Procurement governance framework - Achieving Web viewThe AO must be satisfied that governance structures and reporting requirements are in place to conduct the organisation’s

Victorian Government Purchasing BoardPolicy SuiteVersion 1.1 (July 2016)

SecretariatVictorian Government Purchasing BoardDepartment of Treasury and FinanceLevel 4, 1 Macarthur StreetMelbourne Victoria 3000AustraliaTelephone: +61 3 9651 1699Facsimile: +61 3 9651 5951procurement.vic.gov.au

Supply policies are made by the Victorian Government Purchasing Board (VGPB) pursuant to s54L of the Financial Management Act 1994. They have legislative force and must be complied with.

This new supply policy only applies to departments approved for transition by the VGPB. The current supply policy framework will run concurrently with new supply policies until all departments have transitioned to the new supply policy framework.

State of Victoria 2015

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Table of Contents

Policy One: Governance.......................................................................................3Context ............................................................................................................................3

1. Procurement governance framework.................................................................32. Assessment to manage procurement activity.....................................................33. Complaints management: Managing complaints from suppliers........................3

1. Procurement governance framework.......................................................41.1 Mandatory requirements.................................................................................................4

1.1.1 Roles and responsibilities......................................................................................41.2 Developing a procurement strategy.................................................................................5

1.2.1 Procurement activity plan.....................................................................................5

2. Assessment to manage procurement activity...........................................62.1 Mandatory requirements.................................................................................................6

3. Complaints management..........................................................................73.1 Mandatory requirements.................................................................................................7

3.1.1 Referring a complaint to the VGPB for review.......................................................8

Policy Two: Complexity and capability assessment..............................................9Context ............................................................................................................................9

1. Complexity..........................................................................................................92. Capability.............................................................................................................9

1. Complexity assessment...........................................................................101.1 Mandatory requirements for a complexity assessment.................................................10

2. Capability assessment.............................................................................122.1 Mandatory requirements for a capability assessment...................................................12

Policy Three: Market analysis and review..........................................................13Context ..........................................................................................................................13

3. Market analysis and review...............................................................................134. Aggregated purchasing......................................................................................135. Disposal of assets..............................................................................................13

1. Market analysis.......................................................................................141.1 Mandatory requirements...............................................................................................14

2. Aggregated purchasing...........................................................................152.1 Mandatory requirements...............................................................................................15

Victorian Government Purchasing BoardPolicy Suite, Version 1.1 (July 2016) 1

2.1.1 Governance arrangements for SPCs....................................................................152.1.2 Process for establishing an SPC...........................................................................152.1.3 Obligations for parties using an SPC..................................................................162.1.4 Contract management framework for an SPC...................................................162.1.5 Establishing an SEPC..........................................................................................162.1.6 Rules of use for SPCs and SEPCs........................................................................162.1.7 Exemptions........................................................................................................17

3. Disposal of assets....................................................................................183.1 What is disposal of assets?.............................................................................................183.2 Mandatory requirements...............................................................................................18

Policy Four: Market approach............................................................................19Context ..........................................................................................................................19

1. Market approach:..............................................................................................192. Critical incidents................................................................................................193. Evaluation, negotiation and selection...............................................................19

1. Market approach.....................................................................................201.1 Mandatory requirements for market engagement........................................................20

1.1.1 Management of submissions received..............................................................21

2. Critical incidents......................................................................................222.1 Mandatory requirements for critical incidents...............................................................22

3. Evaluation, negotiation and selection.....................................................233.1 Mandatory requirements for evaluation, negotiation and selection..............................23

3.1.1 Evaluation of bids from suppliers......................................................................233.1.2 Negotiation with shortlisted suppliers..............................................................233.1.3 Supplier selection..............................................................................................23

Policy Five: Contract management and contract disclosure...............................24Context ..........................................................................................................................24

1. Contract management......................................................................................242. Contract disclosure............................................................................................24

1. Contract management............................................................................251.1.1 Contract management at the organisational level............................................251.1.2 Contract management at the individual procurement level.............................25

1.2 Mandatory requirements...............................................................................................26

2. Contract disclosure..................................................................................272.1 Mandatory requirements...............................................................................................27

2.1.1 Contract disclosure............................................................................................272.1.2 Variation disclosure...........................................................................................28

2 Victorian Government Purchasing BoardPolicy Suite, Version 1.1 (July 2016)

Policy One: Governance

ContextThis policy outlines the requirements for setting up and managing a procurement governance framework. It is mandatory for all Victorian Government departments and any public bodies (hereafter referred to as ‘organisations’) that are subject to the supply policies of the Victorian Government Purchasing Board (VGPB).

