1. Procurement – What you need to know about Procurement and Contracting Welcome back!

2. Course structure Provides an overview of the processes to undertake or manage to complete a simple procurement in DFAT. We have reviewed the legislation, policy, conformance and performance environment in which procurement is undertaken within DFAT. We will now focus on the procurement steps to be undertaken in managing a procurement process.

3. Indigenous procurement policy Procurement steps for simple procurement Record contract details and notify unsuccessful suppliers Seek approval to commit and enter into an arrangement Negotiate in-principle agreement and seek clearance Evaluate quotes and seek approval of evaluation outcome Prepare approach to market documentation Define requirements and seek approval to approach the market

4. Consultation requirements For the following types of requirements, you must consult with the following before seeking Approval to Approach the Market: CVB for all procurements that are not low risk or for procurements that are above the clearance threshold. IMD prior to approaching the market to procure information communications & technology (ICT) goods and services OPO for all construction procurement. DSB for all security equipment.

5. Specifications Specifying procurement requirements A good specification will: State the requirement clearly concisely and logically State what the item will be used for Contain enough information for suppliers to decide if they will engage, cost their bids and identify required levels of quality Identify any need to provide sample goods, trial, examination, test or document Provide equal opportunity for all potential suppliers Form the statement of work and basis of contract between DFAT and provider

6. Specifications cont. Types of specifications Functional – the proposed role or function of the product being purchased Performance – an extension to the functional requirement Technical – the physical description of the item required Material – details the physical characteristics for materials (may include Industry Standards) Exemplar – an example of a suitable product (e.g. this is what it looks like; “do you supply anything of a similar nature?”) The development of accurate, clear and concise specifications limits the likelihood of poor outcomes

7. Approach to Market methodology What are Simple Procurement Thresholds?

8. Procurement Methods Open Tender Panel / Standing Offer – created in most cases through open tender Prequalified Tender Multi-use Lists (MULs) – created through open tender and used through a prequalified tender Limited Tender Request for Tender Request for Quote Request for Information (RFI) Expression of Interest (EOI) Commonly used Approach to Market methods

9. Approach the Market – Panel options DFAT has established a range of panels to streamline purchasing for staff throughout the department. Panels: established as a result of a procurement process (open tender) Simplifies the procurement process and enables officials to purchase within the scope of the panel while still allowing for competition between panel members A Deed of Standing Offer is entered into with each supplier on the panel Out of scope goods and services cannot be acquired from the panel

10. Approach to market – panel options (cont’d). Aid Advisory Services Standing Offer (AAS) »must be used to engage internationally recruited Aid Advisors in the category of services listed unless an exemption is approved. Other DFAT panels are available for procuring goods and/or services for both corporate and aid procurements. »must be used unless an exemption is granted by the relevant delegate (as per financial delegations). Mandatory Whole of Government (WoG) Panels »Department of Finance (DoF) has mandated that all Commonwealth agencies use a range of panels for purchasing corporate items such as telecommunications, advertising, travel, stationery, legal services and ICT related goods. The full list of mandatory WoG panels is available from the DFAT procurement website or DoF website.

11. Approach to market cont. Open Tenders – over $80k ($500,00 for administered) Limited tenders – involves approaching one or more suppliers directly to submit a proposal (i.e. Request for Quote) Prequalified tenders – two-stage process / rarely used in DFAT (NOTE: a pre-qualified tender is not a Panel) Contact: contracts@dfat.gov.aucontracts@dfat.gov.au

12. Risk Management Senior managers and the accountable authority are ultimately accountable for the management of risk. It is the responsibility of all staff to undertake risk management as part of their day to day work. The CPR stipulates that risk management form an integral part of procurement planning and management. Must be embedded into procurement practices or business processes.

