Home → University Services → Purchasing → Section A - Overview of Procurement

General Overview of Procurement

SECTION A - PROCUREMENT

Contents of this section

1. INTRODUCTION TO PROCUREMENT.
2. OBJECTIVE
3. HOW PURCHASING WORKS

3.1 Procurement Overview: Quotations & Tenders
3.2 Purchases Subject to Special Conditions
3.3 Preferred Supplier Contracts

Leasing
Stationery & Office Products
Travel Services

3.4 Government Contract
3.5 Dollar Value Threshold for Quotations and Tenders

Value of Order (exclusive of GST)
Minimum

3.6 Probity

1. INTRODUCTION TO PROCUREMENT

This Policy & Procedure outlines how the University of Newcastle (the 'University') will conduct its procurement activities when interacting with the private sector, regardless of the source of funding. All University officers who commit or incur expenditure against any funds administered by the University are accountable for such expenditure and have a general responsibility for the exercise of due economy.

All purchases must be for the official use of the University and not involve requirements for personal use.

2. OBJECTIVE

The fundamental objective for the University's Procurement Policy and Procedure is to:

Achieve value for money - The concept of value for money is not restricted to price alone. The value for money assessment must include consideration of:
- non-cost factors such as fitness for purpose, quality, service and support
- cost related factors including whole-of-life costs and transaction costs associated with acquisition, use, holding, maintenance and disposal.
Ensure probity and accountability for outcomes - The University must ensure fair and impartial dealings with suppliers, to protect the good name of the University and its officers, and to ensure that appropriate records are retained to facilitate the usual processes of accountability and to comply with audit requirements.

3. HOW PURCHASING WORKS

3.1 Procurement Overview: Quotations & Tenders

3.1.1 A flow chart is provided below as an easy to read guide to the University's Procurement Policy and Procedure. More detailed information follows the flow chart or can be accessed by clicking on the chart's "highlighted links".

3.1.2 As the chart indicates the purchasing method to be used will be determined by considering:

Special Conditions
Preferred Supplier Contracts
Government Contracts ; and
the Dollar Value Threshold

3.2 Purchases Subject to Special Conditions

3.2.1 The University has instituted conditions and/or controls on certain types of goods and services, which must be adhered to when purchasing such goods or services, to ensure compliance with University or Government policies, and any regulations or guidelines on their handling and use. The following goods and services require referral to or approval by the relevant University authority before an order can be placed with the supplier:

3.2.2 Unless the goods and services that are subject to the Special Conditions are available under a Preferred Supplier Contract or Government Contract they will generally be dealt with in accordance with the Dollar Value Threshold (unless the Special Conditions dictate otherwise).

3.3 Preferred Supplier Contracts

3.3.1 Staff with purchasing responsibilities should be familiar with the following range of goods and services that are available under a Preferred Supplier Contract to the University (as shown at 3.3.3 below). The purpose of these contracts is to ensure as far as possible the best total cost impact at departmental level. The total cost impact takes into consideration:

Price
Transaction Cost
Risk

3.3.2 Where there is a Preferred Supplier Contract for a class of goods and services, the University expects it to be used. Furthermore, subject to the paragraph below, if the goods or services are purchased pursuant to a Preferred Supplier Contract there is no need to obtain competitive quotations for goods/services. However, notwithstanding this expectation, should staff believe that the preferred supplier is not offering the best value for money taking into account the total cost of the procurement process then they are to approach the Commercial Manager who can approve a competitive quotation process. If the Manager, Financial Operations approves of a competitive quotation process then this must be undertaken in compliance with the Dollar Value Threshold and also a quotation must be requested from the preferred supplier(s).

3.3.3 Preferred Supplier Contracts are available for the following category of goods and services:

Leasing

Stationery & Office Products

Travel Services

3.4 Government Contract

3.4.1 When goods and services can be ordered pursuant to an existing Government Contract, if the supply is under the NSW State Government Contract, there is no need to obtain competitive quotations for goods/services. However, where there is an expected value greater than $100,000, the goods and services must be procured under a Request for Tender (as outlined in Tenders - Contracts valued at or over $100,000) whether available under a Government Contract or not.

3.4.2 For any order placed pursuant to a Government Contract the relevant contract and item number is to be specified on the requisition or order.

3.4.3 Notwithstanding the ability to order goods or services under a Government Contract, nothing prevents staff from purchasing the goods and services from someone else. In such cases staff must adhere to the Dollar Value Threshold.

3.4.4 Circumstances where it may be beneficial to test the market place, even if a Government Contract exists, are:

technology has progressed
market prices have fallen
a significant time has elapsed since the government contract commenced
staff member not absolutely satisfied value for money is being obtained.

