egsc policy template - eastgippsland.vic.gov.au · document control managed by: corporate status:...

PROCUREMENT POLICY

DOCUMENT CONTROL

Managed by: Corporate

Status: Approved

Responsible position: Manager Administration Services

Contact number: 03 5153 9500

Date approved: 12 December 2017

Version: 7

File number: 7441835

Approved by: Council

Next review date: December 2018

Security classification: Public (available on website)

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Procurement Policy 2017 of 24

East Gippsland Shire Council

CONTENTS

1. PURPOSE ..................................................................................................................... 3

2. POLICY STATEMENT ................................................................................................... 3

2.1 Procurement Principles .......................................................................................... 3 2.2 Organisation Structure / Model Adopted for Procurement ...................................... 6 2.3 Financial Delegations and Authorisations ............................................................... 7 2.4 Exemptions From Thresholds ................................................................................. 8 2.5 Procurement Planning ............................................................................................ 9 2.6 Procurement Manual .............................................................................................. 9 2.7 Probity Requirements ............................................................................................. 9 2.8 Risk Management / Occupational Health And Safety ........................................... 13 2.9 Internal Control and Internal Audit ........................................................................ 13 2.10 Methods of Procurement ...................................................................................... 14 2.11 Purchase Orders .................................................................................................. 15 2.12 Corporate Credit Cards ........................................................................................ 16 2.13 Market Engagement ............................................................................................. 16 2.14 Multi-Use Lists (Mul) ............................................................................................. 18 2.15 Build and Maintain Supply Relationships .............................................................. 18

3. RESPONSIBILITY FOR IMPLEMENTATION AND COMPLIANCE............................ 19

4. SCOPE OF POLICY .................................................................................................... 20

5. REFERENCES / ASSOCIATED DOCUMENTS .......................................................... 20

6. PRIVACY AND HUMAN RIGHTS CONSIDERATION ................................................ 20

7. DEFINITIONS AND ABBREVIATIONS ....................................................................... 21

8.1 Purchase Order or Contract ................................................................................. 23 8.2 Conditions of Contract .......................................................................................... 23

REVISION HISTORY (Completed by Governance Officer)

Revision Ref. No.

Approved/ Amended/ Rescinded

Date Council /

Management

ECM Document Reference

Summary of Changes

1 Approved 06/10/09 Council 4350630

2 Amended 5/06/12 Council 4858155

3 Amended 19/11/13 Council 5523287

4 Amended / Approved

16/12/14 Council 6050822




Update to market engagement method table, procurement and variation

thresholds. Inclusion of Multi User List clause. Removal of Purchase card

procurement method.

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1. PURPOSE

This policy provides a framework to support East Gippsland Shire Council’s procurement procedures and processes. The policy aims to;

• establish a procurement framework for Council to achieve value for money and continuous improvement in the provision of services for the community;

• ensure that Council resources are used efficiently and effectively to improve the overall wellbeing of people in the local community;

• ensure a competitive process is conducted prior to purchasing any goods or services or before carrying out works;

• provide guidance for Council officers to make purchases in a consistent and transparent way;

• achieve compliance with relevant legislative requirements;

• achieve high standards of probity, transparency, accountability and risk management; and

• give preference to the procurement of environmentally sustainable goods, services and works.

2. POLICY STATEMENT

Council is committed to the effective procurement of goods, services and works in a manner that will meet its corporate objectives and legislative requirements under the Local Government Act 1989 (the Act), ensuring value for money, fairness and probity in all procurement activities.

Council recognises that best practice procurement principles will support the achievement of Council objectives outlined in the current Council Plan. This policy is underpinned by such principles. Council funds must be used efficiently and effectively to procure goods, services and works and every attempt must be made to contain the costs of the procurement process without compromising any of the procurement principles set out in this policy.

2.1 Procurement Principles

The following principles will be applied to all procurement, irrespective of the value and complexity of that procurement.

Value for Money

Council’s procurement activities will be carried out based on the primary principle of obtaining value for money, being the best quality and value for the price to meet Council’s requirements. Value for money does not always mean accepting the lowest price.

Open and Fair Competition

Council will treat all prospective suppliers and vendors equally without any bias or perception of bias. Prospective suppliers and vendors will be treated in an open and transparent manner ensuring confidence in the process. Suppliers will always have access to the same information when quoting or tendering for Council. Council must comply at all times with the Competition and Consumer Act 2010 and other applicable legislation and regulations.

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Accountability

Consistency in the approach to procurement is maintained across the whole organisation through coherent frameworks, policies and procedures. Accountability in procurement means being able to explain and provide evidence of the process followed. The test of accountability is that an independent third party must be able to see clearly the process followed and that the process was fair and reasonable. Additionally;

• all Council officers must be able to account for all procurement decisions made over the lifecycle of goods, services and works purchased by Council;

• procurement for government funded projects must be in accordance with funding conditions; and

• all procurement activities must be supported by a clear audit trail for monitoring and reporting purposes.

To support accountability in procurement Council specifically maintains policies and guidance in respect of;

• fraud (refer to Fraud and Corruption Control Policy);

• gifts and hospitality (refer to Staff Code of Conduct); and

• use of corporate credit cards (refer to Credit Card Policy).

