DATE ISSUED:
TITLE:
A.
POLICY NO. MPOL-16
MANAGEMENT POLICY
PURCHASING OF GOODS AND SERVICES
OBJECTIVES
To ensure purchasing arrangements comply with the following principles.
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open and effective competition
value for money
sustainable procurement
ethical behavior and fair dealing
B.
POLICY STATEMENT
1.
Delegated Levels of Authority
Only those Council staff with Delegated Authority from the General Manager to authorise
expenditure, subject to the nominated monetary limitations, may enter into purchasing
agreements. The nominated monetary limits vary depending on each individual’s level of
authority and role within Council.
The levels of authority for those Council staff with authority to incur and approve expenditure
can be found under “Council Policies – Staff Delegations” on Council’s Intranet site.
The limits put in place are to be strictly adhered to with the onus being on the individual
employee to ensure that they do not abuse their authority level.
The CivicView ordering system provides for “User Order Limits” for both “Line Limits” and
“Total Limits”. Where an order exceeds the particular staff limit, the order is automatically
referred to the Supervisor/Manager for authorisation. No further action will be taken with this
Order until such approval is granted.
Under no circumstances are orders to be split so that the total value of the order falls under
the amount of the individual’s authority level.
2.
PURCHASING
2.1
Purchasing of Goods and Services in excess of $150,000
For purchases with a value in excess of $150,000 (excl. GST) formal Tenders are to be
invited by public advertisement. The requirements for tendering are contained in Section 55
of the Local Government Act 1993; Part 7 of the
Local Government (General) Regulation 2005; and Council’s Tendering Procedures.
The Tenders received are to be submitted to Council, together with a recommendation from
the General Manager or appropriate Council Director. Exemptions from the requirement to
Tender are available for purchases made under –
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an existing annual tender
Government Contract/Contract Agencies
emergency/exceptional circumstances (as per Council resolution)
public auction
a contract with another council
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a contract for purchase/sale of land
a contract for employment of Council staff
NOTE: “Order Splitting” whereby the cost of a purchase is divided into a number of smaller
order values designed to fall below the Tender contract value is NOT permitted.
2.2
Purchasing of Goods and Services with a value below $150,000
The calling of formal Tenders for goods and services with a value below $150,000 is NOT a
legislative requirement, however the following procedures and conditions apply.
Step 1
a) Decide if the supply is to go to tender.
- Yes. Purchase in accordance with the Local Government Act and Tendering
Regulations.
- No. Purchase in accordance with step 2 guidelines.
b) Is the supply available under a Government Contract?
- Yes. Purchase goods and services via the issue of a Council approved
- No. Purchase in accordance with step 2 guidelines.
order.
c) Is the acquisition available under a Council approved pre-qualified supply agreement?
- Yes. Purchase goods and services via the issue of a Council approved order.
- No. Purchase in accordance with step 2 guidelines.
d) Is the supply required for an emergency event?
- Yes. Obtain approval from the relevant Director (or General Manager) prior to
proceeding to purchase.
The reasons are to be documented. For the purpose of this Policy an emergency
shall be defined as follows:
“The immediate non supply of the goods or services would pose a health, safety or
financial risk to the council and / or the community.”
- No. Purchase in accordance with Step 2 guidelines.
Step 2
2.2.1 Where the cost is between $50,000 and $149,999 (Excl. GST)
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Obtain at least three (3) written quotations and select the quote most advantageous to
Council in accordance with the following procedures –
a)
Council Specification
Quotes shall be called based upon the requirements as detailed in Council’s quotation
specification. The criteria for assessment of quotations shall be established in the
specification.
b)
Submission of Quotations
At least seven (7) days is to be given for the supply of quotations, unless deemed urgent by
the Director.
Quotations for goods and services may be forwarded by fax, email or in written form, so as
to reach the responsible officer by the closing time specified in the quotation specification.
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Details of quotations obtained are to be recorded on the CivicView Order system. Supporting
documentation should be retained by the responsible officer.
If for some reason three (3) written quotes cannot be obtained, the reasons are to be
documented and referred back to the appropriate Manager.