3.5 Dollar Value Threshold for Quotations and Tenders

3.5.1 All requirements not covered by a Preferred Supplier Contract or Government Contract are subject to the competitive quotation or tender process as determined by the following dollar value threshold.

Value of Order (exclusive of GST)	Minimum Number of Quotations Required to be obtained
Up to $5,000	Quotes optional
$5,000 - < $10,000	Two (2) verbal quotes
$10,000 - < $50,000	Three (3) written quotes (can be obtained by Faculty/Division or Procurement staff). Quotation documentation to be retained by Faculty/Division for audit purposes.
$50,000 - < $100,000	Three (3) written quotes (can be obtained by Faculty/Division or Procurement staff). All quotation documentation must be sent to Procurement Section for review before order can be issued.
Minor Contracts (i.e. no significant University wide impact) $100,000 - < $150,000	Requires a Faculty Tender Committee
Equipment $100,000 - < $500,000	Requires a Faculty Tender Committee
Capital Works > $100,000	Requires a University Tender Committee
Major Contracts > $100,000	Requires a University Tender Committee
Equipment > $500,000	Requires a University Tender Committee

3.5.2 As indicated above any contract with an expected value of $5,000 or over will be dealt with through a quotation process which is detailed in Quotations (Contracts valued at less than $100,000), while those with an expected contract value of $100,000 or over will be dealt with through a tendering process as detailed in Tenders (Contracts valued at or over $100,000).

3.5.3 The Dollar Value Threshold applies to the expected dollar value of the procurement rather than the actual dollar value that may result from a quotation or tendering process. However the above requirements are only minimum requirements, which can be exceeded depending on such things as the nature or complexity of the procurement and the accuracy and robustness of the estimate. Furthermore if the actual amount of a proposed purchase is not known with reasonable certainty, it is good practice to choose the higher value procedure as a conservative measure.

3.5.4 Any splitting of transactions in order to manipulate Quotation or Delegation limits is strictly prohibited. This practice is of serious concern to the University and auditors and must not occur.

3.5.5 The above table deals with all contracts, and is applicable to all contracts; however contracts for consultants have been deemed important enough to warrant a separate section in addition to the requirements above resulting in a more robust process for engaging consultants. This is primarily due to the need to report the contracting of consultants in the Annual Report.

Probity

3.6.1 Generally

Probity is a prime consideration in all procurement activities, in particular those contracts with an expected value of $100,000 or more. There are four basic principles of probity:

Obtaining of best value
Fairness and impartiality in dealing with all members of the supply chain;
Ensuring conflicts of interest are dealt with; and
Accountability for actions and decisions.

3.6.2 Adherence to probity principles ensures that the actions and decisions of stakeholders can withstand public scrutiny. The more complex and high risk the project the greater the need to engage independent probity auditors to guarantee the University's compliance with procurement policy, guidelines and regulations.

3.6.3 The relevant guidelines in relation to probity, produced by the Independent Commission Against Corruption (which, whilst a NSW body, is of general application) are:

3.6.4 Adherence to probity principles should occur in all procurement activity, however due to the complex and high risk nature of projects with an expected value of $100,000 or more there is a more detailed analysis of probity and the appointment of Probity Advisors (this is outlined in Tenders - Contracts valued at or over $100,000).

3.6.5 Conflicts of Interest

Any of the following is a conflict of interest:

Party knows the Bidder/Tenderer or any entity or person disclosed by the Bidder/Tenderer
Party (or family or close friend) owns shares in the Bidder/Tenderer or any entity disclosed by the Bidder/Tenderer
Party (or family or friend) sits on the board of the Bidder/Tenderer or any entity disclosed by the Bidder/Tenderer
Party (or family or friend) has any business interest in the Bidder/Tenderer or any entity disclosed by the Bidder/Tenderer
Party has accepted a gift/gratuity from the Bidder/Tenderer or any entity disclosed by the Bidder/Tenderer
Party has a family/social/personal/business relationship with a person connected with the Bidder/Tenderer or an entity disclosed by the Bidder/Tenderer
Any other reason for suspecting a conflict.

3.6.6 If a conflict exists, in addition to declaring the conflict, the conflicted party may need to remove themselves from the procurement process.

3.6.7 If the person can be easily replaced, taking into consideration factors such as the available expertise needed for the evaluation, then this should occur.

3.6.8 If they cannot be easily replaced then, unless a reasonable person would think that the person would be influenced (perception of conflict), they need not withdraw from the process. Though any discussions and considerations in this regard should be fully documented with reasons for decisions.

3.6.9 If however a reasonable person would think that the person would be influenced then they must withdraw, notwithstanding any issues regarding the difficulty of replacing them.