The Governance policy covers three components.

1. Procurement governance frameworkA procurement governance framework establishes processes, authorities, accountabilities and relationships for the organisation to manage an efficient and effective procurement function. It operates at two levels:

a) the structure, processes and roles that drive organisational performance, improve procurement practice, reduce risk and promote value for money; and

b) ensuring compliance with VGPB supply policies.

A procurement governance framework ensures that:

the accountable officer (AO) has developed a strategy, systems, policy, practices and processes to monitor and benchmark performance;

the accountable officer is asking appropriate and regular questions about procurement activity and procurement outcomes;

roles, responsibilities, authorities and accountabilities are clearly articulated and understood; risks are identified, mitigated and/or improved; and

complaints are treated fairly and in a timely manner.

2. Assessment to manage procurement activityAn assessment to manage procurement activity informs the accountable officer that the organisation has the appropriate governance structure, policies, procedures, practices and probity in place to manage the scope and complexity of its procurement activities.

It reassures suppliers that the organisation will apply appropriate standards of probity and process when engaging the market.

3. Complaints management: Managing complaints from suppliers A complaint is an issue or concern expressed by a supplier in relation to the process and probity applied by an organisation when carrying out a procurement activity.

For further information and advice on applying VGPB policies including guides, tools and templates, visit the Procurement Victoria website at www.procurement.vic.gov.au.



1. Procurement governance framework

Governance can be defined as the processes by which an organisation (through the AO) holds itself to account for defensible and justifiable procurement decisions and processes. Governance embodies demonstration of leadership, accountability and responsibility.

1.1 Mandatory requirementsThe AO is responsible for establishing the governance framework and is accountable for its implementation. The AO must set up the governance framework before starting any organisational procurement activity.

1.1.1 Roles and responsibilitiesThe AO must ensure that the governance framework identifies the roles and responsibilities, processes and performance standards to ensure compliance with VGPB supply policies.

The role of the chief procurement officer

The accountable officer must establish the chief procurement officer role. The chief procurement officer role encompasses:

providing expert advice and guidance to the AO on matters related to the governance framework;

overseeing the development, application and ongoing assessment of the governance framework; and

ensuring that the complaints management process demonstrates due process and integrity.

A person assigned to the chief procurement officer role:

must hold a qualification in procurement or hold qualifications with a definable procurement component; and/or

must have experience and expertise in managing a procurement function that matches the organisation’s procurement profile.

Note: In relation to public bodies, an AO may choose not to establish the role of CPO depending on the complexity of procurement activity conducted by the organisation. The AO must be satisfied that governance structures and reporting requirements are in place to conduct the organisation’s procurement activity and to maintain compliance with VGPB supply policies.


The role of the internal procurement unit

The AO must set up an internal procurement unit. The role of the internal procurement unit is to:

ensure that all procurement activity applies strategies, policies, procedures, practices and probity that comply with VGPB supply policies and any other requirements in the Financial Management Act 1994 or imposed by the accountable officer;

assess the procurement capability of the organisation on an annual basis; manage the preparation of a capability development plan;

identify major procurement categories; review its own performance and capability at regular intervals; and

report annually to the accountable officer on the organisation’s procurement activities.

Note: In relation to a public body, an accountable officer may choose not to establish an internal procurement unit if satisfied that governance structures and reporting requirements are in place to conduct the organisation’s procurement activities and to maintain compliance with VGPB supply policies.

The accountable officer will:

determine the terms of reference and operational arrangements of the IPU; and ensure that the expertise and experience of IPU staff are appropriate for the scope, nature

and complexity of the procurement activity carried out by the organisation.

1.2 Developing a procurement strategyThe governance framework is underpinned by a procurement strategy. This strategy provides an overview of the organisation’s procurement profile and includes the following components:

procurement activity plan; contract management planning strategy;

supplier engagement plan; and capability development plan.

Note: Requirements for developing these four components are detailed in respective guides, available at the Procurement Victoria website at www.procurement.vic.gov.au

The AO must ensure that the procurement strategy is reviewed annually to confirm alignment with the procurement profile of the organisation and broader government objectives.