Assessment of Quotations
c)
A formal assessment of quotations is to be undertaken by the appropriate officer having
regard to, but not limited to, the following criteria:
i)
Track Record of Company (general reputation for work competence,
service, etc.)
delivery,
ii)
Product Quality (quality standards, suitability etc) and/or Technical Expertise
(credentials of key personnel, systems and techniques, depth and nature of support)
iii)
Time Performance (ability to provide goods or services on time)
iv)
Price (type of fee, contingencies, terms and conditions).
‘Price’ should not be limited to up-front purchase price alone, as this may distort the
true long term costs to Council. ‘Price’ should also include consideration of life cycle
costs and incorporating issues such as cost of installation, maintenance, replacement
and disposal costs
v)
The ability of providers to demonstrate that they can comply with current
Occupational Health & Safety, Workers Compensation and Environment legislation
applicable to the contracted works.
vi)
The ability of providers to demonstrate that they can meet the provisions of
Kempsey Shire Council’s Contractor Safety management Procedures OHSP 0014.
vii) Enhancement of the capabilities of local businesses (goods/services supplied locally,
skills/knowledge transfer to local firms)
viii) Degree to which the Goods or services meet Council’s sustainable procurement
principles outlined in section 10 of this policy.
For the purpose of assessment a weighting shall be assigned to the attributes within the
assessment criteria.
A sample quotation assessment form is attached for the information of staff at (Appendix
A).
d)
Acceptance of Quotations
A record of the quotations is to be made on the Council order system.
Successful and unsuccessful firms/persons submitting quotations are to be notified as soon
as possible after acceptance. The issue of a Council order will constitute acceptance of a
quotation.
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If not accepting the lowest priced bid, then the reasons must be documented and
forwarded to the officers Supervisor/Manager for acceptance and sign off.
The Supervisor/Manager may accept or reject this recommendation. If rejected, then: a)
the entire process is to recommence, or
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b) the Manager decides to accept another provider not recommended, in which case full
justification for this decision must be documented and recorded.
2.2.2 Where the cost is between $10,000 and $49,999 (Excl. GST)
At least three (3) written quotations are to be obtained and the most advantageous to
Council shall be selected.
Details of quotations obtained are to be recorded on the CivicView Order system. Supporting
documentations should be retained by the responsible officer.
If for some reason three (3) written quotes cannot be obtained, the reasons are to be
documented and referred back to the appropriate Manager.
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The appropriate officer will review all quotations and if not accepting the lowest priced
bid, then the reasons must be documented and forwarded to the officers
Supervisor/Manager for acceptance and sign off.
The Supervisor/Manager may accept or reject this recommendation. If rejected, then: a)
the entire process is to recommence, or
b) the Manager decides to accept another provider not recommended, in which case full
justification for this decision must be documented and recorded.
2.2.3 Where the cost is between $2,000 and $9,999 (Excl. GST)
At least two (2) written or verbal quotations are to be obtained and the most advantageous
to Council shall be selected. If for some reason two (2) quotes cannot be obtained, the
reasons are to be documented and referred back to the appropriate Manager.
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The two (2) verbal quotations are to be recorded, including the providers names,
contract details, and prices.
The appropriate officer will review all quotations and if not accepting the lowest priced
bid, then the reasons must be documented and forwarded to the appropriate
Supervisor/Manager for acceptance and sign off.
The Supervisor/Manager may accept or reject this recommendation. If rejected, then: a)
the entire process is to recommence, or
b) the Supervisor/Manager decides to accept another provider not recommended, in
which case full justification for this decision must be documented and recorded.
2.2.4
Where the cost is below $2,000 (Excl. GST)
Competitive quotations are not required subject to the rates/prices being –
a)
b)
considered reasonable, and
consistent with normal market rates for similar goods and services.
3.
PURCHASE ORDERS
i)
Council Purchase Orders are to be issued in respect of any purchase entered into by
Council with the exception of acquisitions made using credit cards, Council Purchase
Cards or contracts entered into by Council which are repetitive in nature e.g. utility
accounts.
ii)
All official Purchase Orders generated by Kempsey Shire Council must include an
estimate of the purchase price (excluding GST) for every individual item. This is standard
purchasing procedure and it eliminates any issue of providers charging incorrect prices
for goods and services and ensures that Council’s cost reports are kept up-to-date with
all commitments recorded.
