAV Public Liability or Professional Indemnity Insurance

Scheme - If Council participates in the MAV’s Public Liability

and Professional Indemnity scheme (or other Insurance

Scheme approved by the Minister under Section 76A of the

Act) such Insurance premiums are exempt from Section 186 of

the Act. However if Council does not participate in the

Minister’s approved (under Section 76A of the Act) Insurance

scheme, Council must undertake a public tender process.

(refer Department of Planning and Community Development

Circular Nos 19/2009 and 19a / 2009 dated 1 July 2009 and 13

July 2009).

Statutory Payments - Statutory payments such as

Superannuation (Employer and Employee Contributions) and Work Cover Insurance premiums. (refer Department of Planning

and Community Development Circular No 19/2009 dated 1

July 2009 regarding mandatory WorkSafe Injury Insurance.

Refer Memo to the CEO from the Acting Finance Manager

dated 19 January 2012 regarding Superannuation payments)

4. Loan Funds - The provision of Loan Funds. The Department of

Planning and Community Development has advised that loan agreements do not constitute the procurement of a good or

service under section 186 of the Local Government Act 1989,

but rather a financial accommodation. Therefore they are not

subject to the public tender requirements of the Act. (refer

memo to the Acting Finance Manager dated 6 June 2011)

5. Emergency –. In accordance with Section 186(5) (A) of the

Local Government Act that the Council resolves the contract

must be entered into because of an emergency.


6. Sole Supplier / Insufficient Quotes – when it is clear beyond

doubt that there are not sufficient suppliers to provide requisite quotes. Documentation of recent market testing and well

defined specifications of the goods and services sought is

required. This exemption does not apply if over the value of 150,000.00 for Goods and Services and $200,000.00 for the

provision of Works. Ministerial Exemption must be sought by

Council should this be the case.

7. Scope Change – when there is unforseen need to alter the

scope of the project in a minor way and the cost of obtaining

further quotations or retendering will outweigh the potential

benefits. This exemption does not apply if over the value of

150,000.00 for Goods and Services and $200,000.00 for the

provision of Works. Ministerial Exemption must be sought by

Council should this be the case.

8. Exceptionally Advantageous Time-limited Conditions – this

includes unusual disposals by suppliers, unsolicited innovative

proposals, liquidation, bankruptcy, or receivership and which

are not routine purchases from regular suppliers This exemption

does not apply if over the value of 150,000.00 for Goods and

Services and $200,000.00 for the provision of Works. Ministerial

Exemption must be sought by Council should this be the case.

9. Intellectual Property – where the goods or services can only be

supplied by a particular business and no other reasonable

alternative or substitute exists, namely for a work of art; or to

protect patent, copyright, or other exclusive right, proprietary

information, software – are some examples. This exemption does not apply if over the value of 150,000.00 for Goods and

Services and $200,000.00 for the provision of Works. Ministerial

Exemption must be sought by Council should this be the case.

10. Absence of Competition – goods and services are limited by

patents or licences. To be supported by documentation and

demonstrated organisational benefits. This exemption does not

apply if over the value of 150,000.00 for Goods and Services

and $200,000.00 for the provision of Works. Ministerial Exemption

must be sought by Council should this be the case.

11. Support From Original Supplier – for additional goods or

services by the original supplier or authorised representative

where a change in supplier would compel the organisation to

procure goods or services that do not meet the requirements

of compatibility with existing goods or services. For example

spare parts for vehicles and plant. This exemption does not

apply if over the value of 150,000.00 for Goods and Services

and $200,000.00 for the provision of Works. Ministerial Exemption

must be sought by Council should this be the case.


An exemption form must be completed if the above conditions

apply (Refer Appendix 2).

In those cases where an exemption is sought under the Public

Tender threshold amounts, (i.e. an inability to obtain three quotes from the 15,000.00 to 150,000.00 figure), a detailed business case

must be directed to the respective Group Manager and must be

approved in line with the delegation limits noted in Section 2.4.2.

2.3.3 Deployment Flowcharts

The purpose of the Deployment Flowcharts is for a tool to guide

Glenelg Shire Council employees through the correct Procurement

Process to use that will conform to Section 186 of the Local

Government Act and Council’s Own Procurement Policy.