The VGPB can request a review of the procurement strategy and component parts at any time.

1.2.1 Procurement activity planThe procurement activity plan details planned procurement activity for at least the next 12 to 24 month period. The procurement activity plan must be reviewed at least annually to keep the market informed of changes or developments. A high-level summary plan must be published on the organisation’s website to improve transparency for suppliers.



2. Assessment to manage procurement activity

Assessments are measured against a series of standards set out in an assessment tool developed by the VGPB.

2.1 Mandatory requirementsTo operate in the VGPB’s new procurement setting, an organisation must:

make a submission and presentation to the VGPB using the assessment tool to demonstrate that their organisation is fully capable of managing their own procurement activities; and

have the submission supported by the relevant accountable officer.

The VGPB can require the accountable officer to:

submit to further assessment reviews when requested to assure the VGPB that the organisation is complying with supply policies and performance commitments;

submit specific procurement activities to the VGPB for process and probity oversight; report on any recommendations made by the VGPB;

submit documentation in a form required by the VGPB; and adopt processes and procedures as determined by the VGPB.

The VGPB can require the accountable officer to conduct an audit of compliance with VGPB supply policies and to report back as directed by the VGPB.


3. Complaints management

A complaint is an issue or concern expressed by a supplier in relation to the process and probity applied by an organisation when carrying out a procurement activity. The complaint should be a letter, email or fax lodged with an organisation’s accountable officer or chief procurement officer.

3.1 Mandatory requirementsThe organisation must develop a complaints management system that sets out the process and procedures for addressing complaints.

The investigation of a complaint and subsequent response must be overseen by a person not involved in the subject matter of the complaint. An organisation’s complaints management system must be accessible to a complainant.

The complaints management system must outline:

how the investigation will be dealt with; what documentation the organisation requires from the complainant in terms of scope and

format; contact and lodgement details for all documents;

timelines for conducting the investigation and providing a response; the range of outcomes available to the organisation in responding to a complaint;

the process for a review by the VGPB, should the findings and actions taken by the organisation not resolve the matter to the satisfaction of the complainant; and

other government bodies that may be able to assist.

The organisation is to inform the VGPB within five working days of any complaint that could not be resolved to the satisfaction of both parties.

The organisation must disclose in its annual report the following information in relation to each complaint received:

the procurement activity to which the complaint relates; and

the status of the complaint confirming whether it:– was resolved;

– is still under investigation; or– could not be resolved.


3.1.1 Referring a complaint to the VGPB for reviewA complainant can refer a complaint to the VGPB for review if not satisfied with the findings and actions of the organisation involved. This could be related to the management of the complaint or the application of supply policies.

Complaints submitted to the VGPB must be lodged by letter, email or fax within 10 working days of the receipt of the findings by the organisation to:

The ChairVictorian Government Purchasing BoardDepartment of Treasury and Finance GPO Box 4379MELBOURNE VIC 3001

The complainant must provide the following material:

evidence that the organisation did not correctly apply supply policies in relation to a procurement activity;

evidence that the organisation’s complaints management procedures were not applied correctly;

a copy of all relevant correspondence between the complainant and the organisation in relation to the nature of the complaint; and

any additional material requested by the VGPB to assist it in its findings.

The VGPB:

will inform the organisation and complainant of its findings and any further action it intends to take in relation to the matter;

can require the accountable officer to audit its application of supply policies in relation to the procurement activity;

can inform the Minister of its review of a complaint and advise the Minister of further action that could be taken; and

note the outcome of a review in relation to any complaint in its annual report to Parliament.


Policy Two: Complexity and capability assessment

ContextThis policy outlines the requirements for carrying out complexity and capability assessments. It is mandatory for all Victorian Government departments and any public bodies (hereafter referred to as ‘organisations’) that are subject to the supply policies of the Victorian Government Purchasing Board (VGPB).

Figure 1 illustrates where complexity and capability fit into the procurement process.

Figure 1: Complexity and capability assessments and the procurement process

The Complexity and capability assessment policy covers two components.

1. ComplexityProcurement complexity is the level of intricacy and scope of issues involved in procuring a good or service. The complexity assessment considers a broad range of factors including risk, total cost of ownership and market dynamics associated with the procurement activity.

