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Preschool and School Staff : https://ssonet.sa.edu.au/procurement/

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Presentation on theme: "Preschool and School Staff : https://ssonet.sa.edu.au/procurement/"— Presentation transcript:

1 DECD Procurement Overview John Scalzi, Assistant Director DECD Procurement Unit
Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ Corporate, Regional Office and Families SA Staff:

2 Procurement Definition
Procurement… Purchasing… “The process by which a company (or organisation) contracts with third parties to obtain goods and services required to fulfil its business objectives in the most timely and cost effective manner.” (source unknown) Exception is works >$165,000 (Inc GST) and government office accommodation including leasing and fit out which is covered by similar processes undertaken by Building Management DPTI. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

3 Government Procurement Requirements
State Procurement Board (SPB) ALL DECD Staff School Governing Councils/School Councils Pre-School Management Committee Ministerial Statutory Authorities Agency Chief Executive Accredited Purchasing Unit (APU) Senior officers oversee and establish policies, approve higher value/complexity purchases. DECD Procurement Unit Supports APU and sites. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

4 Government Procurement Requirements
Procurement Principles Value for money Not necessarily lowest price. Assessment of quality, service, delivery, backup and support, risks, total life-cycle costs Ethical and Fair Treatment of All Participants Open and fair competition. Equal opportunity, access for new entrants, specifications are not biased, no unnecessary burden on supply market Probity, Accountability and Transparency Proper conduct. Potential or actual conflicts of interest sought, the process can stand up to public scrutiny, tenders evaluated according to published criteria, how will outcomes & decisions be disclosed. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

5 DECD Spend Profile 2012 Expenses $’000 Employee benefits expenses
1,975,159 Supplies and services 601,947 Grants and subsidies 109,172 Depreciation and amortisation expense 106,108 Borrowing costs 23,239 Intra government transfers 7,219 Other expenses 43,737 Source: 2012–13 Budget Paper 4, Agency Statements Volume 1 Published May 2012 DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

6 DECD Spend Profile 2012 DECD Procurement Unit
Supplies and services provided by entities external to the SA Government $,000 Minor works, maintenance and equipment 88,170 Printing, postage and consumables 76,430 Cleaning 34,840 Child care, school card and other allowances 68,430 Student learning materials 27,782 Vehicle and travelling expenses 26,693 Utilities 24,159 Contractors and other outsourced services 24,865 Bus contractors 20,779 Excursions and camps 18,561 Cost of goods sold 12,324 Computer communications 12,667 Telecommunications 14,203 Training and development 9,780 Rentals and leases 4,295 Copyright 4,186 Security 857 Other 59,014 Total supplies and services – non-SA Government 532,045 DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

7 Procurement Planning Process
Business case developed to establish Funding approvals Private treaty, government contracts, in source Market conditions, competition or sole supplier When are the goods or services required? Procurement plan development and approval to processed Undertake procurement process. Contract Establishment and Management Need identified DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

8 Procurement Strategies
Vulnerability (Risk) Long Term Contracts Develop relationships with key suppliers Specifying appropriate standards and levels Exploring alternate solutions/suppliers and services Intensive market research Supplier performance monitoring Negotiated and managed relationships Partnering (product and service integration) Contingency plans Expenditure (Cost) Managed supply and distribution arrangements Standing offer arrangements Devolved purchasing Vendor managed stock Automated payment systems Short to medium term contracts Active sourcing Promoting competition Market research Market exploitation DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

9 DECD Procurement Framework
The Procurement Framework outlines the appropriate practices that are to be followed in accordance with government requirements. The Framework: Identifies responsibilities and delegations Defines the process for specific thresholds Details the procurement process – eg: Acquisition planning, tender development, market approach, evaluating tenders, negotiating, purchase recommendation, contract development and contract management DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

10 Financial vs Purchase Delegations
Expenditure Authorisation Purchase Authority From Public Finance & Audit Act (refer to Treasurer’s Instruction 8) From State Procurement Board Involves managing budgets Establishing contracts or purchase goods/services No negotiation with suppliers to commit to purchase Supplier negotiations required to obtain value Expenditure commitment via brief / requisition Allowed to sign purchase orders DECD Finance and Investing manage instrument of financial delegations Procurement Unit manges procurement delegations DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

