Buying Journey 1 - Social Procurement

Purchasing from an Aboriginal Business 

In recognition of the potential for government procurement to help grow Aboriginal economic participation through the support of sustainable businesses and creating jobs for Aboriginal people, the Western Australian Procurement Rules allow agencies to engage a registered Aboriginal business directly, without undertaking a competitive process.

The Aboriginal Procurement Policy sets targets for the number of government contracts awarded to registered Aboriginal businesses.  To assist in meeting these targets, and for a State agency to procure directly from an Aboriginal business, the business must be registered on the Aboriginal Business Directory WA or Supply Nation’s Indigenous Business Direct.

These web based directories aim to make it easier for people to connect with registered Aboriginal businesses.

More information on how agencies can meet their Aboriginal business targets can be found in the Aboriginal Procurement Policy - Practice Guide.

Purchasing from an Australian Disability Enterprise

People with disabilities experience a range of restrictions in daily living and when participating in family, community, recreational and work activities that significantly impact on their quality of life. For these people, having a job provides more than a wage – it is a doorway to engagement in community life, enhanced feelings of self-worth and the promotion of citizenship.

In recognition of these benefits and the potential for government procurement to improve the employment prospects of people with disabilities, State agencies may engage with Australian Disability Enterprises (ADEs) directly, without undertaking a competitive process. Agencies may only directly engage with ADEs on the Buy Ability website.

ADEs are commercial businesses that provide employment opportunities for people with moderate to severe disability. They receive funding and support from the federal government in recognition of their additional operating costs and provide services across a wide range of categories, including packaging, recycling, gardening and cleaning.

All ADE services are required to meet National Disability Services Standards and are independently audited and certified.

Value for money is the central procurement principle from which all other procurement policies and decisions flow. It is reflected in Western Australian Procurement Rule A1 – Achieve Value for Money. All purchases, regardless of value, must represent value for money.  

Value for money includes a consideration of whether there is a bona fide need to buy the good or service.  Could you borrow the good from another State agency?  Does your agency or the public sector more broadly have the expertise to deliver the service themselves?

Where the need for the good or service is established, then achieving value for money in procurement is much more than choosing the lowest price for a good or service.
  
Achieving value for money requires a consideration of:

1. government’s social, economic and environmental priorities
2. cost
3. other non-cost factors

For further information on the Government’s social, economic and environmental priorities see the Western Australian Social Procurement Framework.

Non-cost factors include:

• fitness for purpose and quality
• critical timeframes
• supplier capability, performance and financial capacity
• maintenance or operating implications, including service and support

Non-cost factors also include a consideration of risk. For a discussion about risk see the Manage Risk Guideline. The Department of Finance’s Risk Workbook might also be a useful resource to help you define your risks.

Your agency is also likely to have its own risk management framework.

Ensuring all procurement is conducted with integrity and accountability is a key supply policy objective and is reflected in Western Australian Procurement Rule B - Act  Ethically – With Integrity and Accountability.

State agency employees must apply the highest levels of ethical behaviour in all areas of their work. This is particularly important in procurement, as it involves spending public money and is subject to high levels of public scrutiny.

Ethical behaviour includes being transparent and accountable. You can be ethical by:

• declaring any conflicts of interest
• treating all suppliers equally
• keeping adequate records

Also ensure you follow your agency’s delegation register and gain the appropriate approvals prior to engaging a supplier.  The key approvals in the planning phase is the approval to spend – often called budget approval – and the approval to go to market.

For further information on acting ethically, including managing conflicts of interest and record keeping, please see the Act Ethically Guideline. You may also find the Department of Finance’s Declaration of Interest and Confidentiality form useful.

Officers must also plan their purchases in accordance with Western Australian Procurement Rule C2 – Plan Procurements.  Where the estimated contract value is $5 million or above then a procurement plan must be developed (unless an exemption is approved).  Please see Western Australian Procurement Rule C3 – Develop a Procurement Plan for more information.

A State agency must ensure that there is a bona fide need for the good and/or service provided by an Aboriginal Business or ADE and that the good and/or service can be provided at a reasonable price – considering both cost and non-cost factors.

Where a good and/or service is required to replace an expiring contract with a company that is not an Aboriginal Business or ADE, then the prices paid for the goods and/or services under the expiring contract may be benchmarked against the price offered by the Aboriginal Business or ADE. This will help ensure price parity, although State agencies must also ensure that the ADE is able to meet their needs.

Where a good and/or service is required and there is not an expiring contract in place, State agencies must undertake sufficient market research to ensure that the Aboriginal Business or ADE is able to meet their needs and provide the good and/or services at a reasonable price.