2. Capability The capability assessment indicates the level of procurement capability in an organisation. Procurement capability is about matching the people, resources, systems and processes to the requirements of procurement activity, ensuring sufficient expertise is in place to carry out the procurement successfully.

Figure 1 details the procurement process and highlights the point at which complexity and capability assessments take place. The assessments are considered together so an organisation can see what level of procurement activity it can carry out with existing resources and where additional or specialist capability may be required.

The assessments take place early in the procurement process and focus on the category level of procurement. However, the assessments should be reviewed during the procurement process as additional considerations and more detailed information is obtained from the sourcing stages of the procurement process.

For further information and advice on applying VGPB policies (including guides, tools and templates), visit the Procurement Victoria website at http://www.procurement.vic.gov.au.



1. Complexity assessment

1.1 Mandatory requirements for a complexity assessmentTo achieve the best value-for-money, an organisation must assess the complexity of a procurement activity before it begins.

The assessment of complexity must be applied to:

relevant categories of procurement; or any individual procurement activity that:

– does not fall into a category of procurement; or – is strategic or high risk to the business of the organisation.

Carrying out an assessment of complexity at the category level can identify individual procurement(s) and strategic and high-risk procurement(s) that require an individual complexity assessment.

An assessment of complexity must:

identify and measure the internal and external factors that affect the procurement; set out the characteristics of the good or service being purchased;

assess the capacity, capability and motivation of the market to supply the goods or service; set out the value created by the procurement to the organisation and analyse opportunities to

improve value-for-money; analyse the potential for aggregating purchasing demand;

analyse the potential within the overall procurement need to improve the opportunities for local businesses and small to medium enterprises to participate in government procurement; and

investigate the best way to approach the market that is cost effective to suppliers and buyers and considers opportunities for local businesses to participate.

The outcome of the complexity assessment will allocate procurement categories and individual procurements into one of four quadrants of complexity.

Quadrant Description (example only)1 Transactional Small value and low-risk transactions where approved suppliers (e.g. state

purchase contracts) are not available.2 Leveraged Frequently used goods/services in a competitive marketplace that are

procured by an individual department or whole of government, where the organisation has the ability to drive value.

3 Focused Procured goods/services where a limited number of suppliers are available or where novel commercial arrangements are in place. May include whole of government contracts.

4 Strategic Goods/services in a competitive market that are high value, where business criticality is high, and/or where the good/service is of State significance. May include whole of government contracts.

The chief procurement officer is to be consulted when determining the optimal approach to market for any procurement identified as strategic or high risk to the organisation.


Organisations are not required to carry out an assessment of complexity of a procurement activity where the procurement is from an aggregated demand contract where it is a sole supplier arrangement.


2. Capability assessment

2.1 Mandatory requirements for a capability assessmentThe accountable officer must ensure that the organisation has an appropriate level of procurement expertise, resources, systems and processes that enable procurement activities to be completed successfully.

The assessment of capability must:

be carried out by people with appropriate knowledge and expertise;

identify the capabilities needed to carry out procurements; and identify whether the capabilities in the organisation need to be developed or supplemented to

undertake procurement.

An assessment of capability may be based on the whole organisation, or based on particular business units.

Your organisation must not carry out procurement where there is an insufficient level of capability.

Refer to the Governance policy for more information on roles and responsibilities.


Policy Three: Market analysis and review

ContextThis policy outlines the requirements for market analysis and review. It is mandatory for all Victorian Government departments and any public bodies (hereafter referred to as ‘organisations’) that are subject to the supply policies of the Victorian Government Purchasing Board (VGPB).

The Market analysis and review policy covers three components.

1. Market analysis and review Market analysis and review provides an understanding of market dynamics to determine the optimal market approach. It can also determine the viability of a procurement requirement.

Figure 1 highlights where market analysis and review takes place in the procurement process.

Figure 1: Market analysis step in the procurement process

2. Aggregated purchasingAggregated purchasing is an important mechanism used to drive efficient government procurement.

3. Disposal of assets As part of market analysis and review, an organisation will develop a whole-of-life appraisal and consider the best process for disposal of assets.




1. Market analysis

Market analysis and review follows the assessment of complexity of the procurement activity either at the category level or at the individual procurement level where the procurement activity falls outside of a category or is critical or high risk.

