Disposal Guideline

Each year, the State Government spends more than $27 billion on products, services and works to assist in the effective delivery of services to the community. A significant proportion of this expenditure is made on goods, many of which need to be disposed of when they become surplus to requirements.

Disposal of a good can be a high-risk activity that may create significant income and present financial or environmental risk if goods are disposed of inappropriately or if resources are not used efficiently.

Western Australian Procurement Rule E4 is therefore requires State agencies to dispose of goods ethically, equitably efficiently and safely and in a manner that maximises a value outcome for government.

For this reason, State agencies must maintain adequate records to enable external scrutiny of the disposal method used. Specifically, the records should demonstrate that the result is in the best interests of the community.

State agencies should consider the development of a disposal strategy when undertaking the procurement planning for a good. The disposal strategy should identify the disposal method that will be used for that good.

When undertaking any disposal of a non-hazardous good a State agency should:

• comply with any relevant legislation – a State agency should be aware of relevant legislation and must ensure that all legislation is complied with when disposing of a good;
• act ethically, transparently and equitably – a State agency should act ethically, transparently and equitably when disposing of a good, considering the immediate impact on the State agency and the impact on society, the economy and the environment; and
• consider how best to achieve value for money whilst ensuring open and effective fair competition where possible - open and effective fair competition should be sought where practical when disposing of goods, however, the effort involved in achieving this should be commensurate with the value of the good.

Valuation can play an important part in the effective and efficient disposal of goods as it provides an important reference point to help officers select the most appropriate disposal option.

The most accurate determination of value is always what the competitive market is prepared to pay. In addition to this, there are a number of agents who provide State agencies with expert valuations to ensure that the seller’s expectations from sales are realistic. However, State agencies should only engage the services of an agent if the products are of sufficient value.

It is important to be aware that valuers may apportion a value on a good that is based on their replacement cost (for insurance purposes) and that this value will often be considerably more than what will eventually be realised at sale. Alternatively, valuers can claim that goods have ‘nil’ book value after depreciation when in fact they could obtain a considerable sum at sale. It is therefore recommended that State agencies identify an appropriate type of valuation and instruct the valuers accordingly.

Preference when Disposing

Where possible State agencies should preference the disposal options (in the following order) to keep materials and energy circulating in the economy for as long as possible:

• re-use;
• reprocessing;
• recycling; or 
• recovering energy from waste.

Further information about these sustainability principles can be found in the Environmental Procurement Guide or on the Department of Water and Environmental Regulations website.

Disposal Methods

It is important that State agencies consider all disposal methods in accordance with the principles and objectives set out in the Western Australian Procurement Rules which promote ethical, equitable, efficient disposal methods that maximise a value for money outcome for government.

When selecting the most appropriate method of disposal State agencies’ careful evaluation of each option should be undertaken. This can be achieved by identifying the benefits and disadvantages of each option and linking them to the particular requirements of the disposal.

Factors to consider when evaluating disposal methods include:

• the type and condition of the good;
• any cultural or historical significance of the good;
• the nature of the recipient market;
• time and resource issues; and
• the costs and benefits provided by each disposal option, including the environmental and social cost and benefit of each method. 

Disposal methods might include:

• transferring to another government entity – reallocation of a good which is surplus in one government entity to another government entity which can utilise the good.
• trade-in and/or take-back by a supplier for re-use, recycling or recovery – suppliers may offer a trade in service. A trade in service is where a good is given in part payment for a new good. This good is then recycled, reused or recovered by the supplier.
• disposal in accordance with the Market-led Proposals Policy – further information about the Market-led Proposals Policy can be found here.
• selling through a competitive written quotation or open tenders process – when disposing of a good through a competitive written quotation or open tender process, similar considerations apply as to when buying a good through a written quotation or open tender process. A State agency should seek legal advice if the disposal presents significant risk and/or requires bespoke conditions. A template does not exist for the disposal of goods through the written quotation or open tender process.
• public auction to dispose of the good – when disposing of a good via an auction, an official auctioneer should be engaged to manage and control the auction process.
• donation to charitable institutions, – it is important to undertake research to identify a suitable charitable organisation or organisations and apply the principles of equity and fairness when selecting which charity and donating the good.