11 Financial Authorisations in DECD
Delegate Threshold Cabinet Approval $11,000,000 plus Level 1 - Chief Executive, Deputy Chief Executive/Chief Operating Officer and Deputy Chief Executive, Child Safety Less than $11,000,000 Level 2 – Head of Schools, Head of Early Childhood Development, Head of Policy and Communications, Executive Director, Families SA, Guardian, Office of the Guardian for Children and Young People Less than $1,100,000 Level 3 – Executive Director, Aboriginal, Student and Family Services, Executive Director, Preschool and School Improvement, Executive Director, Teaching and Learning, Executive Director, Human Resources and Workforce Development Less than $550,000 Level 4- Central Office Directors/Regional Office Directors/Principals and Preschool Directors Less than $220,000 Level 5– Central Office Assistant Directors, Regional Assistant Directors Less than $110,000 Level 6-9 Further specific delegates up to Level 9 are listed in the Specific Financial Authorisation Register. The Register also specifies particular delegations for particular activities such as expenditure of grant funding. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

12 DECD Purchase Delegations
Delegate Purchase Delegation – (Includes GST) Chief Executive (1) $4.4 million Chair APU (1) Assistant Director, Procurement and Contracting (1) $220,000 Principals and Preschool Directors (1)(2) Work Site Financial Delegates (where not specified above) Commensurate with financial delegation up to a maximum of $22,000 Purchase Card Holders Up to designated transaction limit Petty Cash Where contracts exist, the purchase authority is up to value of contract and within the expenditure approval. Principals / Preschool Directors may sub-delegate their purchase authority to their key staff if required providing the sub-delegations are ratified and minuted by the school’s Governing Council. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

13 Procurement Methods Market Approach
Request for Quote (RFQ) – formal and informal Expression of interest (EOI) – two stage process Request for Tender (RFT) Request for Proposal (RFP) By way of: Direct negotiation Selective tender Public tender DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

14 DECD Purchasing Considerations
For procurements up to and including $22,000 a minimum of one verbal or written quote is required. For procurements greater than $22,000 and up to and including $220,000 a minimum of three written quotes (where possible). Procurements over $220,000 must be via a public tender call unless approved otherwise by the Accredited Purchasing Unit. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

15 Main Documents / Steps for Major Procurements
Acquisition Plan – Details the procurement strategy to be followed re the market approach, propose Evaluation Criteria and the findings of market research. Specifications – A document which clearly and accurately describes the essential requirements for goods and/or services required. Tender Document – Comprises Instructions to Tenderers, Specification, Response Schedule and draft contract. The tender forms the basis of the contract and accurately reflects the scope of work and the financial, contractual and time parameters. The tender process should be structured in such a way that it: Gives all tenders opportunity to submit offers based on similar information, and; Facilitates the evaluation process and selection of the best value for money option. Tender Evaluation Plan – identifies the conduct of the evaluation including the process and Evaluation Team responsibilities which include deciding the relative importance of each criteria and assigning weighting to each criteria. Commercial and Contractual Negotiations and Contract Establishment - A Negotiation Plan is required when negotiating with tenderers to address any outstanding commercial and/or contractual issues and to seek best and final offers prior to establishing the contract. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

16 Across Government Contracts
A number of Across Government Contracts have been established. Most of these contracts mandated for Government Agencies. Some of the current contracts include: Auction Services Stationery and Related Products Audit and Related Services Software Electricity Standard Personal Computer/Notebooks/Servers Fuels and Lubricants Temporary Staff Placement Services ICT Services Mobile Phones Travel Management Services Contract Natural Gases Document Output Devices (Photocopiers and Printers) Additional information about all current contracts can be found at the DECD Procurement Unit’s web pages on SSONet or In.DECD. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

17 DECD Purchasing Considerations
Consultancies and Contractors Consultant = engaged for a specified period to carry out a task that requires specialist skills and knowledge not available in the public authority. Contractor = engaged for specified period to carry out a defined task in circumstances in which the engagement of a person under normal conditions is not a feasible alternative. Note: Engagement of Consultants must be approved by the CE or DCE. Need to establish terms and conditions for service agreements. In addition, Vacancy Management Approval is currently required for the engagement of contractors and consultants. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