1.1 Mandatory requirementsAn organisation must:

consider the outcome of the complexity assessment to determine if the assessment at the category level establishes the basis for being able to approach the market;

undertake further complexity analysis at the level of the individual procurement activity where the category assessment provides insufficient detail to determine the optimal approach to market;

conduct market analysis to identify the capability and capacity of the market to supply and identify opportunities for market based solutions;

reassess the procurement requirement with regard to the market analysis; and prepare a statement of grounds, or business case, which supports the decision to proceed

with the procurement and identify the optimal market engagement strategy.

Note: A sourcing process is not required when purchasing from a sole entity purchase contract or a state purchase contract where there is or a sole supplier arrangement in place.


2. Aggregated purchasing

Aggregated purchasing arrangements take the form of state purchase contracts (SPCs) or sole entity purchase contracts (SEPC). SPCs incorporate a number of organisations, whereas SEPCs apply to a single organisation. An SPC or SEPC can be established and managed in a number of ways—sole or multiple suppliers, open or closed panels, register or more formal contractual arrangement for example.

2.1 Mandatory requirements

2.1.1 Establishment of and reporting for SPCsAn SPC can only be established after approval by the Minister.

Where an organisation seeks to establish an SPC: it must consult with the VGPB regarding the category of goods or services proposed for

aggregation and inform the VGPB of any analysis of spend or assessment of complexity that indicates grounds for aggregating demand;

it must have a business case endorsed by the VGPB prior to being approved by that organisation’s relevant Minister; and

it must demonstrate to the VGPB that it has the capability to establish and manage the proposed SPC as the lead agency.

The process involved in establishing an SPC may be nominated for strategic oversight by the VGPB.

All SPCs may be established as a mandated or non-mandated arrangement. Where an SPC is mandated, all entities within the scope of VGPB supply policy must utilise the arrangement unless otherwise expressly excluded in the endorsed business case.Lead agencies are to report to the VGPB on the ongoing use of SPC(s), spend and savings generated.

2.1.2 Process for extending or replacing an SPC A lead agency must consult with the VGPB and obtain approval from its relevant Minister before extending (not including the exercising of a contractual option) or replacing an SPC. Such Ministerial approval must be notified to the VGPB.

The process involved in extending or replacing an SPC may be nominated for strategic oversight by the VGPB.

The lead agency responsible for the SPC must:

take into account any comments made by the VGPB and relevant Minister prior to engaging with the market;

inform the VGPB and relevant Minister of the outcome of the market engagement process; and

authorise an SPC contract/head agreement on behalf of the Victorian Government.


2.1.3 Obligations for parties using an SPC Parties using a mandated or non-mandated SPC must comply with the rules of use established by the lead agency for purchasing under the contract.

Where an organisation is a participating party to a mandated SPC, but has an existing contractual arrangement covered by the scope of the SPC, it must migrate to the SPC upon expiration of the initial contract period.

An organisation may commit to an SPC after its establishment and be included as a participating party. The organisation is then bound to use the contract and comply with the rules of use.

SPCs are established primarily for use by State government bodies. Certain non-government entities may utilise them.

2.1.4 Contract management framework for an SPCThe lead agency must adopt a contract management framework for an SPC. The category manager for the SPC is to nominate those participating parties who must establish a contract manager role to manage the organisation’s participation in the SPC.

The lead agency for the SPC must produce an annual report on the management and use of the SPC arrangement which can be accessed by each participating party.

Participating parties must report information to the lead agency as requested.

2.1.5 Establishing an SEPC When an assessment of the spend in a particular category of goods and services, or a complexity assessment identifies the potential for aggregating requirements in the organisation, you must consider establishing an SEPC.

An SEPC can only be established after approval of a business case by the accountable officer or delegate.

An organisation must adopt a contract management framework for the SEPC.

2.1.6 Rules of use for SPCs and SEPCsAll SPCs and SEPCs must detail the rules of use for buyers intending to purchase from the contract.


2.1.7 ExemptionsTable 1:

Type of exemption Details Approval byExemption of a department or public body prior to establishing an SPC

An organisation can only be exempted from the SPC if it can demonstrate that it is unable to obtain value for money under the proposed SPC.The exemption sought can encompass the whole organisation, or a business unit within the organisation.

The case for exemption is to be included in the business case for establishing the SPC to be approved by the Minister.

