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Goods and services supply 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 five goods and services supply policies cover the end-to-end procurement activity from:

  • identifying needs
  • planning
  • market research
  • through to contract management

The five policies apply to a number of organisations.

There are 5 policies, covering:

  • governance
  • complexity and capability assessment
  • market analysis and review
  • market approach
  • contract management and disclosure

Each policy is supported by good practice guides, tools and templates to ensure consistency when using the policies.

Goods and services procurement principles

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

Value for money, taking into account:

(i) the total benefits and costs over the life of the goods, services or works procured; and
(ii) environmental, social and economic factors; and
(iii) 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.

Governance policy

This policy covers requirements of how to manage organisational procurement of goods and services. The policy covers requirements for:

  • governance

  • assessment to measure procurement activity

  • complaints management

Governance requirements

Requirements for an organisation’s overall goods and services procurement governance framework are set out to ensure the right level of control and probity.

Assessment to manage procurement activity

Assessment to manage procurement activity ensures the right governance structure, policies, procedures to manage the scope and complexity of procurement activities. 

Complaints management

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 more about the governance policy Complexity and capability assessment policy

This policy addresses procurement complexity and the capability of an organisation to perform the procurement. Assessing complexity and capability helps an organisation work out if they need specialist capability to manage the procurement.

Procurement complexity

Procurement complexity refers to the level of difficulty involved in procuring a good or service.

An assessment of complexity considers a broad range of factors associated with the procurement activity including:

  • risk
  • total cost of ownership
  • market dynamics

Procurement capability

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.

Complexity and capability assessments are done together. This lets organisations work out what can be managed with existing resources, and where more capability might be needed.

Read more about the complexity and capability assessment policy

Market analysis and review policy

This policy covers requirements for:

  • market analysis
  • aggregated purchasing
  • disposal of assets

Market analysis

Market analysis and review is the systematic review of the characteristics, capacity capability of the supply market 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 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)

  • one organisation (sole entity purchase contract)

Disposal of assets

Disposal of assets should be considered when an asset is identified as obsolete, beyond repair or surplus to requirements.

Read more about the market analysis and review policy

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

  • managing critical incidents

  • evaluation, negotiation and selection.

Market approach

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.

Managing critical incidents

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

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 market approach policy

Contract management and contract disclosure policy

This policy covers the requirements for managing and disclosing contracts.

Contract management

Contract management covers all activities at the beginning, during and after the contract period. The aim of contract management is to ensure all contractual obligations are fulfilled from start to finish.

Contract disclosure

Organisations 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 contract management and contract disclosure policy

Support

For more information about the goods and services supply policies, contact the goods and services team.

Reviewed 31 October 2019

Buying for Victoria

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