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Governance policy

The governance policy covers mandatory requirements for your procurement governance framework, assessment to manage procurement activity and complaints management.

The governance policy covers:

  • procurement governance framework
  • assessment to manage procurement activity
  • complaints management

Procurement governance framework

Procurement governance means the systems you have in place to achieve control and probity in your procurement. The key components of a governance framework are:

  • procurement policies
  • procedures that define how to manage the process
  • responsibilities - roles are separated and the right staff manage the key processes
  • controls and reviews to track procurement process performance

Assessment to manage procurement activity

The assessment provides assurance that your organisation has the appropriate:

  • governance structure
  • policies
  • procedures
  • practices
  • probity

in place to manage the scope and complexity of your procurement activities.

Complaints management

You need to manage complaints raised by suppliers about the procurement process. The policy lists these requirements in detail below.

To receive procurement news, email vgpb@dtf.vic.gov.au

Policy 1: Governance

Context

This policy outlines the requirements for setting up and managing a procurement governance framework. It is mandatory for all Victorian Government departments and any public bodies (hereafter referred to as ‘organisations’) that are subject to the supply policies of the Victorian Government Purchasing Board (VGPB).

The Governance policy covers 3 components:

1. Procurement governance framework

A procurement governance framework establishes processes, authorities, accountabilities and relationships for the organisation to manage an efficient and effective procurement function. It operates at 2 levels:

  1. the structure, processes and roles that drive organisational performance, improve procurement practice, reduce risk and promote value for money
  2. ensuring compliance with VGPB supply policies.

A procurement governance framework ensures that:

  • the accountable officer (AO) has developed a strategy, systems, policy, practices and processes to monitor and benchmark performance
  • the accountable officer is asking appropriate and regular questions about procurement activity and procurement outcomes
  • roles, responsibilities, authorities and accountabilities are clearly articulated and understood
  • risks are identified, mitigated and/or improved
  • complaints are treated fairly and in a timely manner

2. Assessment to manage procurement activity

An assessment to manage procurement activity informs the accountable officer that the organisation has the appropriate governance structure, policies, procedures, practices and probity in place to manage the scope and complexity of its procurement activities.

It reassures suppliers that the organisation will apply appropriate standards of probity and process when engaging the market.

3. Complaints management: Managing complaints from suppliers

A complaint is 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.

1. Procurement governance framework

Governance can be defined as the processes by which an organisation (through the AO) holds itself to account for defensible and justifiable procurement decisions and processes. Governance embodies demonstration of leadership, accountability and responsibility.

1.1 Mandatory requirements

The AO is responsible for establishing the governance framework and is accountable for its implementation. The AO must set up the governance framework before starting any organisational procurement activity.

1.1.1 Roles and responsibilities

The AO must ensure that the governance framework identifies the roles and responsibilities, processes and performance standards to ensure compliance with VGPB supply policies.

The role of the chief procurement officer

The accountable officer must establish the chief procurement officer role. The chief procurement officer role encompasses:

  • providing expert advice and guidance to the AO on matters related to the governance framework
  • overseeing the development, application and ongoing assessment of the governance framework
  • ensuring that the complaints management process demonstrates due process and integrity

A person assigned to the chief procurement officer role:

  • must hold a qualification in procurement or hold qualifications with a definable procurement component, and/or
  • must have experience and expertise in managing a procurement function that matches the organisation’s procurement profile

Note: In relation to public bodies, an AO may choose not to establish the role of CPO depending on the complexity of procurement activity conducted by the organisation. The AO must be satisfied that governance structures and reporting requirements are in place to conduct the organisation’s procurement activity and to maintain compliance with VGPB supply policies.

The role of the internal procurement unit

The AO must set up an internal procurement unit. The role of the internal procurement unit is to:

  • ensure that all procurement activity applies strategies, policies, procedures, practices and probity that comply with VGPB supply policies and any other requirements in the Financial Management Act 1994 or imposed by the accountable officer
  • assess the procurement capability of the organisation on an annual basis
  • manage the preparation of a capability development plan
  • identify major procurement categories
  • review its own performance and capability at regular intervals
  • report annually to the accountable officer on the organisation’s procurement activities

Note: In relation to a public body, an accountable officer may choose not to establish an internal procurement unit if satisfied that governance structures and reporting requirements are in place to conduct the organisation’s procurement activities and to maintain compliance with VGPB supply policies.