Exemption of a participating party from a mandated SPC

A participating party may seek an exemption from using a mandated SPC where it can demonstrate that special circumstances have arisen in relation to sourcing from the SPC. Factors that may justify granting an exemption could relate but not be limited to:a supplier on an SPC arrangement is no longer able to service an area;regional suppliers can now offer the same or better value for money; ormachinery of government changes alter the relevance of the supply arrangement for the participating party.The exemption sought may be for:the whole or part of the organisation;the whole or part of the SPC supply agreement; ora fixed period of the supply arrangement.

A case for granting the exemption is subject to the approval of the accountable officer of the lead agency.

Exemption for a one-off purchase

A participating party may seek exemption from using an SPC for a one-off purchase where its procurement needs cannot be met by the SPC.

A case for granting the exemption is subject to the approval of the category manager for the SPC.


3. Disposal of assets

3.1 What is disposal of assets?Disposal of assets should be considered when the asset is identified as being:

obsolete due to changed procedures, functions or usage patterns; no longer complying with occupational health and safety standards;

reaching its optimum selling time to maximise returns; beyond repair; or

surplus to requirements.

Disposal of assets can present the organisation with opportunities to optimise the use of an asset, including:

extending the life of an asset by transferring it to another business unit or organisation;

recovering material for recycling prior to sending the asset to landfill; and transferring assets to not-for-profit organisations.

3.2 Mandatory requirementsThe disposal of assets is a key consideration in the forward planning of any procurement activity. Assets of (or belonging to, or in the care, custody, or control of) an organisation are to be disposed of in a way that takes into account probity, security, sustainability and transparency, as well as environmental and social factors. An organisation must develop and apply an asset disposal process that details:

parties/business unit responsible for managing the process; disposal options appropriate to the nature of the asset and broader government objectives;

management of issues of risk, liability, safety and security; the process for keeping the organisation’s assets register up to date; and

issues of risk, liability, safety and security associated with the use of the asset by other parties when transferring an asset to another location or entity.

If the evaluation of disposal options does not warrant modification to extend the life of the asset or transferring it to another party or recycling, the asset must ordinarily be disposed of by way of public auction or public tender. An alternative approach must be sought where cost of disposal process exceeds residual value of the asset.


Policy Four: Market approach

ContextThis policy outlines the requirements for market approach. It is mandatory for all Victorian Government departments and any public bodies (hereafter referred to as ‘organisations’) that are subject to the supply policies of the Victorian Government Purchasing Board (VGPB).

The Market approach policy covers three components.

1. Market approach: Market approach involves informing the potential supply market about your requirements.

Figure 1 highlights when market approach is implemented in the procurement process.

Figure 1: Market approach and the procurement process

2. Critical incidents In a critical incident, an organisation may adopt streamlined and flexible procurement processes to facilitate an immediate response to an emergency, crisis or disaster.

3. Evaluation, negotiation and selectionEvaluation, negotiation and selection involves identifying a supplier(s) best able to satisfy your procurement requirements. Your organisation may decide not to proceed with engaging a supplier if the evaluation and negotiation process cannot satisfy the requirements of the procurement activity.

For further information and advice on applying VGPB policies (including guides, tools and templates), visit the Procurement Victoria website at http://www.procurement.vic.gov.au



1. Market approach

Approaching the market is predominantly a process task to ensure all potential suppliers are treated fairly, have access to similar information and that standards of probity, confidentiality and security are applied in the conduct of all actions between the organisation and suppliers.

1.1 Mandatory requirements for market engagementYour organisation must develop and apply an appropriate market approach that:

encourages participation from the market segment relevant to the procurement activity;

adopts a market engagement strategy that is cost effective for buyer and supplier; applies a market approach that eliminates barriers to participation by small to medium

enterprises and local businesses; engages with potential suppliers in a fair and equitable manner;

has processes in place to ensure the confidentiality and security of bids from suppliers; provides sufficient time for potential suppliers to prepare a submission taking into account the

complexity of the procurement activity and market factors; and makes any material change to a procurement requirement available to all suppliers selected

or registered to participate in the procurement process.

Your organisation must detail requirements that:

identify the conditions for participation; foster innovative or alternative supply solutions, where appropriate;

structure specifications that have relevance to SMEs and local businesses, where appropriate; specify applicable broader government policy and Australian Standards where relevant,

including but not limited to any supplier charters or codes of conduct; adopt an evaluation plan for carrying out supplier selection;

specify the criteria and weightings to be used when evaluating submissions; indicate if the selection process will apply a process for shortlisting; and

do not adopt processes, technical specifications, conditions or a market engagement strategy that precludes relevant suppliers from participating in the potential supply arrangement.