The three High level Deployment Flowcharts are:

• The Procurement Process (Overriding);

• The Procurement of Services Under 150K or Under 200K (for the

carrying out of works); and

• For the Procurement of Goods under $150K.

Instructional Second level Deployment Flowcharts are:

• The Expression of Interest Process

• The Pre Tender Process

• The Tender Evaluation Process;

• The Award Tender Process;

• The Contract Supervision Process;

a. for Physical Works;

b. for Consultancies; and

c. for Period Contracts.

2.4 Delegation of Authority

2.4.1 Requirement

Delegations define the limitations within which employees are

permitted to work. Delegation of procurement authority allows

specified employees to approve purchases, quotation, tender and

contractual processes less than 150K without referral to the Council.


Procurement delegations ensure accountability and provide

confidence to Council and the public that purchasing activities are dealt with in an organised and appropriate level.

Council has delegated responsibilities relating to the expenditure of funds for the purchase of goods, services and works, the

acceptance of quotes and tenders and for contract management

activities.

2.4.2 Delegations

(a) Glenelg Shire Employees

The Council maintains a documented scheme of procurement

delegations, identifying the employees authorised to make

such procurement on behalf of the Council and their

respective delegations.

Authorisation Limits

Authorisation limits for requisition/purchase order approvals are

set by the CEO under the CEO’s power of delegation.

Procurement authorisation limits for the CEO are set by Council.

Specific employees, with specific authority, may requisition

works, goods or services. However, only employees with

delegated authority as listed below can authorise associated purchase orders.

Refer Appendix 1 - Purchase Order and Invoice Payment

Authority Limits Policy

Position Level of Authority per Order

Council Awarded

Contract -

$150,000 + (Goods and Services)

$200,000 + (Works)

CEO (or delegate) $100,000 to $149,999(Goods and

Services)

$100,000 to $199,999 (Works)

Group Managers (or

delegate)

$50,000 to $99,999

Managers; Team/Unit

Leaders and Supervisors

$10,000 to $49,999

Responsible Budget

Officer

$1,000 to $9,999

Other Officer Up to $999

*** All levels of authority are GST inclusive.

Group Managers have responsibility for conferring purchase

order authorisation limits on the four categories of authorising

officers and employees.


(b) Delegations Reserved for the Council

Commitments and processes which exceed the CEO’s

delegation and which must be approved by the Council are:

• Initial signing and sealing of contract documents;

• Contract approval for all expenditure over $150,000 for

goods and services and $200,000 for works in value; and

• Contract term extensions (requiring additional budget)

(c) The following thresholds regarding the acceptance of

Contracts:

• CEO – Contracts up to the value of $150,000 for goods

and services and $200,000 for building and construction

contracts (works); and

• Group Managers – Contracts up to the value of $75,000

for goods and services and $100,000 for building and

construction contracts (works).

(d) Exemptions

The delegation limits for Purchase Orders and Invoice

Payments do not apply for statutory payments such as WorkCover Insurance Premiums; Superannuation Payments;

Other Insurance Premiums; Employee Salaries and Wages and

associated costs; Australian Taxation Payments; Loan Repayments and Investment of Council Funds. In such cases

the CEO (or delegate) has the delegated authority to approve

such payments.

2.5 Internal Controls

The Council will install and maintain a framework of internal controls over

procurement processes.

The key internal controls associated with procurement are:

• Ensuring all purchases of works, goods and services are precipitated

by a order requisition and an official purchase order;

• Ensuring all purchases of goods and services are correctly

authorised in accordance with Council’s purchasing authority

delegations;

• Ensuring purchase orders are issued only as required to meet the

needs of approved and budgeted Council programs;


• Ensuring all purchase commitments are recorded and subsequently

reported in Council’s financial management reports;

• Ensuring there is an appropriate audit trail and retention of records

for all purchases;

• Ensuring that all purchases are purchased in accordance with

Section 2.3.2;

• Ensuring that:

o More than one person is involved in and responsible for a

transaction end to end;

o There is transparency and a clearly documented audit trail

exists for procurement activities;

o Appropriate authorisations are obtained and documented;

and

o Systems are in place for appropriate monitoring, category

spend and performance measurement.

