Process and Systems

The following outlines processes that support the effective operation of procurement.

The effective management of the Vendor Master (VM) will ensure that reasonable measures are being taken to manage any risks associated with fraud that may arise in relation to the creation, deletion or modification of a vendor file in the VM (Vendor also means Supplier).

Overview

  • IPART undertakes a number of informational requests and due diligence actions to verify the details of new vendors prior to authorising the creation of a new Vendor Number.
  • Every Vendor who issues an invoice to IPART seeking must be assigned a Vendor Number and recorded in the IPART Vendor Master File managed by GovConnect. As such, risk management related to vendor master file management is shared between IPART and ServiceFirst.

Creating a new Vendor Number

  • The IPART Procurement Manager will ensure that new Vendor Numbers are only created after bona fide checks on new Vendors are completed prior to approval.
  • The Procurement Manager will ensure that a SAP report on the Vendor Master File is generated for review by the CFO at 6 monthly intervals.
  • The Procurement Manager will, following a Project Manager or other valid staff request that Finance creates a new Vendor in the VMF
  • Support Services will generate a report on the Vendor Master File from SAP and check:
    • Each Vendor Number for currency.
    • Identify and record all the Vendor Numbers where the date of last payment is older than four years.

The Procurement Manager will then ask ServiceFirst to remove these inactive accounts from the IPART Vendor Master File

The Purchasing Method is the process that applied to how Goods or services may be purchased by IPART staff that have authority to purchase goods and services on behalf of IPART through either:

  1. The raising of an IPART Purchase Requisition:
    • Staff will identify their Requirement and complete a Procurement Process.
    • After the Procurement Process has been completed and the resulting contract signed a Purchase Requisition will be raised and submitted to Finance.
    • When approved, the Purchase Requisition will then enable Finance to create a Purchase Order, which is a binding document between IPART and a supplier.
    • The Purchase Order will be issued by Finance to the Supplier.
    • Suppliers can only start a service or deliver product when they have been sent a Purchase Order and can quote the Purchase Order number on the invoice they submit Finance.
    • If a supplier cannot quote an IPART Purchase Order number on their invoice IPART reserves the right to withhold payment to the supplier.
  2. IPART Issued Purchase Cards (pCards):
    • Finance will issue pCards to IPART Employees for low dollar value, low risk purchases.
    • For information on obtaining a Purchasing Card, please see pCard Policy Guide.
    • The pCard application process and regulations relating to the use of the credit card is available in the guide.

When a Project Manager creates a Business Case for a Requirement there will be a need, based on the estimated value and risk, to select which system (eQuote or eTender) will be appropriate to solicit and then manage a response from the supply market.

The NSW government eQuote online service will suffice as long as IPART is procuring within the NSW prequalification schemes and there is no reason to prevent IPART from procuring via the eQuote system.

From time-to-time IPART may be required to procure outside the NSW Government Prequalification Schemes. In such an instance the IPART Procurement Manager is to be advised and consideration will be given to the use of NSW government eTender service.

If your Requirement is to be satisfied using a NSW Government Prequalification Scheme you will need to obtain a quote or quotes. This is known as a Request-for-Quote (RFQ).

The number of quotes required, though, will vary and be determined by both the anticipated value of the requirement and also the type of Scheme that is being utilised.

  • Obtain a quote:
  1. Canvass suppliers from appropriate directories or referrals and determine their interest and capability to fulfil the Requirement so that you can invite them to respond.
  2. The approach and number of quotes required is dependent on the estimated value of the requirement and the type of Scheme that is involved
  3. Approach the market via the eQuote system at the NSW Procurement website at https://tenders.nsw.gov.au/?event=admin.login

The schemes are on the NSW Procurement website at https://www.procurepoint.nsw.gov.au/before-you-buy/prequalification-schemes-0

Refer also to the following tables at Appendix XXX for each of the schemes to determine the financial threshold and the required number of quotes required at that financial level.

There are some circumstances when the Project Manager would not need to obtain quotes from suppliers:

  • If there is a contract that has only one supplier (single source supply – e.g. electricity)
  • General Purchasing under $3,000 which will be undertaken using a Credit Card
  • Also refer to:
    • IPART Credit Card Policy.
    • Credit card application form.
    • Credit card responsibilities form.
    • pCcard exclusions.