Financial

The principles of responsible financial management apply to all procurement activities. To give effect to this principle Council will ensure that approved, available funds will be determined prior to the commencement of any act of procurement. Council officers are required to ensure there is a budget provision in the relevant year for any proposed expenditure, and approve payment to suppliers only on the basis that the goods have been received and services completed satisfactorily. Council officers must not authorise any purchase exceeding their financial delegation (refer to the Financial Delegation Register).

Probity and Transparency

Council’s procurement processes are to be managed using the highest standards of integrity and must ensure that business is conducted in a fair, honest and transparent manner.

Continuous Improvement

Council will establish performance measures designed to audit and monitor performance against internal service standards and compliance with procurement policies and controls. Council will work towards improving procurement systems to better the financial performance of Council.

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Council will seek to improve its performance by capturing and analysing procurement information in a variety of areas, including;

• volume of spend;

• number of transactions per supplier;

• supplier performance;

• user satisfaction;

• costs by expenditure category; and

• spend supporting environmental sustainability.

Sustainability and Environment

Council is committed to protecting and enhancing the environment by supporting the principle of green procurement. This principle will form part of the procurement planning stage where consideration is given to procurement that reduces the impact on the environment while maintaining value for money. This means that where practical and operationally efficient, Council will integrate the following sustainable purchasing strategies into its procurement practices, encouraging suppliers and contractors to do the same;

• where possible, avoid negative environmental impacts from the purchase of goods and services;

• reduce resource consumption and waste generation;

• require the selection of efficient products (use of materials, fuel, water, energy and waste generation). Ideally energy and water ratings will be four star and above, and vehicles will have a high green vehicle star rating;

• encourage the procurement of recycled or part recycled products promoting their use and minimising waste to landfill;

• green the supply chain;

• encourage Council suppliers to adopt robust environmental practices, for example, provision of life cycle assessment information, documented waste minimisation strategies or accreditation as a green procurement supplier

Support for Local Business

Council recognises that it is a major purchaser of goods and services within the municipality, and understands that its procurement policies and practices have the potential to influence the local economy. Council is committed to buying from local businesses where such purchases may be justified on a value for money basis. Further to this, Council will consider the ongoing benefits to the local economy through purchasing works, goods or services from suppliers and contractors within the municipality. All ‘Request for Tender’ documents must include a local content statement requiring tenderers to accurately calculate the local content of their tender such as labour, materials, plant and supervision. Council will also include in its tender process a mandatory weighting of five (5) percent for local content when engaging and contracting with suppliers. This is to acknowledge the suppliers that contribute to the financial, social and environmental wellbeing of the region.

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Whenever practicable, Council will give preference to contracts for the purchase of goods, machinery or material manufactured or produced in Australia or New Zealand.

Social Procurement

Council will encourage a connection between purchasing decisions and social impacts by;

• raising awareness of social objectives and how purchasing can be used to help meet these objectives;

• promoting purchasing as a strategy to achieve social objectives both within Council and in the community; and

• where practical, encourage programs aimed at developing capacity in the local community so that social enterprises and other entities pursuing social objectives can compete for Council contracts.

Contract Management

All Council contracts are to include contract management requirements to ensure that Council receives the goods, services or works to the standard intended by the contract by;

• establishing a system reinforcing the expectation and obligations of both parties under the contract; and

• providing a means for the early recognition of contract issues and performance concerns, with an appropriate resolution process.

Contracts are to be proactively managed by the Council officer responsible for the procurement to ensure that the goods, services or works are delivered on time, within budget and to the standard specified in the contract.

2.2 Organisation Structure / Model Adopted for Procurement

It is the decision of Council to facilitate a centralised procurement structure wherein all strategy, policy, and advice in procurement matters will be held. Council’s procurement function is decentralised for all purchases under the value of $100,000 including GST. Council shall;

• establish a procurement management responsibility structure and delegations ensuring accountability, traceability and auditability of all procurement decisions made across the organisation;

• ensure that Council’s procurement structure is flexible enough to facilitate the timely purchase of the diverse range of goods, works and services required by Council;

• ensure that prospective contractors and suppliers are afforded an appropriate opportunity to tender and quote for Council contracts;

• encourage competition; and

• ensure that policies that interact with the procurement process are communicated and implemented.

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2.3 Financial Delegations and Authorisations

Delegations define the decision-making power of Council officers. Financial delegations allow specific Council officers to approve purchases and complete quote, tender and contractual processes without prior referral to Council. This enables the organisation to conduct procurement activities in an efficient and timely manner while maintaining transparency. Council officers holding financial delegations are to be provided training on the exercise of their delegation through the induction process and other training opportunities. Council officers will not approve expenditure unless the appropriate funding is allocated in Council’s annual budget.

2.3.1 Council Officer Authorisations

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.

Council will maintain a documented record of authorised financial delegations, identifying Council officers authorised to make such procurement commitments on behalf of Council.

The Chief Executive Officer is authorised to approve variations that are outside the agreed contract terms and conditions, being;

• Up to the lesser of $150,000 including GST or 20% (maximum cumulative amount or %) of the total original contract value for contracts awarded by resolution of Council; and

• Up to a total revised contract value of $300,000 including GST for goods, services and works awarded by Council officers under delegation;

provided the variation can be accommodated within the budget of the relevant Directorate or capital works program without adversely affecting other projects or programs within the budget.