Your organisation must provide the following minimum information:

name and address of your organisation;

headline details of the supply requirement; process timelines;

address/site/method where documentation can be obtained; address/site/method where further information will be provided (if relevant);

address/site/method for receiving submissions; and contact details for person(s) managing the market approach.

1.1.1 Management of submissions receivedYour organisation must:


provide a secure, physical submission facility and/or the facility to receive electronic submissions

allocate responsibility for managing either system to a business unit in the organisation;

implement a process to inform suppliers of successfully receiving their submission:– immediately in the case of an electronic system; or

– within five working days of submission close in the case of a physical receipt facility; apply procedures in relation to late submissions that accord with the following protocols:

– late submissions are not to be accepted unless the supplier can clearly document to the satisfaction of the chief procurement officer that an event of exceptional circumstances prevailed; and

– the chief procurement officer must also be satisfied that accepting a late submission would not compromise the integrity of the market approach.


2. Critical incidents

Critical incident protocols and processes are invoked when a relevant Minister, accountable officer or chief procurement officer (CPO) declares a critical incident to exist in relation to the operation of procurement processes by reason of:

an emergency within the meaning of the Emergency Management Act 1986;

an incident that causes your organisation’s business continuity plan to be activated; or an incident that represents a serious and urgent threat to the health, safety or security of a

person or property; or a situation that represents a serious or urgent disruption to services provided by your

organisation.

2.1 Mandatory requirements for critical incidentsYour organisation must:

take into account value for money, accountability and probity to the extent that they can be applied given the severity and urgency of the incident;

adopt minimum record keeping processes; and

adhere to contract disclosure requirements.

Note: During a critical incident, all other supply policies do not apply to the extent that the critical incident makes it impractical to apply them.

The organisation must adopt a format for recording the following minimum information with a view to being accountable for decisions in relation to:

the good/service being procured;

the purpose of the procurement activity; the total value of the procurement (including GST);

the name and contact details of the supplier; a short summary of the procurement process followed; and

contact details of the party managing the procurement.

The organisation’s annual report is to separately disclose the following information regarding procurement activity during a critical incident:

total value of goods purchased;

total value of services purchased; and the nature of the critical incident to which the procurement values relate.

The accountable officer or CPO is to define a date at which procedures under critical incidents cease.


3. Evaluation, negotiation and selection

Evaluating submissions requires high standards of probity and systematic application of evaluation criteria and weightings. Negotiation is an iterative activity conducted after shortlisting suppliers and actioned when the evaluation panel decides that it will add value to the outcome of the procurement activity. Supplier selection establishes a relationship that can deliver value-added improvements beyond the requirements of the contract.

3.1 Mandatory requirements for evaluation, negotiation and selection

3.1.1 Evaluation of bids from suppliersYour organisation must:

develop an evaluation plan which reflects the level of complexity of the procurement activity; conduct the evaluation process with probity, fairness, consistency and impartiality and

evaluates against the same specified criteria and weighting where provided; note and address any real or potential conflict of interest before starting the evaluation

process; clearly define the role of the probity auditor/probity advisor and/or advisory groups formed to

advise and assess elements of a submission; separate the roles of the probity auditor and probity advisor for procurement activity that is

critical and/or high risk; and document and be able to defend all stages of the decision making process.

Your organisation must also ensure that:

the evaluation process only considers a bid that meets the mandatory requirements of participation in the procurement process;

when alternative offers are encouraged, they are submitted and evaluated together with other conforming offers; and

the capability of the people conducting an evaluation or negotiation process is adequate for the complexity of the procurement activity.

3.1.2 Negotiation with shortlisted suppliers Your organisation must ensure:

the negotiation process is transparent, recorded and conducted in a manner that is fair and equitable for all parties shortlisted; and

negotiations seeking further information, improvements to a supplier’s bid or a best and final offer are conducted in a consistent manner and that any accepted improvements are within scope of the market approach.

3.1.3 Supplier selectionYour organisation must:

develop a formal agreement between parties for the selected supplier(s); debrief unsuccessful suppliers in relation to their submission if requested; and

inform all suppliers of the status of their submissions throughout the process.


