DECD Procurement Overview John Scalzi, Assistant Director DECD Procurement Unit

1. DECD Procurement OverviewJohn Scalzi, Assistant Director DECD Procurement Unit DECD Procurement Unit Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

2. Procurement Definition Exception is works >$165,000 (Inc GST) and government office accommodation including leasing and fit out which is covered by similar processes undertaken by Building Management DPTI. Procurement… Purchasing… “The process by which a company (or organisation) contracts with third parties to obtain goods and services required to fulfil its business objectives in the most timely and cost effective manner.” (source unknown) DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

3. ALL DECD Staff School Governing Councils/School Councils Pre-School Management Committee Ministerial Statutory Authorities Agency Chief Executive Government Procurement Requirements Accredited Purchasing Unit (APU) Senior officers oversee and establish policies, approve higher value/complexity purchases. State Procurement Board (SPB) DECD Procurement Unit Supports APU and sites. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

4. Government Procurement Requirements Procurement Principles Value for money Not necessarily lowest price. Assessment of quality, service, delivery, backup and support, risks, total life-cycle costs Ethical and Fair Treatment of All Participants Open and fair competition. Equal opportunity, access for new entrants, specifications are not biased, no unnecessary burden on supply market Probity, Accountability and Transparency Proper conduct. Potential or actual conflicts of interest sought, the process can stand up to public scrutiny, tenders evaluated according to published criteria, how will outcomes & decisions be disclosed. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

5. DECD Spend Profile 2012 DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

6. DECD Spend Profile 2012 DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

7. Procurement Planning Process DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

8. Vulnerability (Risk) • Long Term Contracts • Develop relationships with key suppliers • Specifying appropriate standards and levels • Exploring alternate solutions/suppliers and services • Intensive market research • Supplier performance monitoring • Negotiated and managed relationships • Partnering (product and service integration) • Contingency plans Expenditure (Cost) Procurement Strategies • Managed supply and distribution arrangements • Standing offer arrangements • Devolved purchasing • Vendor managed stock • Automated payment systems • Short to medium term contracts • Active sourcing • Promoting competition • Market research • Market exploitation DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

9. DECD Procurement Framework The Procurement Framework outlines the appropriate practices that are to be followed in accordance with government requirements. The Framework: Identifies responsibilities and delegations Defines the process for specific thresholds Details the procurement process – eg: Acquisition planning, tender development, market approach, evaluating tenders, negotiating, purchase recommendation, contract development and contract management DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

10. Financial vs Purchase Delegations DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

11. Financial Authorisations in DECD DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

12. DECD Purchase Delegations Where contracts exist, the purchase authority is up to value of contract and within the expenditure approval. Principals / Preschool Directors may sub-delegate their purchase authority to their key staff if required providing the sub-delegations are ratified and minuted by the school’s Governing Council. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

13. Procurement Methods Market Approach Request for Quote (RFQ) – formal and informal Expression of interest (EOI) – two stage process Request for Tender (RFT) Request for Proposal (RFP) By way of: Direct negotiation Selective tender Public tender DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

14. DECD Purchasing Considerations For procurements up to and including $22,000 a minimum of one verbal or written quote is required. For procurements greater than $22,000 and up to and including $220,000 a minimum of three written quotes (where possible). Procurements over $220,000 must be via a public tender call unless approved otherwise by the Accredited Purchasing Unit. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

15. Main Documents / Steps for Major Procurements Acquisition Plan – Details the procurement strategy to be followed re the market approach, propose Evaluation Criteria and the findings of market research. Specifications – A document which clearly and accurately describes the essential requirements for goods and/or services required. Tender Document – Comprises Instructions to Tenderers, Specification, Response Schedule and draft contract. The tender forms the basis of the contract and accurately reflects the scope of work and the financial, contractual and time parameters. The tender process should be structured in such a way that it: Gives all tenders opportunity to submit offers based on similar information, and; Facilitates the evaluation process and selection of the best value for money option. Tender Evaluation Plan – identifies the conduct of the evaluation including the process and Evaluation Team responsibilities which include deciding the relative importance of each criteria and assigning weighting to each criteria. Commercial and Contractual Negotiations and Contract Establishment - A Negotiation Plan is required when negotiating with tenderers to address any outstanding commercial and/or contractual issues and to seek best and final offers prior to establishing the contract. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

16. A number of Across Government Contracts have been established. Most of these contracts mandated for Government Agencies. Some of the current contracts include: Across Government Contracts Auction Services Audit and Related Services Electricity Fuels and Lubricants ICT Services Mobile Phones Natural Gases Document Output Devices (Photocopiers and Printers) Stationery and Related Products Software Standard Personal Computer/Notebooks/Servers Temporary Staff Placement Services Travel Management Services Contract Additional information about all current contracts can be found at the DECD Procurement Unit’s web pages on SSONet or In.DECD. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

17. DECD Purchasing Considerations Consultancies and Contractors Consultant = engaged for a specified period to carry out a task that requires specialist skills and knowledge not available in the public authority. Contractor = engaged for specified period to carry out a defined task in circumstances in which the engagement of a person under normal conditions is not a feasible alternative. Note: Engagement of Consultants must be approved by the CE or DCE. Need to establish terms and conditions for service agreements. In addition, Vacancy Management Approval is currently required for the engagement of contractors and consultants. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