18 Leasing The Department’s position regarding leasing is that it should not be considered unless it is determined to be the only viable method of procurement (property leasing and vehicle leasing through the mandated across government fleet arrangements are exempt from this directive). Worksites must not enter into leasing arrangements unless approval has been granted by Assistant Director, Corporate Services and the Procurement Unit. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

19 Leasing Risks In most cases the whole of life cost of leasing is significantly greater over the life of the asset than if purchasing outright. Leasing contracts are often onerous shifting risks from the vendor to the lease holder and can be difficult and/or expensive to terminate. Often the asset does not transfer ownership to the recipient at the end of the contact and has to be returned to the vendor. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

20 Lease Risk Example 1 Multifunctional Device 1 – Black & White Photocopier Options:
Purchase Outright To purchase MDF outright the costs of this option would include the purchase price of the MDF being $6, plus the copy cost of $ per copy (there is no minimum number of copiers per month under this agreement). Whole of life cost calculation over 5 years: Purchase Cost + Copy Costs Leasing To lease the MFD the costs of this option would include a monthly fee of $ for a fixed 5 year period plus the copy cost of $ per copy (as with purchasing outright, there is no minimum number of copies per month). Whole of life cost calculation over 5 years: Total Lease Cost + Copy Costs Print Management Rental Plan To take the MFD under a print management rental plan, there is a minimum payment required of $ per month (based on a minimum of 10,000 copiers per month x $ per copy) fixed for 5 years - $15, therefore even if you do less than 10,000 copiers per month, you must still pay for the minimum of 10,000 copies. Whole of life cost calculation over 5 years: Monthly Plan Rate x Plan Period + any additional copies over the minimum per month. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

21 Lease Risk Example 1 (Continued)
Table 1 Options for Procuring Photocopier Options Purchase Cost Individual Copy Cost Monthly Lease/Plan Rate Lease/Plan Period (months) 1Total Lease Cost over 5 year period Whole of life costs over 5 year period based on number of copies made per month  5 000 10 000 15 000 Purchase $6,387.70 $ n/a $9,357.70 $12,327.70 $15,297.70 Lease $155.10 60 $9,306.00 $12,276.00 $15,246.00 $18,216.00 Print Management Plan $ 2 $250.80 $15,048.00 $22,572.00 1 Total Lease Cost calculated using ‘monthly lease rate’ times ‘lease period’. 2 Minimum cost per month based on copies per month as per agreement Please Note: Although the financial implications have been calculated, it is important to note there are other potential lease risks which may apply. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

22 Lease Risk Example 2 Multi-Functional Device 2 - Colour Photocopier Options:
*NB: Multi-Functional Device 2 (Colour Photocopier) consists of both a colour and black and white component; However, comparisons outlined below are based on the MFD being used only to produce Black and White copies. Purchase Outright To purchase MFD outright the costs of this option would include the purchase price of the MFD ($11,907.50) plus the copy cost of $ per copy for black & white copying (no minimum copies under this agreement). Whole of life cost calculation over 5 years: Purchase Cost + Copy Costs Leasing To lease the MFD the costs of this option would include a monthly fee of $ for a fixed 5 year period plus the copy cost of $ per copy for black & white copying (as with purchasing outright, there is no minimum copy charge per month for this option). Whole of life cost calculation over 5 years: Total Lease Cost + Copy Costs Print Management Rental Plan To take the MFD under a print management rental plan, the minimum payment required would be $ per month (based on a minimum of 10,000 copies per month specified in the agreement x $ per copy) fixed for 5 years - *$21,780 - therefore, even if you do less than 10,000 copies per month, you must still pay for the minimum of 10,000 copies. Whole of life cost over 5 years: Monthly Plan Rate x Plan Period + any additional copies over the minimum DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

23 Lease Risk Example 2 (Continued)
Table 2 Options for Procuring Colour Photocopier Options Purchase Cost Individual Copy Cost Monthly Lease/Plan Rate Lease/Plan Period (months) 1Total Lease Cost over 5 year period Whole of life costs over 5 year period based on number of copies made per month  5 000 10 000 15 000 Purchase $11,907.50 $ n/a $14,547.50 $17,187.50 $19,827.50 Lease $283.80 60 $17,028.00 $19,668.00 $22,308.00 $24,948.00 Print Management Plan $ 2 $363.00 $21,780.00 $32,670.00 1 Total Lease Cost calculated using ‘monthly lease rate’ times ‘lease period’. 2 Minimum cost per month based on copies per month as per agreement Please Note: Although the financial implications have been calculated, it is important to note there are other potential lease risks which may apply. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