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iii) No orders are to be placed with providers without an official Purchase Order being
supplied by Council first. All providers are instructed not to supply goods unless they
make reference to an official Kempsey Shire Council purchase order number. If a
provider supplies goods/services without a Purchase Order number, and produces an
invoice to Council without reference to an official purchase order number, then Council
reserves the right to refuse payment for those goods or services.
4.
PREFERRED SUPPLIER ARRANGEMENTS
Preferred supplier arrangements allow individual purchases to be made without calling for
tenders or quotations. Council is continuing to appoint Preferred Suppliers through the formal
Tendering or request for Quotation process and a list of these suppliers can be found in
Council’s Preferred Supplier register available on the Intranet (currently being developed).
It is expected that such arrangements will be in place for large volume, or frequently
purchased products, thus eliminating the need to obtain quotations for purchases. The
results for Council will be reduced prices on core, large volume products and services and
more efficient use of internal resources.
If large volumes of particular goods or services are required, then Council Officers still have
the right to call for open quotations as required, even if the required goods or services are
currently under a preferred supplier arrangement.
5.
PREFERENCE FOR LOCAL PROVIDERS
The Local Government Act, the Tendering Regulation, the Trade Practices Act and the
principles of the National Competition Policy do not allow Council to set a blanket preference
policy for local purchases that may be applied regardless of the merits of each individual
tender. Council cannot include in a tender specification an across the board preference for
local tenderers and providers.
There is a requirement under the Tendering Regulation that a council must accept the tender
that is “most advantageous” to it. This requirement needs to be borne in mind each time a
consideration is given to a tender or quotation.
All providers will be given fair and equitable consideration at all times, regardless of whether
from within the Kempsey Shire area or otherwise.
However, where goods or services are available within Kempsey Shire and the prices of those
goods or services have been benchmarked against the State Government contract, or the
local provider is a listed contractor in the State Government contract, then preference will be
given to such local providers.
Where the total costs to Council are comparable to the costs of purchasing the same items
outside of the Shire area, the purchase should generally be made from within the Shire.
6.
EXPENSE REIMBURSEMENT
If a Council officer has incurred expenses in the course of their work for Council, in particular
at the attendance of conferences, workshops or deputations etc. then to claim for
reimbursement they must complete a “Travelling Expenses Claim Form”. All claims for
reimbursement are to be authorised by the Council officers direct manager or supervisor.
Once authorised, the completed claim form, along with the original receipts are to be
forwarded to the Finance Section. Payment will be made by EFT through the Account Payable
Section to your nominated payroll account.
7.
ETHICAL STANDARDS
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Kempsey Shire Council has developed a “Statement of Business Ethics for External Parties”
which clearly defines Councils ethical standards, and sets out the expectations of the
standards that the providers of goods and services will meet.
The “Code of Conduct” developed by Council aims to deliver integrity, ethical conduct and
accountability throughout the Organisation. Staff are expected to act in accordance with this
Code and to maintain high standards of ethical behaviour consistent with the positions they
hold.
Equally, providers of goods/services and contractors are expected to demonstrate the
equivalent behavioural standards.
Providers who align their business practices with Councils ethical expectations can expect to:
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compete for business on an even playing field
establish practices that will put them in good stead in competing for works with other
public sector agencies.
This statement of business ethics does form part of the purchasing process and subsequent
contractual arrangements with Council.
The consequences of non-compliance for Council staff could include investigation and
disciplinary action.
For suppliers/contractors it could include termination of contracts or exclusion from
tendering.
Under no circumstances is a provider to approach a member of Council’s staff or a Councillor,
during a period where a product submission or tender/quotation has been submitted for
evaluation, for the purpose of seeking more information, favourable treatment or for the
purpose of offering certain inducements and gifts that may influence the evaluation of the
products and / or tender. If there is any evidence of corrupt behaviour from a provider,
Council staff member or Councillor, then all parties involved will be reported to the
appropriate authorities.
Should you believe you have encountered unethical behaviour in your dealings with Council,
then you should notify Council’s General Manager and you will be given protection under the
“Protective Disclosure Act”.
8.