Direct negotiations may be appropriate in certain circumstances; refer to the ICAC Direct Negotiation Guidelines for further information. Also seek advice from the IPART Procurement Manager prior to proceeding.

Unsolicited Proposals

The NSW Government often seeks to engage with the private sector in the development and delivery of new infrastructure and services.

It encourages the best ideas and solutions from the private sector and a greater level of private sector investment and participation in projects, with rigorous planning and costing to deliver the highest standards of public value as well as confidence to investors and the community (see NSW Government policy guidelines below).

Entities are sometimes in receipt of an unsolicited proposal from industry that exhibits a high degree of innovation and uniqueness that could be of benefit.

These unsolicited proposals generally offer a business process that is quite different to the existing one, utilising a combination of new technology/products and/or initiatives in the provision of services that has the prospect of meeting Agency outcomes with potentially significant benefits in terms of efficacy.

This policy relates to proposals with a total value in excess of $250,000.

On receipt of an Unsolicited Proposal, a preliminary investigation is to be made by the Entity, in consultation with all user representatives (including the Agency for Clinical Innovation where applicable) to ascertain:

  • If there are any elements of the proposed business process, i.e. similar products or services, already under contract, or being sourced from industry, or commercially available from other suppliers in the market;
  • Whether such innovative business processes are in operation elsewhere in Australia or the world, i.e. the degree of novelty; and
  • Whether there would be potentially significant benefits that would accrue to NSW Health.

Unsolicited proposals should include one or more of the following elements of uniqueness:

  • Distinctive intellectual property or innovative ideas/concepts;
  • Ownership of exclusive assets;
  • Exceptional software or technology offering significant benefits;
  • Special financial arrangements; and/or
  • Unusual and attractive implementation/delivery attributes.

If the initial evaluation merits further consideration, then the private sector proponent is to be invited to develop a business case detailing the proposal’s merits, addressing the above elements of uniqueness, clearly identifying ownership of or rights to any related the intellectual property, demonstrating compatibility with the applicable operating environment, and estimating the net efficiencies to be harvested arising from any adoption of the proposal (benefits realised after taking into account any impact/transition costs etc.).

This invitation is to be written, endorsed by the appropriate Delegate, and signed by the Entity’s Chief Executive or equivalent, stating that such a business case would be considered in good faith but is to be prepared at no cost to the Agency and with no obligation by the Agency to proceed with the purchase, adoption, installation or use of the proposal.

Industry can be cautious in investing substantial resources to develop such a business case for a proposal that may not be accepted, especially where the proposal is untested and/or where protection of any underlying intellectual property is critical. Accordingly, in assessing the business case it is paramount that its deficiencies be thoroughly assessed as risks, which may in turn be capable of being addressed by atypical mitigation or treatment actions, forming a potential procurement strategy, i.e. a novel proposal with a real prospect of significant improvement should not necessarily be rejected just because the business case is neither absolutely compelling in all details nor beyond all doubt.

Examples of such atypical mitigation or treatment actions include: conducting a trial, seeking greater input from the broader industry, phasing the project with “stop-go” stages, partnering, close monitoring of emerging risks, enhanced project governance (e.g. external membership on the project steering committee), external probity advice, and increased stakeholder consultation.

Entities are to consult with the Ministry of Health (Business and Asset Services Branch) in seeking and considering the proponent’s business case, in conducting the related risk assessment, and in developing any proposed procurement strategy, noting that any resultant strategic or Lead Agency project plans would need to be endorsed by the Procurement Governance Committee.

Following a positive consideration of the business case, and where the proposal relates solely to an individual Entity, the procurement policies addressing complex and strategic projects apply. Where the proposal has significant potential value to the Agency beyond the individual Entity, then policies relating to a Lead Agency project apply.

In either case, the next stage in the procurement process would generally involve an invitation to industry for proposals, through an RFP, with the intent of establishing either a panel of suppliers, so as to conduct further staged development of the proposed business process, or a restricted list of tenderers for its prospective supply. The choice between the above approaches will mainly be a function of how best to manage the risks arising from: the degree of transformation proposed to the existing business process; the novelty of the proposed new business process; and options available within the proposed new business process.