In summary, to assess the Aboriginal Business or ADE‘s suitability a State agency must determine whether the provider:

• meets the needs of the State agency
• will provide the good and/or service to an acceptable standard
• exists to provide the services of persons with a disability
• is registered as an Aboriginal Business or ADE
• represents value for money

Step 1 – Develop a Specification

When developing your specification, there are a few things you need to consider.  

Think long term.  Is your requirement a one off purchase, or will your agency have an ongoing need for the item.  If you will have an ongoing need for the good or service, then a longer contract term is likely to save you both money and time.  The Western Australian Procurement Rules state that a contract term must not exceed five years – unless you get approval otherwise.  

Combine all of your agency requirements. Might other business units within your agency need the same thing?  If so, you might achieve economies of scale by combining all your needs into one quote.

Step 2 – Secure the appropriate approvals

The second step in procurement planning is ensuring you have the approval to proceed.  Your agency must have financial and procurement delegations that outline who has the authority to act on behalf of the agency in a procurement process; and who has the authority to expend public funds.  It is good practice to ensure that the people exercising these functions for any one procurement process are different.

If you wish to conduct a cooperative procurement, you must also comply with Western Australian Procurement Rule C2.4 – Seek approval for Cooperative Procurement.

If you wish to put in place a standing offer with a panel of Aboriginal Businesses or ADEs; or with a single Aboriginal Business or ADE; and that standing offer has an impact on regional businesses then you must also comply with Western Australian Procurement Rule C2.5 -  Standing Offer Arrangements with Regional Impact.

Step 1: Identify an appropriate Aboriginal Business or Australian Disability Enterprise

Use the Aboriginal Business Directory WA; Supply Nation’s Indigenous Business Direct directory; or the Buy Ability directory to identify a registered Aboriginal business or ADE that may be able to meet your requirements.

The businesses listed in the directories offer a broad range of goods and services throughout the state which presents plenty of opportunity for contracting.  Contact details are provided so you can discuss your requirements with potential businesses.

You can also ask the local community if an Aboriginal business meets your needs (the Land Council in the contract area is a good resource).  Where there is an Aboriginal business within the community that is not registered and you would like to contract directly with them, please ensure they register so that the procurement complies with the Western Australian Procurement Rules.

Where the estimated contract value is $5 million or above and/or a contract term in excess of five (5) years is required then a procurement plan must be developed and/or approvals are required.  Please see the Procurement Rules for more information.

Step 2: Develop your Request and Form a Contract

You will need to form a contract with the registered Aboriginal business or ADE. Before you do so, make sure it has the capacity and capability to meet your needs.

Where the estimated cost is $50,000 and above you are required to form a written contract.  This contract must not exceed five years, unless an approval is given under Western Australian Procurement Rule C2.3 – Maximum Contract Terms.

Finance has templates to assist in contract formation and vary depending on contract value:

• Request for Quote – $50,000 up to $250,000
• Request for Tender – $250,000 and above
• Evaluation Report
• Award Letter

Western Australian Procurement Rule D1 – Use an Appropriate Market Approach and Form of Contract contains more information in respect to this requirement. 

In the process, make sure to check your agency’s internal procurement guidelines.

Once you have drafted your Request document, you need to share the document with the selected supplier and invite them to respond with an Offer.  This is the way a contract is formed with the supplier.

Step 3: Evaluate the offers received

Once you receive the offer, evaluate it in accordance with Western Australian Procurement Rule D5 – Evaluation of Offers. 

Complete an evaluation report and recommendation in accordance with Western Australian Procurement Rule D7 – Prepare Evaluation Reports, and have it approved by the Accountable Authority or delegate within your agency.

Step 4: Award the Contract

The Evaluation Panel makes a recommendation to the accountable authority; who then awards a contract to the successful supplier by sending an order or a letter of acceptance.

Where your contract is valued at $50,000 and above, you must record your contract on TendersWA in accordance with Western Australian Procurement Rule D8.1 – Publish Contact Award Details on Tenders WA.

For more information on the types of agreements that may be formed see the Types of Agreement Guidelines.

More information on awarding contracts may be found in the Awarding Contracts Guideline.

It is the responsibility of the State agency to manage the contract in accordance with the Western Australian Procurement Rules. This should include ensuring that the goods and/or services are provided in accordance with the specification at the accepted price.

Where the estimated contract value is $5 million or above then a contract management plan must be developed.  Please see Western Australian Procurement Rule E1 – Develop a Contract or Project Management Plan for more information.

Any variations to the contract must be approved by an accountable officer within your State agency, and must be managed in accordance with Western Australian Procurement Rule E2 – Apply Rigour to Contract Variations.