The Chief Executive Officer is authorised to approve all contract extension terms, including options in contracts awarded by resolution of Council.

2.3.2 Matters not delegated to Council Officers

The following processes and commitments must be approved by Council;

• tender recommendations and contract approvals for all expenditure over $250,000 including GST;

• Contract variations outside the agreed terms and conditions of a contract where the variation amount or cumulative amount of variations is greater than $150,000 including GST or greater than 20% of the original contract amount awarded by resolution of Council;

• Contract variations outside the agreed terms and conditions of a contract awarded by Council officers under delegation which would result in a total contract value greater

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than $300,000 including GST; and

• Contract variations that cannot be accommodated within the budget of the relevant Directorate or capital works program without adversely affecting the other projects or programs within the budget.

2.4 Exemptions from thresholds

2.4.1 Emergency Situations

Purchases can be made without the need to initially follow policy but only in emergency or exceptional circumstances. The use of the emergency provision is limited to situations where a real emergency exists and immediate action is required and approved by the Chief Executive Officer. Situations where this might occur include;

• during the period where a natural disaster has been declared such as flooding, bushfire or epidemic which may require the immediate procurement of goods, services or works to provide relief;

• the occurrence of an event such as flooding or fire at a Council property which may require the immediate procurement of goods, services or works to ensure business continuity;

• the unforeseen cessation of trading of a core service provider to Council resulting in a need to appoint a replacement service provider on the grounds of public safety;

• an unforeseen event which impacts heavily and unsustainably on Council’s level of service to the community; or

• any other situation which may constitute a risk to health, life or property.

When a situation is declared to be no longer an emergency then the use of this power ceases. Contracts entered into under the emergency provisions must be limited in scope to that which is necessary to deal with the emergency. The emergency provision cannot be relied upon for extended works and services after the need for an emergency response has passed. Where a purchase is made under this clause, the following will apply;

• expenditure must be within the delegated financial authority;

• expenditure should be limited to that required to address the immediate emergency situation only; and

• following the declared event, Council officers must ensure that appropriate methods of purchase are resumed as soon as practicable.

2.4.2 Ministerial Approval

The requirements of section 186 of the Act do not apply if a contract is entered into in accordance with arrangements approved by the Minister.

2.4.3 Exemptions List

Exemptions apply to certain expenditures as they are subject to a specific process undertaken by Council, or Council does not have control over the expense. For a detailed list of exemptions, please refer to the Procurement Exemptions List located on the Council’s website.

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2.5 Procurement Planning

A procurement conduct plan must be completed and approved for all procurements that are considered strategic (refer to the Risk and Complexity Assessment form) and for procurements over $2,000,000 including GST, except where the responsible Director and Chief Executive Officer decides that the plan would be of no benefit due to the nature of the procurement. This plan must cover a range of matters including;

• the scope of the requirement;

• strategic analysis/feasibility study;

• evaluation criteria and methodology;

• procurement timeframe;

• risk management framework;

• due diligence requirements;

• composition and responsibilities of the evaluation panel; and

• the requirement to appoint an external probity auditor or advisor.

The procurement conduct plan will outline the objectives and application of probity principles, roles and responsibilities in the evaluation process and what probity auditing will occur. This plan must be approved by the responsible Director and provided to the Procurement Team prior to advertising for tenders.

2.6 Procurement Manual

The Procurement Team will develop and maintain a procurement manual to provide guidance to Council officers on all aspects of procurement. The manual will include checklists and forms required in Council’s procurement process.

2.7 Probity Requirements

Councillors and Council officers engaged in procurement will always conduct themselves in an ethical manner, displaying the highest degree of integrity, probity and impartiality.

To ensure the probity of Council’s procurement activities, when undertaking purchasing Council officers must ensure they;

• conform to standard procedures;

• provide accountability;

• treat potential and existing suppliers with equality and fairness;

• engage with suppliers in an honest and impartial manner that does not allow for conflicts of interest or perceived conflicts of interest;

• assess all submissions against the same criteria;

• maintain the confidentiality of commercial in confidence matters and information such as tendered prices and other sensitive information;

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• preserve public and supplier confidence in government processes by presenting the highest standards of professionalism and probity; and

• package works or services in a manner that encourages competition and produces the best outcome for Council.

2.7.1 Conflict of Interest

Councillors and Council officers must make their interests known in any situation where it could be perceived that a personal interest might unduly influence them in procurement matters. A Councillor must comply with the primary principle of councillor conduct and avoid conflicts between his or her public duties as a Councillor and his or her personal interests or obligations (Section 76BA of the Act). Councillors must formally disclose any conflict of interest (section 79 of the Act).

All Council officers have a responsibility to act impartially and with integrity, avoiding conflicts of interest at all times. Under section 80C of the Act, Council officers must disclose a direct or indirect interest as soon as practicable. Council officers are prohibited by the Act from exercising delegated powers, duties or functions if a conflict of interest exists.