Policy Five: Contract management and contract disclosure

ContextThis policy outlines the requirements for contract management and contract disclosure. It is mandatory for all Victorian Government departments and any public bodies (hereafter referred to as ‘organisations’) that are subject to the supply policies of the Victorian Government Purchasing Board (VGPB).

The Contract management and contract disclosure policy covers two components.

1. Contract managementContract management is the systematic and efficient management of contract creation, execution and analysis for the purpose of maximising financial and operational performance and minimising risk.

2. Contract disclosure An organisation makes specific information available to the community on the contracts it has entered into with a supplier.




1. Contract management

1.1 Contract management operates at two distinct levels: at the level of the organisation as a high-level contract management planning strategy

(CMPS); and

at the level of individual procurement activity.

1.1.1 Contract management at the organisational levelAt the organisational level, a CMPS can identify how individual contracts in a procurement category could be managed. It positions contract management issues at the beginning of the procurement planning cycle and allows for the effective allocation of resources.

Developing a CMPS takes place at the beginning of the planning process after identifying procurement categories and carrying out an assessment of complexity.

Figure 1 indicates where the CMPS is considered and developed in the procurement process.

Figure 1: Contract management at the organisation level

1.1.2 Contract management at the individual procurement levelAt the individual procurement activity level, contract management is the management of contracts made with supplier(s) to ensure that goods and services are delivered as agreed over the life of the contract and that value for money is consistently achieved. Contract management as a function can extend beyond the current term of the contract where there are ongoing obligations associated with maintenance agreements, warranties and guarantees.

Consideration of contract management issues is relevant across the elements of market analysis and review and market approach.

At the market approach stage of sourcing, it can inform prospective suppliers about the organisation’s intended legal arrangement in delivering the procurement requirement.

Figure 2 highlights the stages at which contract management is considered and implemented at the individual procurement activity level.

Figure 2: Contract management at the individual procurement level


1.2 Mandatory requirementsThe organisation must manage its contracts in a manner that is appropriate for the complexity and risk of the procurement activity.

At a minimum, the organisation must develop:

a CMPS for categories of that represent a significant proportion of the organisation’s spend; and

a contract management plan for each individual procurement activity that is critical and high risk.

The accountable officer must ensure that:

contracts are managed on behalf of the organisation by people with sufficient capability; and contracts clearly define the performance standards, review mechanisms and deliverables

required from the supplier.

The organisation must:

keep an appropriate record of contracts on a contracts register; and monitor contracts to ensure the expiry dates of insurance certificates are current and new

certificates are obtained prior to expiry.


2. Contract disclosure

Contract disclosure, including disclosure of variations, ensures high standards of probity and transparency in government procurement.

2.1 Mandatory requirements

2.1.1 Contract disclosureOrganisations must disclose the key details for contracts (excluding contracts under head agreements), with a total estimated value equal to or exceeding $100,000 (including GST) within 60 days of the award of a contract on the contract publishing system, the Tenders VIC website.

Disclosure relates to:

individual procurement contracts that are not contracts under head agreements such as state purchase contracts (SPC) and sole entity purchase contracts (SEPC); and

head agreements such as state purchase contracts (SPC) and sole entity purchase contracts (SEPC);

Key details for disclosure include:

Contract details:

– contract number;– contract title;– type of contract;– total estimated value of contract or SPC/SEPC;– start date and current term of contract; and– category.

Organisation details: – organisation;– contact person;– contact number; and– email address.

Supplier details:

– name of supplier; and– Australian Business Number or Australian Company Number.

Organisations must disclose full contract information for contracts with an estimated value exceeding $10 million (including GST) on the contract publishing system. Only trade secrets or genuinely confidential business information will be withheld from voluntary disclosure, along with material which if disclosed would seriously harm the public interest. The Government will be guided by the criteria established by Parliament in the Freedom of Information Act 1982.

Organisations are to develop protocols and procedures detailing such exemptions from disclosure.


2.1.2 Variation disclosureEach individual variation, or variations with a cumulative value exceeding $100 000 (including GST) must be disclosed on the contract publishing system against the contract to which the variation relates. The estimated value of the variation and the adjustment to the total estimated value of the contract must be noted on the contract publishing system.


Documents

Procurement governance framework - Achieving Web viewThe AO must be satisfied that governance structures and reporting requirements are in place to conduct the organisation’s