2.6 Commercial Information

Council is responsible for the storing and protection of sensitive

information under state and federal privacy laws under its record policy OPO-CORPS-RECM-001.

2.7 Risk Management

2.7.1 General

Risk management is to be appropriately applied at all stages of

procurement activities which will be properly planned and carried

out in a manner that will protect and enhance the Council’s

capability to prevent, withstand and recover from interruption to

the supply of goods, services and works.

All procurement carries some risk. All high value purchases and

purchases of a lesser value but of a complex nature will be subject

to a risk management plan, involving risk identification and

assessment of likelihood and magnitude of potential risk; strategies

for pre-empting, mitigating and treating the occurrence of a risk;

detailing responsibility for managing a risk; and monitoring and

controlling procurement risks as they arise.


2.7.2 Occupational Health and Safety

Through emphasising OHS obligations to suppliers/vendors/

contractors, the Council will take responsibility for ensuring goods/works/services are safe for users and the broader

community.

OHS considerations in procurement decisions and processes will

include:

• SWMS – Safe Work Method Statement provided to Council by

Contractor;

• Insurances in place prior to Council site handover for works to

commence;

• Evaluation of contractor’s OH&S performance;

• Safe design principles (e.g. ergonomic standards);

• Suppliers/vendor/contractors OHS systems and safe work

methods;

• OHS qualifications and certifications;

• Operator/user input into purchasing decisions;

• Site visits and OHS references as required;

• Applicable Australian Standards and Codes of Practice;

• Hazard assessments; and

• Training manuals and training demonstrations of Heavy plant

and machinery that is Purchased by Council.

OHS considerations will be most important in certain types of

procurement decisions (e.g. construction contracts, long term

service contracts and plant, machinery and equipment purchases).

However, OHS issues should be considered in all procurement

decisions.

2.7.3 Supply by Contract

The provision of goods, services and works by contract potentially

exposes the Council to risk.

The Council will minimise its risk exposure by measures such as:

• Standardising contracts to include current, relevant clauses;


• Requiring security deposits where appropriate;

• Requiring Bank Guarantees, Appropriate Insurance, Defects Liability Periods, and Liquidated damages clauses to be

accepted to protect its risk in large capital works projects;

• Reporting on the performance of the contractor for corporate

memory, audit and reference purposes;

• Referring specifications to relevant experts;

• Requiring contractual agreement before allowing the

commencement of work;

• Use of or reference to relevant Australian Standards (or

equivalent); and

• Effectively managing the contract including monitoring and

enforcing performance.

Council will determine if a contractual arrangement needs to be

administered to protect Council’s risk interests in either the

Quotation Selected Tender, or other arrangement such as

Purchasing Scheme or Government Contract it wishes to partake.

2.8 Contract Terms

All contractual relationships must be documented in writing based on

the terms and conditions of the specific contract, and in accordance

with any other requirements of Council or organisational ’s policies, procedures and guidelines.

Where this is not possible, approval must be obtained from the

appropriate member of Council employees listed in the Council

Delegations. A request for such an approval should be supported with procurement and legal advice as relevant.

To protect the best interests of the Council, terms and conditions must be

settled in advance of any commitment being made with a supplier. Any

exceptions to doing this expose the Council to risk and thus must be

authorised by the appropriate member of Council employees listed in

the Council Delegations.

2.9 Endorsement

Employees must not endorse any products or services.


2.10 Dispute Resolution

All contracts shall incorporate dispute management and alternative

dispute resolution provisions to minimise potential disputes escalating out of control and to reduce or avoid legal costs and/or proceedings. A well

documented Procurement Plan, Risk Assessment and Procurement

Process process should minimise disputes and protect the best interests of Council with clear obligations agreed between the principal and

contractor and a positive level of communication, relationship

management and Contract Management processes adopted to the

project.

