Goods and services procurement policies

The way that all government departments and specified entities buy goods and services is governed by a framework of policies. This page explains where and how to apply this framework.

The Victorian Government Purchasing Board (VGPB) procurement framework includes requirements that government organisations must follow. These apply to a variety of government organisations and agencies. Find out more about who must follow the policies.

There are 5 policies, covering:

  1. governance
  2. complexity and capability assessment
  3. market analysis and review
  4. market approach
  5. contract management and disclosure

These five policies cover the end-to-end procurement activity from identifying needs, planning, and market research through to contract management. Each policy is supported by good practice guides, tools and templates to ensure consistency across government.

When applying the policies, organisations must ensure that all procurement activity meets the following principles:

Value for money, taking into account:

  • the total benefits and costs over the life of the goods, services or works procured
  • environmental, social and economic factors
  • any risk related to the procurement

Accountability: for procurement commensurate with appropriate levels of authority and responsibility

Probity: through the application of integrity, ethical behaviour, fairness and transparency in the conduct of procurement processes

Scalability: so that the procurement governance policies and processes are appropriate and efficient, taking into account the capability of available resources and the complexity of the procurement undertaken.

1. Governance policy

This policy covers requirements of how to manage organisational procurement, including:

  • requirements for your overall procurement governance framework to ensure the right level of control and probity
  • assessment to manage procurement activity ensures you have the right governance structure, policies, procedures to mange the scope and complexity of procurement activities. 
  • complaints management to deal with an issue or concern expressed by a supplier in relation to the process and probity applied by an organisation when carrying out a procurement activity

Read the policy, helpful guidance, tools and templates

2. Complexity and capability assessment policy

The complexity assessment refers to the level of difficulty involved in procuring a good or service. It considers many factors including:

  • risk
  • total cost of ownership
  • market dynamics

Procurement capability describes an individual’s or organisation’s ability to perform tasks or activities effectively. Procurement capability is about matching the person(s), resources, systems and processes to the requirements of a procurement activity—ensuring sufficient expertise is in place to carry out the procurement successfully. 

Assessing complexity and capability helps an organisation work out if they need specialist capability to manage the procurement.

Read more about the policy

3. Market analysis and review policy

This policy covers requirements for market analysis, aggregated purchasing and disposal of assets.

Market analysis

Market analysis and review is the systematic review of the:

  • characteristics 
  • capacity
  • capability of the supply market in order to understand the extent to which the market meets the needs of the buying organisation

An in-depth market analysis assists in understanding the market dynamics, which helps determine the best way to approach the market. It should include local businesses and small to medium enterprises.

Aggregated purchasing

Aggregated purchasing is a generic term whereby demand for identical or similar categories is grouped together in order to leverage benefits from greater economies of scale when negotiating with potential suppliers.

Aggregated purchasing can offer better value for money, while also reducing duplication of process and driving continual improvement over the life of the contract.

There are mandatory requirements for setting up and managing supplier registers and common purchasing arrangements:

  • across multiple organisations (state purchase contracts: SPC)
  • one organisation (sole entity purchase contract:SEP)

Find out more about these types of contracts and their requirements. Options for approaching the market

Read more about the policy

4. Market approach policy

Market approach involves informing the potential supply market about your requirements. Some common methods of market approach are quotations, open tendering, multi-stage tendering and limited tendering. The policy has 3 parts:

  • Market approach, which can involve forming a relationship with the market to identify further benefits to all parties and drive innovation and continuous improvement. Suppliers must be treated fairly, giving them access to similar information and applying high standards of probity and confidentiality.
  • Critical incidents allow for an alternative procurement process to operate during an emergency, crisis or disaster, including any subsequent relief effort.
  • Evaluation, negotiation and selection are complementary processes and involve identifying the supplier(s) best able to satisfy an organisation’s procurement requirements.

Read more about the policy

5. Contract management and contract disclosure policy

This policy covers the requirements for managing and disclosing contracts. It’s in place to make sure all contractual obligations are fulfilled from start to finish.

Government departments entering into contracts must make specific information available to the public. This upholds standards of probity and transparency in government contracts.

Read more about the policy

Reviewed 29 August 2019

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