CONFLICT OF INTEREST
Where a Council officer is involved in procurement activity, whether it be on a daily basis, or
as part of tender Evaluation Committee, or as the person actually responsible for inviting
tenders, he/she are obliged to declare any interest or bias he/she may have in regard to a
particular supplier.
This conflict of interest could range from a pecuniary interest, to a personal interest such as
a family member being involved in that business. The individual is obliged to declare this
interest at the outset of the process to avoid any supplier being treated in any way other
than fairly and without bias.
It is of paramount importance to Kempsey Shire Council that all suppliers be treated in an
equitable manner and that all dealings are transparent and can withhold public scrutiny.
9.
OCCUPATIONAL HEALTH & SAFETY
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All providers must comply with current Occupational Health and Safety, Worker’s
Compensation and Environmental legislative requirements and regulations when applicable.
The relevant Council Contract Manager is to ensure all providers comply with the provisions
of Kempsey Shire Council’s, Contractor Safety Management Procedures OHSP 0014.
10.
SUSTAINABLE PROCUREMENT
Kempsey Shire Council is committed to the principles of Ecologically Sustainable
Development (ESD). Sustainable procurement will help achieve triple bottom line objectives
to deliver better environmental, social and economic outcomes that will assist Council in:
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eliminating unnecessary inefficiency, waste and expenditure;
contributing to the combined purchasing power of local government to further stimulate
demand for sustainable products, including materials collected through council’s kerbside
collection;
increasing awareness about the range and quality of products available;
delivering its commitments in relation to ESD and other environmental and social
objectives;
playing a leadership role in advancing long term social and environmental sustainability;
supporting local businesses and organisations.
To meet the desired outcomes listed above, responsible officers should always give
consideration to goods and services that;
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11.
contain recycled content;
reduce unnecessary packaging
are reused or recycled at end of life;
reduce unnecessary packaging
reduce greenhouse gas emissions;
save water and/or energy;
are non toxic;
help protect biodiversity and habitat;
minimise unnecessary purchasing;
support local jobs;
provide long term value for money.
INTERNAL AUDIT
Council’s Policy and procedures allow all those staff who have delegated authority to
authorize expenditure to actively purchase goods and services required for their
Department/Section.
There is a need for strict controls related to purchasing. To support and reinforce these
controls, the purchasing of goods and services will be the subject of internal audits in respect
of matters such as –
• compliance with Policy objectives
• quotation process (incl. assessment)
• quotation documentation
• orders documentation
• etc.
12.
OTHER RELATED POLICIES
Staff – Council Purchase Cards
Staff – Provision of Mobile Phones
Staff – Provision of Credit Cards
Staff – Occupational Health & Safety Policy
Internal reporting of corruption, mal administration and
7.74
7.33
7.47
7.28
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serious and substantial waste
Code of Conduct
Conflict of Interest
Reporting Breaches of Council Code of Conduct
Statement of Business Ethics for External Parties
Fraud Control Policy
Disposal of Assets
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C24.5
C24.8
C24.9
C24.10
C24.18
C24.20
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APPENDIX ‘A’
Example Only
Kempsey Shire Council - Tender/ Quotation Evaluation Form
The Selection Criteria and Weightings are examples only and maybe varied in accordance with the purchasers requirements.
Evaluation Scores
Kempsey Shire Council - Tender/ Quotation Evaluation Form
Weighting
(Example
Only)
Scores, Total = 100%
Supplier
1
Supplier
2
Supplier
3
Supplier
4
Supplier
5
Supplier
6
100.0%
Selection Criteria (Example Only)
Conformity with the tender documents (Yes / No)
Price
50.0%
Time Performance
15.0%
Quality management systems in line with the requirements of the tender
Demonstrated experience in carrying out similar work as stated in the tender
agreement
Demonstrated evidence of Environmental management systems
OH & S management systems
Demonstrated adherence to the principles of sustainable procurement.
5.0%
10.0%
5.0%
5.0%
10.0%
Total Weighted Score
Normalised total weighted score
TOTAL SCORE
Scoring - 1 to 10 with 10 being the highest score
Price determined by formula:
Evaluation Score = Rank/MAX(All prices)*weighting*100
Were Rank=
Rank = 2.5 (5$M - $T)/$M
Where $T = quotation price
$M = average price
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Appendix A
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