2.11 Contract Management

The purpose of contract management is to ensure that the Council, and

where applicable its clients, receive the goods, services or works

provided to the required standards of quality and quantity as intended

by the contract by:

• Establishing a system monitoring and achieving the responsibilities and obligations of both parties’ under the contract;

• Providing a means for the early recognition of issues and

performance problems and the identification of solutions; and

• Adhering to the Risk Management Framework and compliance with

relevant occupational health and safety contractor compliance

procedures.

All Council contracts are to be made in accordance with the relevant

policies, procedures and guidelines, and Occupational Health and Safety requirements.

3. Demonstrate Sustained Value

3.1 Integration with Council Strategy

The procurement policy shall support Council’s corporate strategy, aims

and objectives as outlined in the Council Plan 2009-2013 relating to the

four key strategic objectives of:

• Responsible and responsive governance and decision making;

• Enhancing community well being;

• Strengthening a vibrant economy; and

• Building quality places.


3.2 Achieving Value for Money

3.2.1 Requirement

Procurement activities will be carried out on the basis of obtaining

Value for Money.

This means minimising the total cost of ownership over the lifetime of

the requirement consistent with acceptable quality, reliability and

delivery considerations. Lowest price is not the sole determinate of

value for money.

The Council is not obliged, and will not always accept the lowest

price. The concept of value for money is to be centred on obtaining

the best quality and value for the price and that the quality of the

goods/services/works meets the criteria and cost constraints.

3.2.2 Approach

This will be facilitated by:

• Developing, implementing and managing procurement

strategies that support the co-ordination and streamlining of

activities throughout the lifecycle;

• Effective use of competition;

• Using aggregated contracts and Standing Offer Arrangements

where appropriate;

• Identifying and rectifying inefficiencies in procurement

processes;

• Developing cost efficient tender processes;

• Employees responsible for providing procurement services or

assistance providing competent advice in terms of available

products and agreements; and

• Working with suppliers to create relationships that are

professional and productive, and are appropriate to the value

and importance of the goods, services and works being

acquired.

3.2.3 Role of Specifications

Specifications used in quotations, tenders and contracts are to

support and contribute to Value for Money objectives through

being written in a manner that:

• Ensures impartiality and objectivity;


• Encourages the use of standard products;

• Encourages sustainability;

• Eliminates unnecessarily stringent requirements; and

• Are weighted accordingly to the requirements of the

Evaluation Criteria in awarding the tender bids

3.3 Performance Measure and Continuous Improvement

Appropriate performance measures are to be established and reporting

systems will be used to monitor performance and compliance with

procurement policies, procedures and controls and, where possible, cost

savings going forward through innovation.

3.4 Sustainability

3.4.1 General

Council supports sustainable use of resources by purchasing

recycled and environmentally friendly products, if they perform

satisfactorily and are available at a reasonable or competitive

price.

When purchasing plant, equipment and machinery, consideration

must be given to noise reduction options. The purchase of chemicals must adhere to any statutory requirements, recognised

standards, codes of practice, related policies and procedures.

3.4.2 Sustainable Procurement

Council will promote procurement that achieves environmental

sustainability through the supply chain and may consider selection

of products or services which have minimum environmental impact

providing all other evaluation criteria are met.

Council requires that as a minimum all evaluation criteria is to

include the following:

Evaluation Criteria Minimum Weighting

The impact that this purchasing

activity will have on

environmental sustainability

10%


3.5 Diversity

Council is committed to achieving its social policy outcomes and therefore undertakes to identify social procurement opportunities that

assist to build and maintain strong communities by generating local

employment (particularly among disadvantaged residents), and promoting social inclusion.

Council staff should consider the inclusion of social procurement

evaluation criteria wherever possible.

3.6 Support of Local Business

Council will direct tenderers to substantiate what economic benefits,

directly and indirect that can be provided within the region in their bid,

whether it be based the shire or not.

Council requires that as a minimum all evaluation criteria is to include the

following:

Evaluation Criteria Minimum Weighting Economic Contribution to the Glenelg Shire Region

10%

3.7 Local Australian and New Zealand Supplier Preference

Section 186 (6) of the Local Government Act 1989 provides that

wherever practicable, Councils must give effective and substantial

preference to contracts for the purchase of goods, machinery or

material manufactured or produced in Australia and New Zealand. Employees must therefore always endeavour to give preference to

Australian and New Zealand suppliers/ vendors/contractors where

practicable.