18. Leasing The Department’s position regarding leasing is that it should not be considered unless it is determined to be the only viable method of procurement (property leasing and vehicle leasing through the mandated across government fleet arrangements are exempt from this directive). Worksites must not enter into leasing arrangements unless approval has been granted by Assistant Director, Corporate Services and the Procurement Unit. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

19. Leasing Risks In most cases the whole of life cost of leasing is significantly greater over the life of the asset than if purchasing outright. Leasing contracts are often onerous shifting risks from the vendor to the lease holder and can be difficult and/or expensive to terminate. Often the asset does not transfer ownership to the recipient at the end of the contact and has to be returned to the vendor. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

20. Lease Risk Example 1Multifunctional Device 1 – Black & White Photocopier Options: Purchase Outright To purchase MDF outright the costs of this option would include the purchase price of the MDF being $6,387.70 plus the copy cost of $0.0099 per copy (there is no minimum number of copiers per month under this agreement). Whole of life cost calculation over 5 years: Purchase Cost + Copy Costs Leasing To lease the MFD the costs of this option would include a monthly fee of $155.10 for a fixed 5 year period plus the copy cost of $0.0095 per copy (as with purchasing outright, there is no minimum number of copies per month). Whole of life cost calculation over 5 years: Total Lease Cost + Copy Costs Print Management Rental Plan To take the MFD under a print management rental plan, there is a minimum payment required of $250.80 per month (based on a minimum of 10,000 copiers per month x $0.02508 per copy) fixed for 5 years - $15,048.00 therefore even if you do less than 10,000 copiers per month, you must still pay for the minimum of 10,000 copies. Whole of life cost calculation over 5 years: Monthly Plan Rate x Plan Period + any additional copies over the minimum per month. DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

21. Lease Risk Example 1 (Continued) Table 1 Options for Procuring Photocopier DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

22. Lease Risk Example 2Multi-Functional Device 2 - Colour Photocopier Options: *NB: Multi-Functional Device 2 (Colour Photocopier) consists of both a colour and black and white component; However, comparisons outlined below are based on the MFD being used only to produce Black and White copies. Purchase Outright To purchase MFD outright the costs of this option would include the purchase price of the MFD ($11,907.50) plus the copy cost of $0.0088 per copy for black & white copying (no minimum copies under this agreement). Whole of life cost calculation over 5 years: Purchase Cost + Copy Costs Leasing To lease the MFD the costs of this option would include a monthly fee of $283.80 for a fixed 5 year period plus the copy cost of $0.0088 per copy for black & white copying (as with purchasing outright, there is no minimum copy charge per month for this option). Whole of life cost calculation over 5 years: Total Lease Cost + Copy Costs Print Management Rental Plan To take the MFD under a print management rental plan, the minimum payment required would be $363.00 per month (based on a minimum of 10,000 copies per month specified in the agreement x $0.003630 per copy) fixed for 5 years - *$21,780 - therefore, even if you do less than 10,000 copies per month, you must still pay for the minimum of 10,000 copies. Whole of life cost over 5 years: Monthly Plan Rate x Plan Period + any additional copies over the minimum DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

23. Lease Risk Example 2 (Continued) Table 2 Options for Procuring Colour Photocopier DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

24. Lease Risk Example 3Multi-functionalDevice 2 – Colour Photocopier *NB: Multi-Functional Device 2 (Colour Photocopier) consists of both a colour and black and white component; However, comparisons outlined below are based on the MFD being used only to produce Colour copies. Purchase Outright To purchase MFD outright the costs of this option would include the purchase price of the MFD being $11,907.50 plus the copy cost of $0.099 per copy for colour copying (with no minimum number of copies per month). Whole of life cost calculation over 5 years: Purchase Cost + Copy Costs Leasing To lease the MFD the costs of this option would include a monthly fee of $283.80 for a fixed 5 year period plus the copy cost of $0.099 per copy for colour copying (as per purchasing outright, no minimum number of copies per month). Whole of life cost calculation over 5 years: Total Lease Cost + Copy Costs Print Management Rental Plan It is important to note that under this agreement, colour copies charged will be additional to the minimum cost of 10,000 black and white copies per month ($363.00). The black and white copy charge is incurred irrespective of whether any black and white copies were actually made. Whole of life calculation over 5 years: Rental Period (60 months) x Cost per Month ($363) + any additional colour copies DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

25. Lease Example 3 (Continued) Table 3 Options for Procuring Colour Photocopier DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

26. Tender and Contract Timelines DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

27. Contract Execution Managing Procurement Summary Down Stream Upstream Finalise Contract Supplier Selection Contract Management Contract Strategy Supply Planning Business Needs DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/

28. Questions? For further information contact the DECD Procurement Unit on 08 8226 1610. DECD Procurement Websites: For Preschool and School Staff https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement DECD Procurement Unit For Preschool and School Staff : https://ssonet.sa.edu.au/procurement/ For Corporate, Regional Office and Families SA Staff: http://in.decd.sa.gov.au/procurement/