This strategy of an RFP is employed principally both to avoid any real or perceived breach of confidentiality and probity, were the proponent’s concepts/solutions/specifications to be or perceived to be used as the sole basis of an RFT’s statement of requirements, as well as to seek other innovative concepts from industry so as to develop further or to determine the ultimate new business process to be sought and its functional requirements. In approaching the market with the RFP, the original proponent is to be provided with the opportunity to participate.

Any strategy to accept an unsolicited proposal by direct negotiations with a single supplier, without any prior market testing, is to be first endorsed by the relevant Chief Executive and the Chief Procurement Officer, then assessed by the Department of Premier and Cabinet (DPC), and finally approved by Government (Cabinet). This requires a three (3) stage process; the first being the submission of the proponent’s business case, its risk assessment/evaluation, and the proposed strategy to the Director General DPC (see Guide for Submission and Assessment below).

In considering whether the above direct negotiations strategy would be viable, the evaluation of the business case is to centre on the assessed risks balanced against the likelihood of significant benefits being derived from one or more of the following:

  • Clear demonstration that optimal value for money can be achieved;
  • Sole ownership of or sole rights to intellectual property governing a uniquely valued function;
  • Exclusive ownership of superior assets, software or technology;
  • Unmatchable timetable of delivery; and/or
  • Exceptional capability to meet a critical need.

Trials can be used as a proof of concept, aimed at addressing some of the risks identified in the assessment of the business case, especially in verifying the practicability of a single proposal or in comparing the relative value of different proposals or different options within a broader proposal.

If trials are proposed, then a Trial Plan is to be approved by the appropriate Chief Executive, following endorsement by the Procurement Manager, covering such matters as governance arrangements, objectives, assessment criteria, design/methodology, control management arrangements, resources, schedule, reporting requirements, evaluation (internal or external), and a draft Memorandum-of-Agreement (MOA) between the Agency and the other party/parties.

Such an MOA should reflect the Trial Plan and include the following:

  • Governance arrangements, organisational structure, roles and responsibilities;
  • Objectives and related assessment criteria for their achievement;
  • Trial design/methodology;
  • A clear statement of the proponent’s ownership of or rights to intellectual property inherent in the proposal;
  • Permission to trial the proposal on-site within the applicable operating environment;
  • A Deed of Confidentiality between the Entity and the proponent in relation to information provided to or made available by the Entity;
  • Full compliance to all Agency policies concerning clinical trials/protocols, if clinical products/services and/or patients are directly involved;
  • Agreement on meeting costs, e.g. each party to meet its own costs both direct and indirect;
  • Insurance and indemnity arrangements;
  • Acceptance that there is no obligation by the Entity to proceed with the purchase, adoption, installation or use of the proposal after this trial; and
  • A statement on available prices and other relevant attributes to be offered as part of the proposal in the event that the Entity, following a successful trial, sought to procure the subject supplies.

Management of Supplies and Disposal

All received supplies are to be inspected and assessed as meeting the quality and quantity ordered. Any deficiencies are to be addressed in accordance with the terms and conditions of the relevant contract.

Supplier performance in deliver and response is a Key Performance Indicator (KPI) in any feedback to the procurement management area from business units.

The issue, storage and handling of goods are to occur in accordance with the supplier’s technical advice, contractual terms and conditions, local arrangements and Agency’s guidance on Work, Health and Safety (WHS). Where there is any conflict between the aforementioned factors, procedures are to be developed based on a thorough risk assessment and approved by the nominated Delegate.

The nominated Delegate is to maintain a Register of all high value supplies, as well as ensuring those supplies and any other attractive supplies are secured, accounted for in terms of usage/release and with remaining stocks periodically tallied.

Under an existing contract and as specified in its terms and conditions, an Entity or Branch may consign contractor owned stock to its storage facilities where it is mutually beneficial. Such consignment stock should only occur where the demand for the supplies are unknown and irregular. In all instances where consignment stock is to be considered the procurement team are to be consulted.

Specific guidance on the handling of medication in NSW can be found at:

  • Specific guidance on the handling and storage of sterilised instruments and equipment is at AAA
  • Specific guidance for the safe use of hazardous substances and dangerous goods is at AAA

The disposal of all goods (excluding motor vehicles) must be aimed at achieving value for money and the process used must be efficient and effective so as to meet transparency and probity requirements.