4. Apply a Consistent and Standard Approach

The Council will provide effective and efficient commercial arrangements for

the acquisition of goods and services.

4.1 Standard Processes

The council will provide effective commercial arrangements covering

standard products and provision of standard services across the

organisation to enable employees to source requirements in an efficient

manner.

This will be achieved via establishing the following:

• Pricing where relevant;


• Processes, procedures and techniques;

• Tools and business systems (e.g. implementing appropriate e-tendering, e-evaluation; e-catalogue or e-sourcing arrangements);

• Reporting requirements; and

• Application of standard contract terms and conditions.

5. Build and Maintain Supply Relationships

Council recognises that in order to achieve sustainable value, a strategic

assessment of the appropriate purchasing methods should be undertaken –

whether to go to market on its own, participate in regional or sector

aggregated projects or panels, access State Government panel agreements

or other means. The Council will consider supply arrangements that deliver the

best value outcomes in terms of time, expertise, cost, value and outcome.

5.1 Developing and Managing Suppliers

Council recognises the importance of effective and open working

relationships with its suppliers and is committed to encouraging and

maintaining existing suppliers, as well as encouraging new suppliers to

compete for work wherever possible or appropriate and improving the

capability of existing suppliers where appropriate.

5.2 Supply Market Development

A wide range of suppliers should be encouraged to compete for council

services. The focus for new services need not always be with the larger more familiar businesses. Other types of organisations offering business

diversity include:

• Local businesses;

• Green suppliers;

• Small to medium sized enterprises (SME’s);

• Social enterprises;

• Ethnic and minority business; and

• Voluntary and community organisations.

5.3 Communication

External communication is very important in ensuring a healthy interest

from potential suppliers and partners. Council will communicate to

current and potential suppliers in the most appropriate manner as

specific circumstances arise.


6. Continuous Improvement (Best Value)

The Council is committed to continuous improvement and will review the Procurement Policy on an annual basis, to ensure that it continues to meet its

strategic objectives.

6.1 Best Value Principles

A Council must comply with the Best Value Principles.

The Best Value Principles are:

• All services provided by a Council must meet the quality and cost

standards required by Best Value;

• All services provided by a Council must be responsive to the needs

of its community;

• Each service provided by a Council must be accessible to those

members of the community for whom the service is intended;

• A Council must achieve continuous improvement in the provision of

services for its community;

• A Council must develop a program of regular consultation with its

community in relation to the services it provides; and

• A Council must report regularly to its community on its

achievements in relation to the principles.

6.2 Factors that may be considered in applying Best Value Principles

In applying the Best Value Principles, a Council may take into account,

among other factors:

• The need to review services against the best on offer in both the

public and private sectors;

• An assessment of value for money in service delivery;

• Community expectations and values;

• The balance of affordability and accessibility of services to the

community and opportunities for local employment growth or

retention;

• The value of potential partnerships with other Councils and State

and the Commonwealth governments; and

• Potential environmental advantages for the Council's municipal

district.


7. Enforcement of the Policy

The Chief Executive Officer (CEO) has overall accountability for the

procurement of goods and services required to support the business of the

Council and therefore is responsible for enforcing the Procurement.

7.1 Breaches of the Policy

The CEO or nominee is responsible for authorising corrective action to

rectify all breaches of the Procurement Policy, for example suspected

breaches that may involve corrupt conduct, maladministration, wilful

non compliance, or serious and substantial waste.

7.2 Reporting Breaches

All suspected breaches of this Policy should, in the first instance, be

reported to the relevant Senior Officer who shall advise the CEO of the

outcome of each reported breach. Suspected breaches of a serious

nature should be reported directly to the CEO. All reports received will

be treated with appropriate concern for the law, privacy and

confidentiality.

7.3 Penalties for Breaches

Breaches of this Policy will be dealt with in accordance with the Council’s Discipline Procedure and Staff Code of Conduct.

