Buying Journey 4 – Under $250,000

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?

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; and
3. other non-cost factors.

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

The price assessment must include both the price; and other non-cost factors including:

• 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.

Step 1 – Develop a Specification

The first step in procurement planning is to develop a specification using the Written Quotes Template Suite – Request for Quote.

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.  Western Australian Procurement Rule C2.3 states 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.

Promote competition 

Western Australian Procurement Rule D2.1 requires your quote, including your specification, to promote open and fair competition.  This includes ensuring your specification is set out in terms of performance and functional requirements (e.g. outcomes) rather than specific design or descriptive characteristics.  Specifically, products must be specified generically – brand names should not be used unless you have approval from your accountable authority.  

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.

The Western Australian Procurement Rules C2.1 – Undertake Appropriate Procurement Planning; and Rule C2.3 - Maximum Contract Terms set out more detail about procurement planning.

Step 1: Issue your Quote

Written quotes may be sent directly to a number of suppliers without having to release the quote publicly.  Generally, three to five suppliers should be asked for a quote; however this number might be higher in markets where there is a great deal of competition.

If you are not going to publicly release your quote you can find a suitable supplier by:

• Checking the Aboriginal business registers (Aboriginal Business Directory WA or Supply Nation)
• Checking the Australian Disability Enterprises register (Buy Ability)
• Searching on the internet
• Looking at catalogues and other promotional materials
• Speaking to co-workers in your agency
• Contacting other agencies who have recently made similar purchases
• Check Tenders WA for previously awarded contracts of this type

If you find an Aboriginal business or an Australian Disability Enterprise can meet your needs, please stop this Buying Journey and go to Buying Journey 1 - Social Procurement.

On some occasions you may wish to go directly to one supplier. This is possible only in very limited situations.  Please see the information below. 

You may choose to release your written quote to the open market. If you do, you must use Tenders WA to release the quote.

In either event, please give suppliers sufficient time to respond to your quote. A minimum of 14 days must be given if you release your quote to the open market – and is a good time period even if you are directly approaching suppliers.  If you need to change the quote after it is released, please consider giving the suppliers extra time to respond.

Step 2: Evaluate the offers received

In order to evaluate the offers you receive you will need to establish an evaluation panel of two or more appropriately skilled and knowledgeable people. These evaluation panel members must evaluate the offers in accordance to the selection process and criteria included in the quote. The Evaluation Report, included in the Written Quotes Template Suite will assist in evaluation.  It must be completed.

If you need to conduct negotiations, then you must be aware of the requirements of the Western Australian Procurement Rule D6 - Negotiations, and, above all, negotiations must be conducted fairly.

Step 3: 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.  A letter of acceptance (or award letter) can be found in the Written Quotes Template Suite.

Advise the unsuccessful bidders of the outcome, if you received more than one quote.  If requested by the supplier, Western Australian Procurement Rule D9 – Debrief Suppliers requires that you provide a debrief.

You must also publish the contract award details on Tenders WA, unless authorised otherwise.  Such authorisation must be recorded on your agency’s exemption register.

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

Directly engaging one supplier without seeking quotes

Western Australian Procurement Rule C4.2 and C5 deal with instances where it is permissible to directly engage a supplier.  Generally speaking, it is permissible to directly engage a supplier where:

• you buy from an Aboriginal Business or an Australian Disability Enterprise 
• your accountable authority determines that a written quote is not appropriate or
• where an emergency situation arises

Where your accountable authority determines a written quote is not appropriate; and in emergency situations, justification for the decision must be recorded in writing.  The direct engagement must also be recorded on your agency’s exemption register.

Poor planning does not constitute an ‘emergency situation’.  An emergency situation generally arises where life or property is threatened.

Where you are able to directly engage a supplier, in situations other than emergency situations, you must still issue the supplier a written quote document; they must respond; and the offer must be evaluated in the manner outlined, above.  The purchase must still be recorded on Tenders WA.

Ensure that the successful supplier provides the products or services in accordance with the quote at the accepted price.

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.