Define the need

Understand how to detail the procurement requirement.

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What is define the need?

Whenever buying anything, it helps to know:

  • what is needed
  • what quality it needs to be
  • how much of it is needed
  • when it is needed
  • where it is needed

Defining the need answers these questions.

How to define the need

Step 1: Consult project sponsor

Consult the project sponsor to confirm:

  • the objective
  • the expected outputs
  • the function to be fulfilled
  • budget available
  • when the goods, works or services are needed
  • any special considerations

Step 2: Consult users and subject matter experts

Consult users and subject matter experts to learn:

  • what is needed
  • quality requirements
  • relevant product and standards and testing capability
  • technical requirements, such as compatibility
  • performance measures
  • estimated value of the need
  • specific requirements, such as maintenance, training, installation, and disposal

Step 3: Seek existing specifications

Seek existing specifications for the same or a similar need from:

  • elsewhere in the Agency
  • another Agency

If a potentially suitable specification:

  • exists, go to step 4
  • does not exist, go to step 5

Step 4: Review existing specification

Carefully review the existing specification. Consult with the project sponsor, users and subject matter experts.

Confirm that:

  • how it describes the current need is suitable
  • performance measures are appropriate
  • it is consistent with current marketplace capabilities (outlined in Step 5: Research the market)
  • it does not restrict competition

Example: A specification for courier services may describe a different way to pick up packages from that needed.

If the specification:

  • meets the current need, go to Step 6
  • does not meet the current need, go to Step 5

Step 5: Research the market

Undertake market analysis.

Step 6: Meet specific category rules

Ensure specific category rules are addressed in the need or the procurement process.

Specific category requirements relate to purchases for:

  • Uniforms and personal protective equipment
  • Paper

Ensure procurement-related policy rules are addressed in the need or the procurement process.

Procurement-related policies increase value by including within the purchase:

  • social outcomes
  • environmental sustainability
  • climate change resilience

This step is not needed if a state purchase contract has addressed the procurement-related policy. Read the rules for each contract to see if this has been covered.

Step 8: Opportunities for co-operative procurement

Consider if there are opportunities for co-operative procurement.

Co-operative procurement occurs where more than one Agency approaches the market together. It enables Agencies to reduce cost by:

  • sharing administration costs
  • using their combined economies of scale.

Refer also to Aggregated purchasing – goods and services procurement guide.

Step 9: Opportunities to use another Agency’s contract

Consider if there are opportunities to access another Agency’s established contract. This may be set up within portfolio Agencies, or by Agencies that have a common need.

This can only occur if:

  • set out in the invitation to supply documents at the start of the procurement process
  • it forms part of the terms of the resulting contract

Using another Agency’s contract will reduce the number of approaches to market. This is more efficient for both Agencies and suppliers.

Refer also to Governance of State purchase contracts and VGPB’s engagement model – goods and services guide.

Step 10: Look ahead for similar needs

Look ahead to see if this need will, or is likely to, occur again. Consider the opportunity to include future needs within a single purchase.

Look ahead to see if similar or related needs will, or are likely to, occur. Consider the opportunity to link related needs.

Consider this:

  • within a work unit or project
  • between different work units or projects
  • over different time periods

Example, training services are needed each year. Instead of buying this service yearly, purchase this over a three year period.

Example, project 1 needs civil engineering services. Project 2 needs mechanical engineering services. Project 3 needs geotechnical services. These similar services could be linked under a common engineering technical services purchase.

Step 11: Consider how long the contract should be

Consider how long the contract should be. Longer contracts are often bigger in size and scope.

Long contracts may have breakpoints, known as options. This reduces risks by letting the Agency check if continuing with the contract gives best value.

Example, longer contracts may lock in prices. But this may exclude savings from short term changes in the market.

See, Construction standard form contracts and Goods and services standard contract templates.

Step 12: Allow for innovative solutions

Consider supplier’s ability to offer innovative solutions.

Innovative solutions may be cost effective for larger supplies with a long contract period, but not economical for a small supply over a short period.

Refer also to Innovation and the procurement process - goods and services guide.

Step 13: Make the procurement efficient

Consider how to make the procurement more efficient for both suppliers and Agencies.

Tender processes involve time and cost for suppliers and buying Agencies. Seek to reduce unnecessary transaction costs.

Refer also to Promoting efficiency in the tender process (Construction Direction and Instruction 3.3).

Example, a single large procurement means suppliers only need to respond to one invitation, reducing their costs.

Step 14: Define the need

Define:

  • what is needed and its quality
  • how much is needed
  • when it is needed
  • results from market analysis
  • requirements for:
    • specific categories
    • procurement-related policy outcomes
    • over which period the need will be supplied
    • which work units or Agencies will be involved

This is likely to involve balancing competing aims.

Example, a single large procurement operating across the state is more efficient for Agencies. But this may exclude suppliers based in regional areas.

Example, a single procurement with 4 categories (a large scope) may reduce suppliers’ cost of tendering. But this may exclude an Aboriginal business that can only supply a single category.

Example, inviting 4 smaller procurements based on one category will take more time for an Agency. But this may allow a disability enterprise to bid for one of the categories.

Example, a single large procurement is more efficient for Agencies. But if suppliers do not have the capacity to deliver, the purchase will fail.

Step 15: Record in draft procurement plan

Record information about the need in the draft procurement plan. For more information see, Prepare a procurement plan.

Consider:

Manage probity and conflicts of interest

Manage probity – consider issues raised at Probity issues by stage and task.

Conflicts of interest can arise during this task. Identify, declare and manage these.

Address Agency rules

Consult Agency procurement team for advice on meeting:

Follow Agency specific rules on when to seek an approval and who can give the approval.

Follow Agency specific rules for recording decisions and storing records.

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