COUNCIL POLICY

PROCUREMENT POLICY Page 32 of 35

Level 6 Officer requisitions Purchase Order Purchase Order & Payment approved by

Up to $999 Level 6 Other Officer

Between $1,000 to $9,999 Level 5 Responsible Budget Officer

Between $10,000 to $49,999 Level 4 Unit/Team Leader, Supervisor, Manager

Between $50,000 to $99,999 Level 3 Group Manager (or delegate)

$100,000 to $149,999 (Goods & Services)

$100,000 to $199,999 (Works)

Level 2 CEO (or delegate)

$150,000 + (Goods & Services)

$200,000 + (Works)

Level 1 Council Awarded Contract -

CEO/relevant Group Manager


Up to $9,999 Level 5 Responsible Budget Officer

Between $10,000 to $49,999 Level 4 Unit/Team Leader, Supervisor, Manager



$100,000 to $199,999 (Works)



$200,000 + (Works)




Up to $49,999 Level 4 Unit/Team Leader, Supervisor, Manager



$100,000 to $199,999 (Works)



$200,000 + (Works)




Up to $99,999 Level 3 Group Manager (or delegate)


$100,000 to $199,999 (Works)



$200,000 + (Works)





$100,000 to $199,999 (Works)



$200,000 + (Works)





$200,000 + (Works)



8. Appendices

DELEGATION FLOWCHART APPENDIX 1

COUNCIL POLICY


PROCUREMENT POLICY EXCEPTION REPORT APPENDIX 2

The purpose of this Policy (as stated in Section 1.3) is to:

• Outline the principles and processes to apply in decisions and practices

associated with the Council’s procurement of works, goods and services;

• Provide policy and guidance to facilitate consistency and control over

procurement activities;

• Demonstrate accountability to residents and rate payers;

• Provide guidance on ethical behaviour in public sector purchasing;

• Demonstrate the application of elements of best practice in purchasing; and

• Increase the probability of obtaining the right outcome when purchasing

goods and services.

There are limited circumstances in which there may be legitimate reasons

compliance with the minimum spend competition thresholds are not met. Refer

Section 2.3.2 of the Procurement Policy.

The following factors are not reasons that justify seeking a procedural exception:

• Completion of projects prior to end of financial year. Projects should be well

planned to avoid end of year deadlines;

• Use of the “emergency” category should not substitute for good project

planning;

• Desire to include only certain suppliers because of previous relationships; and

• Working with and expending Council funds through a community group.

COUNCIL POLICY


PROCUREMENT POLICY

APPLICATION FOR EXEMPTION

Purchase Order Number:…………………………….

Ledger Number:…………………………..

Supplier:………………………………………………………………………

Reason for Exemption (please circle) refer to Section 2.3.2

• Legal Services

• Ministerial Exemption

• MAV Insurance Scheme

• Statutory Payment

• Emergency

The Following categories exemptions does not apply if over a figure of 150,000.00

for Goods and Services and $200,000.00 for the provision of Works . Ministerial Exemption must be sought by Council.

In such cases where an exemption is sought under the Public Tender threshold

amounts, (i.e. an inability to obtain three quotes from the 15,000.00 to 150,000.00

figure), a detailed business case must be directed to the respective Group Manager and must be approved in line with the delegation limits.

These categories may include:

• Sole Supplier/Insufficient Quotes

• Scope Challenge

• Exceptionally Advantageous Time – limited Conditions

• Intellectual Property

• Absence of Competition

• Support from Original Supplier

Additional Information / Comment:

COUNCIL POLICY


Recommendation:

Prepared By:……………………………………………………………………..

Position:

Date:

Approved By:…………………………………………………………………….

Position: (Only CEO/Group Manager)

Date:

Once completed this form should be filed with all documentation relating to the

procurement process.

Documents

CURRENT - Council Policy - Procurement Policy CPO-CORPS-FI-001 · 2013-09-19 · 2.7.2 Occupational Health and Safety 23 2.7.3 Supply by Contract 23 2.8 Contract Terms 24 2.9 Endorsement