CEI 3.1 Procurement

1. Scope of these instructions

These Chief Executive's Instructions (CEI) outline the requirements for procurement under the Financial Management and Accountability Act 1997 (FMA Act) framework, including the Financial Management and Accountability Regulations 1997 (FMA regulations) and the Commonwealth Procurements Guidelines (CPGs).

The department’s Procurement Guidelines outline the requirements in more detail and provide practical guidance on procurement procedures.

2. Policy principles

• All procurement must represent value for money and the efficient, effective and ethical use of Commonwealth resources
• All purchases must be made in accordance with the CPGs and the department’s Procurement Guidelines (including checklists)
• Legal and probity advice must be obtained for material contracts in accordance with the department’s Procurement Protocols
• All tender documentation must be approved by the delegate before the request for tender is released to the market
• All members of tender evaluation panels must have received procurement training provided by the Procurement Advisory Unit in Corporate Services Division
• Procurement processes must be accountable, transparent and able to withstand scrutiny
• All potential suppliers must be treated equitably
• Procurement processes and decisions must be documented and records must be retained for 7 years after completion for standard contracts and 12 years after completion for tenant leases and deeds, such as deeds of standing offer
• Offers of gifts or hospitality in connection with, or in close proximity to, any procurement activity must not be accepted
• All arrangements, including contracts and other procurements, must be executed by an appropriate FMA section 44 delegate
• All purchases must be approved prior to the purchase by an appropriate FMA regulation 9
  delegate and, if required, an appropriate FMA regulation 10 delegate. Procurement arrangements should not contain contingent liabilities unless they are considered remote and immaterial.
• For minor purchases (less than $20 000 including GST)
• • Existing arrangements (corporate contracts, panels and whole of government arrangements) must be used where appropriate
  • In the ACT the department’s E-procurement system must be used to purchase stationery, toner and copy paper
  • Where e-procurement and existing arrangements are not suitable, minor purchases are to be made using corporate credit cards wherever possible.
• For medium purchases (from $20 000 to less than $80 000 including GST)
• • Existing arrangements (corporate contracts, panels and whole of government arrangements) must be used where appropriate
  • Where existing arrangements are not appropriate, medium purchases are to be made by obtaining and evaluating quotes from the market and selecting a preferred provider. A minimum of three quotes should be obtained wherever possible
• For major purchases ($80 000 and over including GST)
• • Existing arrangements (corporate contracts, panels and whole of government arrangements) must be used where appropriate
  • Where existing arrangements are not appropriate, major purchases are to be made in accordance with the mandatory procurement procedures set out in the CPGs, namely via open tender, select tender or direct sourcing. Direct sourcing should only be used as a last resort and requires approval from either the secretary, a deputy secretary or the Chief Operating Officer.

3. Target audience

These CEIs are applicable to all officials in the department.

4. Departmental instructions

4.1 Responsibilities

Officials must:

• only enter into an arrangement if it is approved by an appropriate FMA Act section 44 delegate.
• obtain prior spending proposal approval from an FMA regulation 9 delegate, as required by FMA regulation 8. The FMA regulation 9 approval must be provided in writing. Where verbal approval is provided it must be followed up in writing within 14 calendar days
• before entering into any procurement arrangement utilising departmental funds and valued at $80 000 or more (GST inclusive) for which there is insufficient existing departmental appropriation, obtain written approval from an FMA regulation 10 delegate, usually the Chief Finance Officer (CFO). (Note FMA regulation 10 approval is required for procurements extending beyond the current financial year for which there is insufficient existing appropriation, regardless of value, but the CFO has waived the requirement for procurements funded by departmental appropriation that are valued at less than $80 000 and have a duration of less than five years)
• before entering into any procurement arrangement utilising administered funds for which there is insufficient existing administered appropriation, obtain written approval from an FMA regulation 10 delegate
• ensure that any contingent liabilities arising from the procurement arrangements are remote and immaterial
• before conducting a direct source procurement valued at $80 000 or more (GST inclusive), obtain direct source approval from the Secretary, Deputy Secretary or the Chief Operating Officer
• declare and manage any actual or perceived conflicts of interest. For actual conflicts of interest this may involve removing oneself from the process
• maintain complete and accurate records of procurement activities on file, including recommendations to the delegate, supporting reasons and delegate approvals
• register all procurements and consultancies contracts valued at $10 000 or more (GST inclusive) on the department’s contracts register and raise a purchase order
• ensure all procurements and consultancy contracts valued at $10 000 or more (GST inclusive) are accurately registered on the department’s contracts register and that a purchase order has been raised.

Delegates must:

• before entering into any arrangement ensure that the requirements of FMA regulation 8 and
  9 have been met and they have appropriate FMA section 44 delegation
• not act as FMA regulation 9 delegate for procurement activities which they have managed and conducted themselves. Corporate credit card holders may exercise their delegation under FMA regulation 9 to approve spending proposals up to the transaction limits of their corporate credit card
• declare any actual or perceived conflicts of interest
• only approve the purchase of goods and/or services of a nature and value consistent with their delegation.

4.2 Reporting

• Complete and accurate records of procurement activities must be maintained on file. Sufficient documentation must be kept on file to provide an understanding of the reasons for the procurement, the process that was followed and all relevant decisions, including approvals and authorisations and the basis of these decisions.
• Mandatory procurement reporting requirements apply to the department and are outlined in the department’s Procurement Guidelines.

5. Breaches

Most officials are bound by the Public Service Act 1999 (the Australian Public Service (APS) Values and APS Code of Conduct), the FMA Act. and the CPGs to use Commonwealth resources in an efficient, effective, economical and ethical manner. Officials who do not comply with this CEI may be found to be in breach of these provisions and sanctions may apply.

6. References

6.1 Legislation

• Public Service Act 1999 (sections 10 and 13)
• Financial Management and Accountability Act 1997 (specifically s44)
• Financial Management and Accountability Regulations (regs 7, 8, 9, 10, 10A & 12)
• Public Service Act 1999 (sections 10 and 13)

6.2 Internal guidance/instruction

• Finance Circular 2011/05 – Chief Executive's Instructions
• DAFF Procurement Guidelines
• DAFF Procurement Information Sheets
• DAFF Procurement Protocols
• DAFF Finance Policy 1/2010 regulation 10 - Authorisation and Approval of Future Spending Proposals

6.3 External guidance/instruction

• Commonwealth Procurement Guidelines
• AusTender

6.4 Related CEIs

• CEI 1.2 – Fraud control
• CEI 1.3 - Gifts
• CEI 1.4 - Official hospitality
• CEI 2.1 - Risk management
• CEI 3.4 – Official Travel
• CEI 3.5 - Corporate Credit Cards

7. Definitions and Acronyms

Change History