Conflict of interest refers to situations in which personal interests (which may include financial interests) may compromise, or have the appearance of, or potential for, compromising professional judgement and integrity and, in doing so, the best interests of the Council. For example, a Councillor or Council officer may have a conflict of interest where they:

• have a financial interest (e.g. holding shares or options) in the company of a potential tenderer;

• have a financial or personal interest in the outcome of any tender evaluation process;

• receive any kind of monetary payment or non-monetary gift or incentive (including hospitality) from any tenderer or its representatives;

• have a close member of their family (including defacto or unmarried partners) or personal friends who have a close relationship or a financial or personal interest in the outcome of a tender evaluation process; or

• have a close relationship (current or historical) with any potential tenderer.

All Council officers and external representatives for project stakeholders and service partners involved in evaluating tenders or quotes are required to complete and lodge a Conflict of Interest Declaration and Deed of Confidentiality, stating that no such conflict currently exists. Disclosure of any actual or potential conflict of interest must also be made if it emerges during the course of the evaluation. Declarations must be signed prior to the commencement of the evaluation of the respondents’ submissions.

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Conflict Relationship with Organisation

Where a Council officer is to be engaged for works and/or services beyond their normal employment arrangement with Council, a written quote must be obtained and approval to accept the quote obtained from the Chief Executive Officer or Director. Communication

During the tender or quote process, all prospective tenderers must be afforded an equal opportunity to tender or quote. Impartiality must be maintained throughout the procurement process so that it can withstand public scrutiny. Council officers should ensure all potential and current suppliers, contractors and tenderers receive fair and equal access to the same information during the tender or quote process. Council officers should not engage in communication with potential or current suppliers, contractors or tenderers either prior to or during the tender or quote process, where that communication may provide or could be seen to provide an unfair advantage to that party. 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. At no stage should any discussion be entered into with any tendering party or its representative or agent that could have potential contractual implications prior to the contract approval process being finalised, other than authorised pre-contract negotiations. If Council officers become aware of any inappropriate and/or undocumented communication they are to immediately report this to the Procurement Team or the relevant Director. Where a Probity Advisor or Probity Auditor is engaged, they must also be briefed on the matter. Council officers must engage the Procurement Team to coordinate all communication with potential respondents, both prior to and during the tender process for procurements over $100,000 including GST in value.

Confidentiality / Disclosure of Information

Confidentiality of information provided by existing and prospective suppliers must be maintained at all times, particularly commercially sensitive material such as (but not limited to) prices, discounts, rebates, profit, manufacturing and product information. Commercial in Confidence information received by Council must not be disclosed and is to be stored in a secure location. Councillors and Council officers are to protect the information, by refusing to release or discuss information to the extent that it is Commercial in Confidence. All Council officers involved in evaluating tenders or quotes are required to complete and lodge a Deed of Confidentiality. The Procurement Team and other Council officers that have access to proprietary information are responsible for ensuring that information is maintained in compliance with the relevant legislation and Council policy. Records must be kept for each tender or quote documenting key issues raised in discussions or meetings with respondents. These records must be entered in Council’s electronic document records management system. For all procurements over $100,000 including GST in value written records should be managed by the Procurement Team.

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All tender related documents must be stored securely with access appropriately restricted.

Probity Risks

Potential probity risks can arise during the tender or quote evaluation. This may occur when;

• evaluations span an extended period of time;

• there are significant changes to detail contained in the original specifications;

• there has been a deviation from evaluation criteria or the method of evaluation contained within the tender or quote documentation;

• information has been provided to one or more respondents but not to all;

• acceptance of significant changes to proposals originally submitted by respondents including pricing;

• there is a likelihood that respondents have gained information inappropriately; or

• the composition of the tender evaluation panel has changed.

The Procurement Team is responsible for assessing probity risks in the above or similar circumstances, and for escalating any concerns to the Director Corporate. Each case is to be assessed on its individual merit. Probity risks may necessitate risk mitigation strategies, including cancelling and re-advertising tenders or quotes, to ensure compliance with probity requirements.

Tender Evaluations

The tender evaluation process must be robust, systematic and unbiased. Tender evaluations will be conducted in accordance with the Procurement Team’s documented processes and procedures. Late tenders must not be accepted under any circumstances. A tender evaluation panel must be appointed to evaluate tenders for all procurement over $150,000 including GST in value for goods or services and over $200,000 including GST in value for works including GST. The tender evaluation panel is to comprise of at least three members. At least one of the members of the tender evaluation panel must have specialist expertise relating to the goods, services or works being procured. If the required level of specialist expertise cannot be sourced from within Council, the tender evaluation panel may use an external specialist to assist during the evaluation process. For procurement over $1,000,000 including GST the tender evaluation panel must include the relevant Manager or in the absence of the relevant Manager, the relevant Director, or another Manager appointed by the relevant Director. Representatives of external stakeholders and service partners may be appointed as independent tender evaluation panel members. The Procurement Team is not part of the tender evaluation panel and has no role in selecting the successful respondent.

Once a preferred tenderer is selected negotiations can commence to obtain the optimal solution and commercial arrangements, provided they remain within the intent and scope of the tender. Such negotiations must be exhausted with one tenderer before beginning with another tenderer. The chairperson of the tender evaluation panel must maintain detailed records of all Commercial-in-Confidence negotiations, if any occur.

