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DECD Procurement Overview John Scalzi, Assistant Director DECD Procurement Unit DECD Procurement Unit Preschool and School Staff : https://ssonet.sa.edu.au/procurement/

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Presentation on theme: "DECD Procurement Overview John Scalzi, Assistant Director DECD Procurement Unit DECD Procurement Unit Preschool and School Staff : https://ssonet.sa.edu.au/procurement/"— Presentation transcript:

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

3 Government Procurement Requirements State Procurement Board (SPB) DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: 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. ALL DECD Staff School Governing Councils/School Councils Pre-School Management Committee Ministerial Statutory Authorities

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 DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: Expenses$’000 Employee benefits expenses1,975,159 Supplies and services601,947 Grants and subsidies109,172 Depreciation and amortisation expense106,108 Borrowing costs23,239 Intra government transfers7,219 Other expenses43,737 Source: 2012–13 Budget Paper 4, Agency Statements Volume 1 Published May 2012

6 DECD Spend Profile 2012 DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: Supplies and services provided by entities external to the SA Government$,000 Minor works, maintenance and equipment88,170 Printing, postage and consumables76,430 Cleaning34,840 Child care, school card and other allowances68,430 Student learning materials27,782 Vehicle and travelling expenses26,693 Utilities24,159 Contractors and other outsourced services24,865 Bus contractors20,779 Excursions and camps18,561 Cost of goods sold12,324 Computer communications12,667 Telecommunications14,203 Training and development9,780 Rentals and leases4,295 Copyright4,186 Security857 Other59,014 Total supplies and services – non-SA Government532,045

7 Procurement Planning Process DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: Planning 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

8 Procurement Strategies DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: 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 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 Vulnerability (Risk) Expenditure (Cost)

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 DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: Expenditure AuthorisationPurchase Authority From Public Finance & Audit Act (refer to Treasurer’s Instruction 8) From State Procurement Board Involves managing budgetsEstablishing 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

11 Financial Authorisations in DECD DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: DelegateThreshold 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 DirectorsLess 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.

12 DECD Purchase Delegations DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: DelegatePurchase Delegation – (Includes GST) Chief Executive (1) $4.4 million Chair APU (1) $4.4 million Assistant Director, Procurement and Contracting (1) $220,000 Principals and Preschool Directors (1)(2) $220,000 Work Site Financial Delegates (where not specified above) Commensurate with financial delegation up to a maximum of $22,000 Purchase Card HoldersUp to designated transaction limit Petty CashUp to designated transaction limit (1)Where contracts exist, the purchase authority is up to value of contract and within the expenditure approval. (2)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.

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

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 DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: Options Purchase Cost Individual Copy Cost Monthly Lease/Plan Rate Lease/Plan Period (months) 1 Total Lease Cost over 5 year period Whole of life costs over 5 year period based on number of copies made per month Purchase$6,387.70$ n/a $9,357.70$12,327.70$15, Leasen/a$ $ $9,306.00$12,276.00$15,246.00$18, Print Management Plan n/a$ $ n/a$15, $22, 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.

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 DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: Options Purchase Cost Individual Copy Cost Monthly Lease/Plan Rate Lease/Plan Period (months) 1 Total Lease Cost over 5 year period Whole of life costs over 5 year period based on number of copies made per month Purchase $11,907.50$ n/a $14,547.50$17,187.50$19, Lease n/a$ $ $17,028.00$19,668.00$22,308.00$24, Print Management Plan n/a$ $ n/a$21, $32, 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.

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 DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: Options Purchase Cost Individual Copy Cost Monthly Lease/Plan Rate Lease/Plan Period (months) 1 Total Lease Cost over 5 year period Whole of life costs over 5 year period based on number of copies made per month Purchase$11,907.50$0.099n/a $41,607.50$71,307.50$101, Leasen/a$0.099$ $17,028.00$46,728.00$76,428.00$106, Print Management Plan n/a$ $ n/a$51,480.00$81,180.00$110, 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.

26 Tender and Contract Timelines DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: ActivityCommentTime (weeks) Expenditure approvalRefer Instrument of delegation, Register of Financial Authorisations2-4 Expenditure approval – CabinetCabinet approval above $11m (+PMG, Treasury input as appropriate)4-8 + Develop Acquisition PlanConsider detailed strategic approach to a range of procurement issues1-2 APU approval – Acquisition PlanPresent Acquisition Plan at APU fortnightly meeting1-2 SPB approval – Acquisition PlanFor procurement in excess of $4.4m – submitted through the APU2-4 Develop Tender documentDevelop parts A, B & C in Specification also Tender Evaluation Plan2 Tender Call – advertise Advertise in Govt Tenders website (and other publications as required) NB: min 4 weeks required if >$551k – ref AUSFTA. 2-4 Tender EvaluationAt close of tender implement Tender Evaluation Plan2 Tender NegotiationsSeek ‘best and final offers’, clarify ambiguity etc2 Purchase Recommendation – APUSubmit the recommendation to the APU for approval2-4 Purchase Recommendation – SPBSPB approval sought if deviation from Acquisition Plan2-4 Cabinet approvalCabinet approval may be required depending on original Cabinet submission if there is a variation in cost. 4-8 Supplier NotificationNotify successful and unsuccessful tenderers1-2 Contract document finalisationLegislation and Legal Servcies to finalise negotiated contract Terms and Conditions6-8 Contract FormalisationSign and exchange contracts with successful Contractor2 Contract ImplementationNotify work sites of new contract arrangements and handover for contract admin1 Note timeframe6 months to over 1 year + allowance for public holidays etc

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

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/ 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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