In addition, State agencies may decide to sell unwanted products to public sector employees through a competitive process.

When disposing to public sector employees through a competitive process, a State agency needs to be aware of the sensitivities that surround this type of disposal. If this disposal option is to be adopted, it is recommended that consideration be given to the following issues:

• Internal disposals may draw criticism from the general community and should therefore be used sparingly. Perception is important and a State agency must, if required, be able to justify why the particular method was chosen;
• It should not be used as a means to avoid a public disposal process; and
• If products are packaged in large quantities, they may be targeted by employees for the purpose of resale. Some consideration should therefore be given to limiting the number of items an individual employee can purchase. 

Appropriate procedures ensure fairness and probity of the internal disposal process. Officers involved in the internal disposal process must not be permitted to bid for the products.

Alternatively, suppliers may take back a good, which they then reuse, recycle or recover at no cost (or minimum collection cost) to the Government.

There are a number of Common Use Arrangements for disposal. Information about specific Common Use Arrangements is available here.

There are also stewardship arrangements in operation across Australia. These arrangements provide recycling services for priority waste streams. Many schemes are regulated or accredited under the Product Stewardship Act 2011 (Commonwealth). The Government supports product stewardship because it gives effect to the principle of shared responsibility in the State’s Waste Strategy.

National product stewardship schemes are in place for products including paint (PaintBack), packaging (Australian Packaging Covenant), mercury containing lamps (FluoroCycle), tyres (Tyre Stewardship Australia), used oil (Product Stewardship for Oil Scheme), mobile phones (MobileMuster) and televisions and computers (National Television and Computer Recycling Scheme). Schemes are also being developed for other products such as batteries and photovoltaic systems.
Services provided under some schemes may be limited (e.g. to households or small business) however all schemes will generally provide support and guidance for appropriate and safe disposal. Further details of Australian product stewardship schemes is available here.
The listed methods are not exhaustive and State agencies may nominate other methods more appropriate for the particular disposal.

Important Issues and Actions Prior to Using Disposal Method

Liability 

A State agency should not offer any warranty as to the quality or condition of products offered for disposal.

Documentation relating to the products that a State agency is offering for disposal should contain a disclaimer and exclusion of warranty, which establishes that:

• the State agency offers no warranty on the condition of products for sale;
• all products are generally sold ‘ex works’ or ‘as is, where is’; and
• the State agency will not admit any claims for rebates resulting from any error in description, quantity or quality.

A State agency should consider seeking legal advice regarding the drafting of any disclaimer relating to the disposal of products of sufficient value.

Disposal of electronic equipment

It is important that when disposing of goods, irrespective of the method, State agencies consider information security issues of electronic equipment, such as faxes, copiers, printers and personal computers. 

State agencies should ensure that all sensitive information is deleted from their electronic equipment prior to disposal.

State agencies should consult the State Records Office of Western Australia (SRO) Guideline on Records Retention, Disposal and Destruction and their own disposal guidelines for guidance on sanitisation of devices.

Destroying or Dumping Goods

A State agency should only destroy or dump goods at landfill where the goods:

• cannot be refurbished or reused; 
• have no resale value;
• are non-recyclable; and
• cannot be disposed of in any other way, due to a law, government policy or public safety. 

Guiding Principles of Disposal 

Hazardous goods must be disposed of according to the relevant legislative requirements. It is the responsibility of the State agency to make all necessary enquiries to ensure compliance with all relevant legislative requirements.

Disposal Methods

It is essential that a State agency, disposing of hazardous or potentially pollutant goods, obtain advice on policy and environmental considerations from the relevant government authority.