How to implement the Supplier Code of Conduct: Buyers

Implementing the Supplier Code of Conduct

The Supplier Code of Conduct applies from 1 July 2017 to all:

• new suppliers,
• contracts,
• agreements and
• purchase orders.

The Supplier Code of Conduct applies to the supply of:

• goods and services
• construction works and construction services.

The Supplier Code of Conduct requires suppliers to acknowledge the minimum standards of behaviour when conducting business with, or on behalf of, the Victorian State Government.

Suppliers acknowledge the Supplier Code of Conduct by completing and returning the commitment letter acknowledging the State’s minimum expectations confirming they will aspire to meet those expectations.

The commitment letter has been incorporated into the invitation to supply documentation and forms a compulsory part of the supplier’s tender submission.

Low value, intermittent purchase order procurements will have the terms and conditions amended to reflect the suppliers’ acknowledgement and commitment to the Supplier Code of Conduct. This eliminates the need for a separate commitment letter.

Supplier Code of Conduct not required for grants

Community sector organisations receiving funding or providing services are not required to provide a Commitment Letter.

Grants are managed separately and will not be required to implement the Supplier Code of Conduct.

How the Supplier Code of Conduct works

New suppliers

From 1 July 2017, suppliers must acknowledge the Supplier Code of Conduct in all new contractual arrangements. Suppliers do this by signing and returning the commitment letter included in the invitation to supply documentation.

Subcontractors

Suppliers are obligated to communicate the Supplier Code of Conduct to related entities and subcontractors who support them in supplying goods, works or services to the State. This will ensure that subcontractors conduct their business in accordance with the Supplier Code of Conduct.

Corrective action process

Suppliers are expected to self-assess their compliance with the Supplier Code of Conduct and are encouraged to raise concerns or seek clarification on any elements of the Code with the relevant contract manager under their contract (refer to the Supplier Code of Conduct for guidance on additional reporting options).

If requested by the State, suppliers must provide evidence and confirmation of their compliance with the Supplier Code of Conduct, including providing documents and records that support compliance.

Include Supplier Code of Conduct in market approach process

Revise market approach processes to include commitment letter

Government buyers are required to modify their market approach process to incorporate the return of the signed commitment letter in the invitation to supply documentation.

Purchase order terms and conditions will need to be amended to reflect the suppliers acknowledgement and agreement to comply with the Code.

Supplier issues raised in relation to the Supplier Code of Conduct following receipt of the signed commitment letter will be managed through the contract management processes.

Note that different processes apply to purchases:

• using Construction work and services using the Construction Supplier Register
• made under a state purchase contract
• made under a standing offer arrangement
• products or inputs purchased from other countries.

The Supplier Code of Conduct should be part of the review of completeness of tender submissions. The Code is to be treated the same as any other mandatory part of a submission. The supplier must sign the commitment letter aspiring to meet the minimum standards of ethical behaviour. If they do not provide a commitment letter, the submission is to be treated as incomplete.

Construction works and services using the Construction Supplier Register

Suppliers already on the Construction Supplier Register have been informed of the Code. New suppliers joining the register will be required to sign a commitment letter prior to registration.

Subsequently, any work tendered to suppliers on the Construction Supplier Register will not require a separate commitment letter for each engagement.

However, should the works or services being performed by such suppliers be of a high ethical risk, additional commitment and compliance requirements may be required. This should be assessed and addressed at the tender stage by the buyer developing the tender for the State.

Purchases under a state purchase contract

The relevant category manager (from the Department of Premier and Cabinet, Treasury and Finance or Justice and Community Safety) responsible for managing the state purchase contract (including panels and registers), will implement the Supplier Code of Conduct as part of their contract management responsibilities.

Departments and entities can procure from state purchase contracts as per their usual process. State purchase contract suppliers are not be required to sign a separate commitment letter for each purchase.

Standing offer arrangements

Buying organisations can hold one commitment letter from a vendor rather than obtaining a letter for each transaction, such as when using standing offer arrangements

The Supplier Code of Conduct should be treated the same as other mandatory obligations under a standing offer arrangement. A standing offer arrangement is an ongoing arrangement for a specified length of time to which the Supplier Code of Conduct, and any other terms and conditions within the contract, apply for the life of the arrangement.

Products or inputs purchased from other countries

The Supplier Code of Conduct recognises that suppliers may operate and provide goods, works or services from different jurisdictions. Where the Code refers to the law, it means the law(s) in the jurisdiction where the goods, works or services are procured. Fundamental to the Code, is the expectation that all suppliers operate in full compliance with all laws, rules and regulations of the jurisdictions in which they do business.

Manage the offer process to include the Supplier Code of Conduct

If a supplier fails to lodge a Supplier Code of Conduct commitment letter, the tender submission is incomplete. Return of the Supplier Code of Conduct commitment letter is compulsory and forms part of the tender submission. For a supplier’s tender submission is to be considered, the commitment letter must be completed and returned.