13. Probity Record management, meetings, reports, probity management, briefings, conflicts of interest, deeds of confidentiality Observing probity Ensure compliance with legal and regulatory requirements All suppliers are treated equally, rules applied consistently All bids are assessed against the same criteria as per RFQ documentation Observe confidentiality Provide confidence to public and tenderer in government processes Decisions are justifiable, can withstand scrutiny by Parliament, the media and the public Defensible in court if challenged

14. Develop evaluation criteria Developed in conjunction with specifications and statement of work This is what we assess the market responses against Mandatory and desirable criteria Mandatory = a must Desirable criteria can be weighted to direct the market to focus energy on areas we consider most important Evaluation criteria must be clear! Clear evaluation criteria will enable you to differentiate between suppliers and make a VFM recommendation to the delegate in the evaluation outcome minute.

15. Develop evaluation plan How will we assess? Who will assess? Different methodologies depending on value, complexity, risk assessment Least cost – only appropriate when purchasing from re-sellers where the product and terms are the same and only difference is the price Simple technical comparison – suitable for low value/low risk activities Comparative matrix analysis – allows tabulated comparison of more complex data, often broken in to two tables (mandatory and desirable) to allow effective and transparent comparisons

16. Developing evaluation plan cont. Complex weightings and ratings – identifies mandatory and desirable criteria, attaches weightings to desirable criteria depending on priorities and risk factors within the procurement process Ratings are developed - effectively a score of how well each bidder complies with each of the weighted criteria A formula is then applied incorporating price in to the assessment

17. Develop evaluation plan cont. Contact email box identified for questions in market approach documents All questions answered in writing (both question and answer posted to Austender as an addenda if required) Clear document management and record management strategies identified Evaluation team confirmed and briefed

18. Receipt of bids Most simple bids are submitted electronically direct to requesting area. Mandatory close time Password protected Evaluation team should sign conflict of interest declarations and Deeds of confidentiality as required Probity advisor should be identified in advance if required.

19. Managing evaluation Only criteria identified in approach to market documents can be applied to bid assessments Criteria and weightings cannot be altered No missing information can be supplied by bidder after close of tenders Clarification on submitted information may be sought Responsible officer must oversee process, manage records etc. Other information may be considered such as past performance and referee reports in accordance with approach to market documentation

20. Managing evaluation When evaluation is complete, bidders can be ranked in order of merit of bid. An Evaluation Outcome Minute must be drafted for delegate approval. It should include: A summary of the bids received A summary of the evaluation process A summary of each bid assessment including reasons for excluding any bid Recommendations of preferred bidders Identification of any issues to be negotiated prior to contract signature Recommendation for the preferred supplier, setting out how the supplier provides best VFM.

21. Debrief Unsuccessful bidders must be notified and an opportunity for a debrief offered Debriefs  Must be supplied on request only after a contract is signed.  include a summary of the strengths and weaknesses of the bid and any areas of suggested improvement No information about any other bid may be given as part of this process A debrief letter template is available on the procurement intranet page.

22. Austender Gazettal DFAT is required to publish details of procurement agreements exceeding $10,000 (GST inclusive) on Austender within 42 days of the agreement signature Agreement managers must ensure that aid agreements are activated in Aidworks within seven business days of contract signature Corporate agreements must be entered in the Central Contracts Database within seven business days of contract signature Corporate agreements where goods or services are to be procured and consumed overseas are exempt from gazettal on Austender. However, details of these agreements must be entered in to the post’s contract register to enable DFAT to meet its statutory reporting obligations

23. A final word DFAT staff must ensure that all procurements are conducted in a manner that is transparent, defensible and delivers a value for money outcome in accordance with the CPRs. Further information: Simple Procurement Guideline contracts@dfat.gov.au Procurement intranet page: http://dfatintranet.titan.satin.lo/finance/procurement/Pages/Index.aspx http://dfatintranet.titan.satin.lo/finance/procurement/Pages/Index.aspx Or navigate DFAT Homepage > Finance > Procurement

24. Lessons Learnt Review your procurement process What did we do well? What would we improve on? Innovative strategies Complexities and risks encountered Document lessons learned

25. The End Thank you for your participation.