A business case is to be provided to the Chief Executive, or their nominated delegate, for approval confirming that the goods are unwanted and are suitable for disposal (i.e. no longer required, obsolete, unserviceable, surplus to requirements, etc.) their estimated present value, if needs be by a Registered Valuer, as well as a recommended method for disposal. The Disposal Plan must not split the subject goods into components or in succession for the process of avoiding the delegated process as mandated.

For the Agency, the process and related Equipment Disposal Request Form is here.

In all cases of sale, prospective buyers of any disposable goods are to sign a declaration that the goods are for purchase and removal with all faults, if any, and the Agency is not responsible for any of the defects, etc. now or in the future. Such a declaration should also include the timeframe for removal and well as the payment to be made via a bank cheque prior on or before collection.

For further details on the disposal of goods see:

http://www.procurepoint.nsw.gov.au/sites/default/files/documents/disposals_guidelines.pdf

http://www.treasury.nsw.gov.au/_data/assets/pdf_file/0016/5092/asset_disposal.pdf

Value Actions
Up to $3,000 (plus GST) Goods valued up to $3,000 may be disposed of by transfers, trade-ins, and negotiated sales or by seeking oral quotations.
Over $3,000 but not exceeding $250,000 Goods valued over $3,000 but not exceeding $250,000 may be disposed of by auction (including on-line systems like eBay), or trade-ins, or at least three (3) written quotes, or via an Open Tender.
Over $250,000 and up to $30m If the estimated value of the goods is between $250,000 and $30m, then the disposal must be referred to the Agency (for non-Ministry entities) or Strategic Procurement (for Ministry entities) for the invitation of tenders/action approval action.
In excess of $30m If the estimated value of the goods exceeds $30m, then the disposal must be referred to the Department of Finance and Services for the invitation of tenders/auction approval action.
Transfer to another government agency or entity The transfer of goods to another NSW Government agency or entity can be undertaken regardless of the value of the goods.
Method Definition
Transfer Transfer to another NSW public service agency either at a fair market price or on a no-charge basis if it is more cost effective to do so.
Trade-in Trading-in unwanted goods may be an efficient means of disposal, especially if it is linked to procuring updated goods to serve a similar purpose. However, the estimated net cost of the new good, following the trade-in discount, should always be compared with the option of selling the unwanted good(s) and using the revenue to offset the prices of the updated good.
Sale The unwanted goods can be sold through an auction (including on-line services such as eBay), quotes or open tenders. For potentially high value items the employment of a licensed auctioneer should always be considered. If the goods are unable to be transferred or traded-in, or sold despite all best efforts, then offers from staff can be considered with the highest price accepted, as long as:

  • The inability to transfer, to trade or to sell is documented
  • The method is approved by the appropriate Delegate
  • The goods are advertised to all staff in the locality, and
  • The sale and price are full disclosed for the purpose of audit

For prospective individual sales to staff with an estimated value of $3,000 or more (plus GST), written advice to the Delegate by an independent probity advisor, confirming the propriety of the proposed method and recommending any risk mitigation or treatment actions, is mandatory before any such offer is sought. All individual sales above $150,000 (plus GST) in total value to any kind of buyer are to be disclosed in accordance to contract award disclosure requirements. Policy document refers: AAA.

Recycling, Donating, Destruction or Dumping For items of no value to the public sector, certified by a qualified person (e.g. tradesman), the priority should be to recycle them or to have them returned to the original manufacturer or agent wherever practicable. Opportunities for e-Waste recycling and disposal should also be considered wherever practicable.

For details see AAA. Alternatively, it the items have some value to a Charity or a Community/non-for-profit organisation, then such items can be removed by these organisations and their ownership transferred, subject to a written signed agreement recording that the goods are accepted in their current state, including any defects either known or latent, and there will be no cost and no obligation/liability to the Agency now or into the future.

It is recommended that legal advice be sought should the items being donated be past their ‘use-by’ date to ensure that NSW is not exposed in any way. If the unwanted items are of historic value then specific guidance is at AAA. In the last resort of dumping and destruction, the process must accord to all applicable Environmental safeguards, Work, Health and Safety requirements, and to local council regulations.

Entities or Branches within the Agency must ensure that the disposal of goods or materials that are of a hazardous or polluting nature is carried out in a responsible manner, which is consistent with relevant regulations and procedures. Before disposing of these goods or materials entities should obtain advice from the Department of Environment and Heritage at AAA.