The accountable officer will:

  • determine the terms of reference and operational arrangements of the IPU
  • ensure that the expertise and experience of IPU staff are appropriate for the scope, nature and complexity of the procurement activity carried out by the organisation

1.2 Developing a procurement strategy

The governance framework is underpinned by a procurement strategy. This strategy provides an overview of the organisation’s procurement profile and includes the following components:

  • procurement activity plan
  • contract management planning strategy
  • supplier engagement plan
  • capability development plan

Note: Requirements for developing these four components are detailed in respective guides available on this site.

The AO must ensure that the procurement strategy is reviewed annually to confirm alignment with the procurement profile of the organisation and broader government objectives.

The VGPB can request a review of the procurement strategy and component parts at any time.

1.2.1   Procurement activity plan

The procurement activity plan details planned procurement activity for at least the next 12 to 24 month period. The procurement activity plan must be reviewed at least annually to keep the market informed of changes or developments. A high-level summary plan must be published on the organisation’s website to improve transparency for suppliers.

2. Assessment to manage procurement activity

Assessments are measured against a series of standards set out in an assessment tool developed by the VGPB.

2.1 Mandatory requirements

To operate in the VGPB’s new procurement setting, an organisation must:

  • make a submission and presentation to the VGPB using the assessment tool to demonstrate that their organisation is fully capable of managing their own procurement activities
  • have the submission supported by the relevant accountable officer

The VGPB can require the accountable officer to:

  • submit to further assessment reviews when requested to assure the VGPB that the organisation is complying with supply policies and performance commitments
  • submit specific procurement activities to the VGPB for process and probity oversight
  • report on any recommendations made by the VGPB
  • submit documentation in a form required by the VGPB
  • adopt processes and procedures as determined by the VGPB

The VGPB can require the accountable officer to conduct an audit of compliance with VGPB supply policies and to report back as directed by the VGPB.

3. Complaints management

A complaint is 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. The complaint should be a letter, email or fax lodged with an organisation’s accountable officer or chief procurement officer.

3.1 Mandatory requirements

The organisation must develop a complaints management system that sets out the process and procedures for addressing complaints.

The investigation of a complaint and subsequent response must be overseen by a person not involved in the subject matter of the complaint. An organisation’s complaints management system must be accessible to a complainant.

The complaints management system must outline:

  • how the investigation will be dealt with
  • what documentation the organisation requires from the complainant in terms of scope and format
  • contact and lodgement details for all documents
  • timelines for conducting the investigation and providing a response
  • the range of outcomes available to the organisation in responding to a complaint
  • the process for a review by the VGPB, should the findings and actions taken by the organisation not resolve the matter to the satisfaction of the complainant
  • other government bodies that may be able to assist

The organisation is to inform the VGPB within 5 working days of any complaint that could not be resolved to the satisfaction of both parties.

The organisation must disclose in its annual report the following information in relation to each complaint received:

  • the procurement activity to which the complaint relates, and
  • the status of the complaint confirming whether it:
    • was resolved
    • is still under investigation
    • could not be resolved

The organisation must also ensure that its procurement governance framework includes measures that implement a dispute resolution mechanism as required by Australia’s international free trade agreements.

3.1.1   Referring a complaint to the VGPB for review

A complainant can refer a complaint to the VGPB for review if not satisfied with the findings and actions of the organisation involved. This could be related to the management of the complaint or the application of supply policies.

Complaints submitted to the VGPB must be lodged by letter, email or fax within 10 working days of the receipt of the findings by the organisation to:

The Chair

Victorian Government Purchasing Board

Department of Treasury and Finance

GPO Box 4379

MELBOURNE VIC 3001

The complainant must provide the following material:

  • evidence that the organisation did not correctly apply supply policies in relation to a procurement activity
  • evidence that the organisation’s complaints management procedures were not applied correctly
  • a copy of all relevant correspondence between the complainant and the organisation in relation to the nature of the complaint
  • any additional material requested by the VGPB to assist it in its findings

The VGPB:

  • will inform the organisation and complainant of its findings and any further action it intends to take in relation to the matter
  • can require the accountable officer to audit its application of supply policies in relation to the procurement activity
  • can inform the Minister of its review of a complaint and advise the Minister of further action that could be taken
  • note the outcome of a review in relation to any complaint in its annual report to Parliament

There are 4 other Victorian Government Purchasing Board (VGPB) policies, this is policy 1 of 5.

Reviewed 10 February 2019