If a supplier submits an offer or tender (including a completed commitment letter with their offer) and reports an issue in relation to meeting the minimum standards of behaviour as outlined in the Supplier Code of Conduct, the tender evaluation team should:

• review the issue raised by the supplier and
• assess what impact it will have on the tender response for the future supply of goods or services.
• Some consultation with the supplier regarding the issue may be required to resolve the issue raised by the supplier.

If the commitment letter regarding the Supplier Code of Conduct was not included in the invitation to supply documentation when they were sent out, issue an addendum requesting that suppliers review the Supplier Code of Conduct and submit a commitment letter as a compulsory part of the invitation to supply.

If a tenderer submits, with their tender documentation, a commitment letter that doesn’t follow the standard template, Government buyers can accept any format of the commitment letter, as long as the letter contains all the required information.

Manage the contract to include the Supplier Code of Conduct

Post contract award, if it is found that the commitment letter was never included in the invitation to supply, treated the Supplier Code of Conduct in the same as any other mandatory commitment that has been unintentionally omitted. The government buyer will need to inform the contracted supplier about the Supplier Code of Conduct and request that the commitment letter be signed and returned as soon as practicable.

After the contract is awarded, if a supplier reports an issue with aspiring to meet the Supplier Code of Conduct the failure to aspire to meet the Code should be treated the same as any other contract deviation. The contract manager will need to work with the supplier and seek to rectify the issue as soon as practicable.

If the issue cannot be rectified, the deviation may need to be escalated in accordance with the contract issue resolution processes. You should seek advice in accordance with your organisation’s contract management processes. If in doubt, contact your Chief Procurement Officer, legal counsel and/or Procurement Governance Board.

Aspiring to meet the Code can be a key performance indicator within a contract management strategy. It is a quantifiable measure that can be used to evaluate the performance of an organisation where applicable, for example number of deviations from the Code. However, inclusion of a key performance indicator related to the Supplier Code of Conduct is not compulsory.

Government buyers are not required to have suppliers re-sign the Supplier Code of Conduct commitment letter when carrying out an extension or variation as the original commitment letter will still apply to ongoing purchases made under the original agreement.

Suppliers are generally required to complete only one Supplier Code of Conduct commitment letter per contract and are generally not required to provide an annual attestation to confirm their ongoing commitment to meet the Code. However, if the goods, works or services being procured carry a significant ethical risk, then the contract manager may ask the supplier to provide an annual attestation of their commitment to meet the Code or ask the supplier to annually renew their commitment letter.

If there is reason to think that a contracted supplier, who has signed a commitment letter regarding the Supplier Code of Conduct is not meeting the Code, any suspected deviation from the minimum standards of behaviour outlined in the Code, should be treated the same way as any other issue under contract. The contract manager should raise the concern with the supplier and ask them to address the concern.

If a deviation from the Supplier Code of Conduct is confirmed, the contract manager will work with the supplier and seek to rectify the issue. If the issue cannot be rectified, it may need to be escalated in accordance with the contract issue resolution processes. You should seek advice in accordance with your organisation’s contract management processes. If in doubt, contact your Chief Procurement Officer, legal counsel and/or Procurement Governance Board.

If a contracted supplier is not complying with the Supplier Code of Conduct, seek advice about termination rights. The Code does not override the terms and conditions of a contract, including termination rights. You should seek advice from your Chief Procurement Officer, Procurement Governance Board and relevant legal counsel to establish your termination rights under the circumstances. Non-compliance with the Code may also be a breach of specific contractual requirements. It would be preferable to work with the supplier first to attempt to rectify the issue(s) before taking such action.

Tools and support

Access the following tools in the Supplier Code of Conduct toolkit and document library:

• Commitment letter (template)
• Letter of introduction to the Victorian Government’s Supplier Code of Conduct (template)
• Standard messaging for the Supplier Code of Conduct

The following guides for goods and services address the Supplier Code of Conduct:

• Preparing a supplier engagement plan – Goods and services procurement guide
• Market approach – Goods and services procurement guide
• Specification writing – Goods and services procurement guide
• Developing an offer template – Goods and services procurement guide
• Pre-qualification supplier arrangements – Goods and services procurement guide

Goods and services standard form contracts have been revised to include the Supplier Code of Conduct. Access goods and service s market approach templates:

The following goods and services tools support the Supplier Code of Conduct:

• Contract management plan short form
• Contract management plan long form
• Contract management checklist

Construction standard form contracts and templates have been revised to include the Supplier Code of Conduct. Access construction standard form contracts. Access construction tools and templates.

This content on this page is taken from the Ensuring Ethical Procurement Government Buyer fact sheet. Access a Microsoft Word version of this document in the Supplier Code of Conduct – toolkit and document library.

Buyers are encouraged to contact their department or entity Chief Procurement Officer or equivalent State manager for more information.

For more information about the Supplier Code of Conduct, please contact the Goods and services policy team.