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Tender evaluation panels must produce a written report of their evaluation using the prescribed template of Council. All panel members must sign off on the completed tender evaluation report and note any areas of concern they may have.

2.8 Risk Management / Occupational Health and Safety

Council will manage all aspects of its procurement process in accordance with its Risk Management Policy and any relevant legislation, policy or standards. Risk management practices apply to all stages of procurement and must be planned and carried out in a manner that will prevent, withstand and recover from interruption the supply of goods, services and works to Council. The provision of goods, services and works by contract potentially exposes Council to risk. This risk exposure will be minimised by measures such as;

• standardising contracts to include current, relevant clauses;

• requiring security deposits where appropriate;

• referring specifications to relevant experts;

• requiring contractual agreement ensuring contracts are signed by all parties before allowing the commencement of work;

• use of or reference to relevant law, policy and standards; and

• effectively managing the contract including monitoring and enforcing performance.

During the preliminary planning stage, major procurement projects, which includes procurement greater than $150,000 including GST for goods and services or $200,000 including GST for carrying out of works, or those projects of lesser value but of a complex nature will undergo a formal documented Risk and Complexity Assessment. All contractors, suppliers and service providers must comply with all legislative and regulatory requirements, particularly in relation to Occupational Health and Safety. This is a mandatory requirement and non-compliance will disqualify prospective contractors, suppliers and service providers.

2.9 Internal Control and Internal Audit

Council will maintain a framework of internal controls over procurement processes that will ensure;

• more than one person is involved in and is responsible for each transaction;

• transparency in the procurement process;

• a clearly documented audit trail exists for procurement activities;

• appropriate authorisations are obtained and documented; and

• systems and controls are in place for appropriate monitoring and performance measurement.

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2.10 Methods of Procurement

2.10.1 Approved Methods Council’s standard methods for purchasing goods, services and works will be by;

• Petty Cash;

• Corporate Credit Card;

• Quotes;

• Tender;

• Expressions of Interest;

• Local Government Supply Contracts / Purchasing Schemes and State Government Supply Contracts.

2.10.2 Determining the appropriate method of Procurement The following table documents the appropriate procurement method to use for different levels of expenditure. When estimating the likely value of any procurement, the total purchase or acquisition cost, inclusive of GST, is calculated as the total cost to be incurred over the whole term of any engagement, including options for extension for the supply of a service, goods or works (i.e. not the cost per annum). Tenders must be invited for all high-risk procurement irrespective of the procurement price.

Market Engagement Agreement Record Keeping

Minimum Requirement

(exemptions apply see clause 2.4)

Purchase Order

(exemptions apply see

clause 2.11)

Council Contract

*SS/PS Contract

Details

$0 to $2,000 One (1) verbal quote Required Not

Appropriate Not

Appropriate Receipt of purchase.

$2,001 to $10,000

Two (2) verbal quotes Required Not

Appropriate Not

Appropriate

Verbal Quote Form must be stored in the financial

system.

$10,001 to $50,000

Two (2) written quotes Required Not

Appropriate Not

Appropriate

Records of quotes and Written Quote Form (50k)

must be stored in the financial system.

$50,001 to $100,000

Three (3) written quotes Required ^Required for

Strategic procurement

Yes

Records of quotes and Written Quote Form

(100k) must be stored in the financial system.

$100,001 to $150,000

(Goods and Services) or

$200,000 (Works)

Public RFQ (In partnership with the

Procurement Team) Required Required Yes

In accordance with the Procurement Manual

procedures.

> $150,000 (Goods and Services) or

$200,000

Public RFT (In partnership with the

Procurement Team) Required Required Yes

In accordance with the Procurement Manual

procedures.

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*SS/PS Contract: State Supply Contract / Purchase Scheme Contract (when available and appropriate) refer to clause 2.16.

^See clause 2.8 – Risk and Complexity Assessment

For the purpose of clause 2.10.2 the expenditure level for;

• single one-off purchases shall be the gross value of, or estimated value of the purchase inclusive of GST;

• multiple purchases shall be the gross value of, or estimated gross value of all items to be purchased inclusive of GST;

• ongoing purchases over a period of time shall be the gross value, or estimated gross value over the term of the contract including options for extension inclusive of GST; and

• the life of a contract or gross value of a contract over the contract term, including options, inclusive of GST.

Council officers must not divide a particular procurement or procurement phase into separable parts or use a particular method for calculating the estimated total value for the purpose of circumventing the requirements of this policy or the Act.

2.11 Purchase Orders

A purchase order is a legal document issued by Council to a supplier indicating the type, quantities and agreed prices for products or services. If the supplier does what is asked of them in the purchase order, then Council is committed to pay the supplier. Purchase orders are required for all purchases except as follows;

• purchases up to the value of $75 inclusive of GST and claimed via Petty Cash;

• purchases made using Corporate Credit Cards (refer to clause 2.12 and Council’s Credit Card Policy); and

• exemptions as approved by the Chief Executive Officer from time to time, listed in the Procurement Exemption List.