24 Lease Risk Example 3 Multi-functional Device 2 – Colour Photocopier
*NB: Multi-Functional Device 2 (Colour Photocopier) consists of both a colour and black and white component; However, comparisons outlined below are based on the MFD being used only to produce Colour copies. Purchase Outright To purchase MFD outright the costs of this option would include the purchase price of the MFD being $11, plus the copy cost of $0.099 per copy for colour copying (with no minimum number of copies per month). Whole of life cost calculation over 5 years: Purchase Cost + Copy Costs Leasing To lease the MFD the costs of this option would include a monthly fee of $ for a fixed 5 year period plus the copy cost of $0.099 per copy for colour copying (as per purchasing outright, no minimum number of copies per month). Whole of life cost calculation over 5 years: Total Lease Cost + Copy Costs Print Management Rental Plan It is important to note that under this agreement, colour copies charged will be additional to the minimum cost of 10,000 black and white copies per month ($363.00). The black and white copy charge is incurred irrespective of whether any black and white copies were actually made. Whole of life calculation over 5 years: Rental Period (60 months) x Cost per Month ($363) + any additional colour copies DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

25 Lease Example 3 (Continued)
Table 3 Options for Procuring Colour Photocopier Options Purchase Cost Individual Copy Cost Monthly Lease/Plan Rate Lease/Plan Period (months) 1Total Lease Cost over 5 year period Whole of life costs over 5 year period based on number of copies made per month  5 000 10 000 15 000 Purchase $11,907.50 $0.099 n/a $41,607.50 $71,307.50 $101,007.50 Lease $283.80 60 $17,028.00 $46,728.00 $76,428.00 $106,128.00 Print Management Plan 2$363.00 $51,480.00 $81,180.00 $110,880.00 1 Total Lease Cost calculated using ‘monthly lease rate’ times ‘lease period’. 2 Minimum cost per month based on copies per month as per agreement Please Note: Although the financial implications have been calculated it is important to note there are other potential lease risks which may apply. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

26 Tender and Contract Timelines
Activity Comment Time (weeks) Expenditure approval Refer Instrument of delegation, Register of Financial Authorisations 2-4 Expenditure approval – Cabinet Cabinet approval above $11m (+PMG, Treasury input as appropriate) 4-8 + Develop Acquisition Plan Consider detailed strategic approach to a range of procurement issues 1-2 APU approval – Acquisition Plan Present Acquisition Plan at APU fortnightly meeting SPB approval – Acquisition Plan For procurement in excess of $4.4m – submitted through the APU Develop Tender document Develop parts A, B & C in Specification also Tender Evaluation Plan 2 Tender Call – advertise Advertise in Govt Tenders website (and other publications as required) NB: min 4 weeks required if >$551k – ref AUSFTA. Tender Evaluation At close of tender implement Tender Evaluation Plan Tender Negotiations Seek ‘best and final offers’ , clarify ambiguity etc Purchase Recommendation – APU Submit the recommendation to the APU for approval Purchase Recommendation – SPB SPB approval sought if deviation from Acquisition Plan Cabinet approval Cabinet approval may be required depending on original Cabinet submission if there is a variation in cost. 4-8 Supplier Notification Notify successful and unsuccessful tenderers Contract document finalisation Legislation and Legal Servcies to finalise negotiated contract Terms and Conditions 6-8 Contract Formalisation Sign and exchange contracts with successful Contractor Contract Implementation Notify work sites of new contract arrangements and handover for contract admin 1 Note timeframe 6 months to over 1 year + allowance for public holidays etc DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

27 Managing Procurement Summary
Contract Execution Down Stream Upstream Finalise Contract Supplier Selection Contract Management Contract Strategy Supply Planning Business Needs DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:

28 Questions? For further information contact the DECD Procurement Unit on DECD Procurement Websites: For Preschool and School Staff https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff:


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