Where a purchase order is required it must be raised prior to the purchase being made unless the purchase is a result of an emergency situation (refer clause 2.4.1). In the event of emergency or exceptional circumstances the responsible officer must exercise discretion to ensure the appropriate documentation for procurement is completed as soon as practicable. Purchase orders for the procurement of goods and or services requiring a verbal or written quote must be accompanied by the relevant quote form, with copies of written quotes to be attached to the purchase order in the financial system. All purchase orders must be approved by Council officers within their financial delegation. Purchase orders in excess of an approved financial delegation must be endorsed by an officer with the appropriate authority.

(Works)

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2.12 Corporate Credit Cards

Corporate Credit Cards are appropriate for low risk purchases. Unless extenuating circumstances exist, Council will use Corporate Cards for any purchases under $50 excluding GST. Corporate Credit Card holders are responsible for the security of their card, using the card appropriately and in compliance with applicable expenditure limits. Credit Card holders must report any non-compliance to policy immediately to their Director. Officers are also obliged to complete a reconciliation of the monthly transaction statement for their card (refer to Credit Card Policy).

2.13 Market Engagement

The need to seek verbal or written quotes must be determined in accordance with clause 2.10.2. A formal tendering process may take place if it is considered that the public advertising of the tender and a more formalised process would provide the best outcome for Council.

2.13.1 Verbal Quotes Quotes must be sought in accordance with clause 2.10.2 and are to be recorded by the Council officer who is making the purchase. When one verbal quote is required the receipt of purchase is sufficient for audit purposes. When obtaining two verbal quotes, the process must be recorded using the Verbal Quote Form. The completed Verbal Quote Form is to be recorded in accordance with clause 2.10.2. 2.13.2 Written Quotes A minimum number of written quotes must be sought in accordance with clause 2.10.2. When obtaining written quotes, the process must be recorded using the Written Quote Form. Should Council go to the market and find that the minimum level of quotes cannot be sought or obtained (for instance, in the event of a lack of suppliers), the Council officer should endeavour to obtain as many quotes as possible. In this instance, the relevant Director or Chief Executive Officer must approve the purchase prior to a purchase order being raised, noting on the Written Quote Form that all procurement prospects have been investigated.

The following thresholds prescribe the action to be taken in this instance;

• expenditure range $25,001 to $75,000 including GST - as per the appropriate financial delegations and Director approval; and

• expenditure range $75,001 to $100,000 including GST - as per the appropriate financial delegations and Chief Executive Officer approval.

2.13.3 Expressions of Interest (EOI) The aim of an Expression of Interest process is not to elicit tenders, but rather to assess the capacity of the respondents to undertake the work or project, or to pre-qualify the respondents for the Request for Tender (RFT) stage. The Procurement Team will undertake the EOI process in partnership with the responsible Council officer.

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An EOI is a two-step process. When the thresholds are met an EOI process does not replace the need to call a tender. It simply precedes the calling of tenders and generally seeks to constrain the number of, or focus the response of tenders received. An EOI may be used in circumstances where;

• there is likely to be many tenderers or tendering will be costly or the procurement is complex; or

• there is uncertainty as to the interest of suppliers or vendors to offer the potential products or services or to undertake the proposed work.

By its very nature the specifications for the goods, services and works used for a call for EOIs may be brief and less detailed than those that might be used for a RFT.

The EOI stage cannot be used to award a contract. 2.13.4 Requests for Tenders (RFT)

The need for a public tender process will be determined in accordance with the expenditure level thresholds outlined in clause 2.10.2. and requirements under S.186 of the Act. Where the nature of the procurement requirement and the characteristics of the market are such that the public tender process would lead to a better outcome, public tenders may be called for the purchase of goods, services and works for which the estimated expenditure level is below the specified thresholds. When it is considered that a tender is the most appropriate method of purchase, the Procurement Team will undertake the RFT process in partnership with the responsible Council officer. Specifications used in quotes, tenders and contracts are to support and contribute to Council’s value for money objectives. Specifications aim to;

• ensure impartiality and objectivity;

• encourage the use of standard products;

• encourage sustainability;

• eliminate unnecessarily stringent requirements; and

• specify the technical standards required.

2.13.5 Supply Contracts and Purchasing Schemes In addition to State Purchase Contracts (SPC) approved by the Minister, supply contracts from specialist local government group purchasing schemes can be utilised. These purchasing schemes must utilise public tenders to establish supplier contracts, which are accessible to all members of the respective schemes. Council officers may use any supplier contracts established by Procurement Australia or Municipal Association of Victoria (MAV) Procurement for purchases within the thresholds prescribed in clause 2.10.2.

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Procurement through an SPC or supplier contract must still be in accordance with the financial delegations of Council. 2.13.6 Panel of Suppliers

A panel of suppliers is the result of a Request for Tender process, where a number of suppliers are appointed through a contract or deed of standing offer. In a panel arrangement, a deed of standing offer or a contract exists between the Council and each supplier on the panel detailing;

• the type of goods or service the supplier will provide;

• the set/indicative price for the goods or service; and

• the manner which Council will procure the goods or service from the supplier, including any process for competition between panel members, where appropriate.

Once a panel of suppliers is established, procurement can then be undertaken directly with any supplier on the panel. A panel cannot be used to purchase goods, services or works that fall outside the scope of the contract or deed. Panels are established at a point in time. Once established, the opportunity for additional suppliers to join the panel will be limited. If Council requires additional panel members, an opportunity to join an existing panel may be advertised through the Request for Tender process.

2.14 Multi-Use Lists (MUL)

The MUL is a facility for registering interested suppliers prior to conducting a procurement process. The process of establishing a MUL is not a procurement. The MUL can grow as large as the number of suppliers who request to join the list and meet the stated conditions for participation and inclusion. The Procurement Team maintain the MUL and suppliers can join the MUL continuously. No other evaluation of the supplier’s abilities or relative value is undertaken. When conducting a procurement from an MUL the procurement process must be in accordance with clause 2.10.2.

2.15 Build and maintain supply relationships

Council recognises that in order to achieve sustainable value, appropriate relationships must be developed and maintained with suppliers.

2.15.1 Developing and Managing Contractor Relationships

Council acknowledges the importance of effective and open working relationships with its suppliers, and is committed to the following;

• managing existing suppliers, via the appropriate performance review programs and measurements to ensure the benefits are delivered;

• maintaining Multi-Use Lists; and

• supporting new suppliers who wish to do business with Council.

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2.15.2 Supply Market Development

A wide range of suppliers should be encouraged to compete for Council works and the provision of services. Types of organisations that offer business diversity include;

• green suppliers;

• social enterprises;

• ethnic and minority business (including Indigenous business); and

• voluntary and community organisations.

2.15.3 Communication

External communication is very important in ensuring a healthy interest from potential suppliers and partners to Council. Council’s website will be regularly updated to provide;

• a list of existing and forthcoming contract opportunities, available on the East Gippsland eTender Portal;

• guidelines for doing business with Council;

• standard documentation used in the procurement process; and

• links to other relevant sites.

3. RESPONSIBILITY FOR IMPLEMENTATION AND COMPLIANCE

The positions below are responsible for the implementation and compliance monitoring of the policy;

Party / Parties Roles and responsibilities

Chief Executive Officer Ensure overall organisation compliance with the policy.

Authorise activation of emergency procurement provisions.

Directors Ensure compliance with the policy by all Council officers under their supervision.

Director Corporate Overall responsibility for policy implementation and compliance.

Managers Ensure compliance with the policy by all Council officers under their supervision.

Manager Administration Services Responsible for review, updating and implementing policy.

Procurement Team Primary source for procurement advice, training and guidance.

All Council officers have an obligation to report occurrences of non-compliance with Council policy. Should the policy not be adhered to, it must be reported immediately to the Director Corporate. Any complaints received by Council regarding the probity of a procurement process will be handled in accordance with Council’s Customer Response Policy.

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4. SCOPE OF POLICY

This policy applies to the procurement of goods, services and the carrying out of works for any value commencing from when Council has identified a need for procurement. This policy applies to all contracting and procurement activities at Council. It is binding upon Councillors, Council officers and all persons undertaking procurement on Council’s behalf, who are accountable for complying with all relevant procurement, legislative and policy requirements.

5. REFERENCES / ASSOCIATED DOCUMENTS

This policy is consistent with Council Plan 2017-21 Good Governance goal – “East Gippsland Shire is inclusive, engaged and open”. This policy is made under section 186A of the Local Government Act 1989. The Act is the key legislative framework that regulates the process of all local government procurement in Victoria.

The policy forms part of Council’s overall procurement policies and guidelines, and should be read in conjunction with the following;

• Local Government Procurement Best Practice Guidelines 2013

• MAV Procurement Contract Management Guidelines

• Social Procurement: A Guide for Victorian Local Government

• Competition and Consumer Act 2010

• Security of Payments Act 1999

• East Gippsland Shire Council Risk Management Policy

• East Gippsland Shire Council Fraud and Corruption Control Policy

• East Gippsland Shire Council Staff Code of Conduct

• East Gippsland Shire Council Financial Delegation Register

• Instruments of East Gippsland Shire Council Petty Cash Policy

• East Gippsland Shire Council Credit Card Policy

• East Gippsland Shire Council Cash Handling Policy

• East Gippsland Shire Council Procurement Multi User List

• East Gippsland Shire Council Procurement Exemption List

6. PRIVACY AND HUMAN RIGHTS CONSIDERATION

All personal information collected by East Gippsland Shire Council in connection with procurement activities will be handled in accordance with all applicable privacy legislation and will be used only for the purpose of investigating procurement matters. The procurement policy has been assessed as compliant with the obligations and objectives of the Victorian Charter of Human Rights and Responsibilities Act 2006.

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7. DEFINITIONS AND ABBREVIATIONS

Term Meaning

Act (The) Local Government Act 1989 (as amended)

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.

It is information provided for a specific purpose that is not to be used for any other purpose than set out in the initial document.

Conflict of Interest

According to the Local Government Act, a conflict of interest may arise if the relevant Council officer has a direct or indirect interest in the matter at hand. In the case of procurement, if there is a reasonable likelihood that a Council officer may personally benefit from a decision made in their official capacity, then a conflict of interest exists.

Contract

An agreement between two or more authorised persons on behalf of their organisations to perform or not perform a specific act/s that is enforceable in law. A contract may be verbal or written or inferred by conduct.

Contract Documents Documents construed together as an instrument of contract. They may include terms and conditions, specifications, drawings, tender responses, delivery schedules and payment schedules.

Contract Management

The process that ensures both parties to a contract 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.

Council East Gippsland Shire Council.

Councillor Person who has been elected to the office of ‘Councillor’ of East Gippsland Shire Council.

Council Officer A current member of East Gippsland Shire Council staff with the authority to engage in activities on behalf of Council.

Evaluation Criteria

The standard used to evaluate compliance with Council’s requirements and to assist in the ranking of tender responses. Evaluation criteria must be clearly stated in the request documentation.

Expression of Interest

A response to an invitation from Council or Council officers seeking submissions, by prospective suppliers wishing to engage in procurement with Council. The list of potential suppliers who have provided expressions of interest may be used as the basis for conducting a select tender process.

Local Content Defined as labour, materials, plant and supervision which are sourced from within the East Gippsland Shire region.

Probity

In the context of a procurement process probity is a defensible process able to withstand internal and external scrutiny – one which achieves both accountability and transparency, providing tenderers with fair and equitable treatment.

Probity Advisor

A contractor with extensive experience and skills in procurement who may develop probity plans and other key documents and provide advice and training to Council officers on probity principles and guidelines.

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Term Meaning

Probity Auditor

An external consultant who provides Council with an independent assessment of probity requirements within a contract. This contractor is required to authorise compliance with the probity requirements of a contract.

Procurement

Procurement is the process of acquiring goods, services and works. It can include planning, design, standards determination, specification writing, preparation of quote and tender documentation, selection of suppliers, financing, contract administration, disposals and other related functions. This process spans the whole life cycle from initial concept through to the end of the useful life of an asset (including disposal) or the end of a contract.

Social procurement The use of procurement processes and purchasing power to generate positive social outcomes without losing sight of probity and value for money.

Specification

The statement which clearly and accurately describes the essential requirements for goods, services or works to be supplied. It may include the procedures by which it will be determined that the requirements have been met and performance required under contract.

Sustainability Activities that meet the needs of the present without compromising the needs of future generations.

Tender An offer in writing to supply goods and/or services, usually submitted in response to an invitation such as a Request for Tender.

Tender Process The process of inviting parties to submit a quote or tender by public advertisement, followed by evaluation of submissions and selection of a successful bidder or tenderer.

Treatment of GST All monetary values stated in this policy include GST; unless specifically stated otherwise.

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.

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8. SUPPORTING PROCEDURES / GUIDELINES

8.1 Purchase Order or Contract

The following checklist below is a guide to assist in selecting the best procurement method. It is important to note that the value of the procurement is only one indicator and is not the only item to consider when purchasing.

PURCHASE ORDER CONTRACT

Single low value purchases For periodic supply arrangements, consultancies, large and/or complex contracts are invited by means of a Quote or Tender process

Small commercial risk Can be associated with large commercial risk, regardless of value

Off the shelf items Purchasing arrangements requiring service deliverables technical specifications or are complex

Shall be used for standalone commitments involving professional indemnity, public liability insurance, contractors’ all risk insurance etc. and OH&S issues

Transaction often covered by Statute Law such as the Sale of Goods Act

Transaction covered by the Common Law of Contract and associated Conditions of Contract

For single payments For several progress payments

Used for commitments <$100,000 including GST

Must be used for purchasing commitments >$100,000 including GST

8.2 Conditions of Contract

Council uses industry standard conditions of contract as follows;

CONTRACT TYPE DESCRIPTION OF USE

AS (Australian Standard) 4000 – General Conditions of Contract

AS4000 General Conditions of Contract: comprises general conditions of contract suitable for a wide variety of construction and building contracts including civil, mechanical, electrical and other types of engineering contracts.

AS 2124 Comprises a single set of General Conditions of Contract suitable for a wide variety of civil engineering, building, electrical and mechanical engineering and other types of construction contracts.

NPWC – Vic Roads General Conditions of Contract

This contract may be utilised by Council for Bridge and Civil Construction Projects.

AS4906 – Principal Administered AS4906 Minor Works Contract Conditions: applies to construction projects only of a simple nature. It is not suitable for projects of a complex or long-term nature, or where a bill of

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CONTRACT TYPE DESCRIPTION OF USE

quantities has been prepared. These contract conditions recognise that the Principal is administering the contract.

AS4902 AS4902 General Conditions of Contract for Design and Construct: specifies general conditions of contract suitable for the design and construct project procurement method. The Standard provides for different variations of the design and construct contract, namely design development and construct, design, novate and construct

AS4919

AS 4919 General Conditions of Contract for Asset Service and Maintenance arrangements suitable for Council’s lump sum maintenance contracts.

AS 4920 AS 4920 Principals version of General Conditions of Contract for Asset Service and Maintenance arrangements suitable for Council’s lump sum maintenance contracts.

AS4122 AS4122 General Conditions for the Engagement of Consultants used when engaged by a form of agreement or purchase order

GITC - General Information Technology Conditions of Contract

Used for Information Technology contracts

Purchase order Conditions Used for small goods and services contracts that are engaged by purchase order. These are relevant for higher value purchase orders that are not covered by Manufacturers warranties.

Hardcopies of this document are considered uncontrolled please refer to the East Gippsland Shire Council Website, HIVE intranet site or ECM for the latest version