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DFAT Procurement Operational Handbook

November 2012






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CONTENTS
Foreword ............................................................................................................................................................................ 8
Introduction ........................................................................................................................................................................ 9
CHAPTER 1 Risk Management ........................................................................................................................................ 11
Section 1: Introduction .......................................................................................................................................................... 11
Section 2: Managing risk ...................................................................................................................................................... 11
Background....................................................................................................................................................................... 11
What is risk in procurement? ........................................................................................................................................... 11
How to manage procurement risks? ................................................................................................................................ 11
Procurement risk assessment .......................................................................................................................................... 11
Risk management monitoring .......................................................................................................................................... 11
Section 3: The procurement risk management process ........................................................................................................ 12
Background....................................................................................................................................................................... 12
Stages in procurement Risk management........................................................................................................................ 12
CHAPTER 2 - Probity .......................................................................................................................................................... 14
Section 1: Introduction .......................................................................................................................................................... 14
Scope and Application ...................................................................................................................................................... 14
Policy ................................................................................................................................................................................ 14
Section 2: Ethics and Probity in Procurement ....................................................................................................................... 14
Principles .......................................................................................................................................................................... 14
Practice: Ethics and Probity in Procurement .................................................................................................................... 14
Tips: Ethics and Probity in Procurement .......................................................................................................................... 15
Section 3: Code of Conduct in Procurement and Contracting ............................................................................................... 16
Practice: Code of Conduct in Procurement and Contracting ........................................................................................... 16
Section 4: Probity Guidelines for Evaluation Panel Members ............................................................................................... 17
Section 5: Probity Guidelines for Management of and Access to Procurement Records ...................................................... 18
Overview .......................................................................................................................................................................... 18
Roles and Responsibilities ................................................................................................................................................ 18

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CHAPTER 3 - APPROACHING THE MARKET ........................................................................................................................ 19
Section 1: Introduction and scope ......................................................................................................................................... 19
Introduction...................................................................................................................................................................... 19
Scope ................................................................................................................................................................................ 19
Records Management ...................................................................................................................................................... 19
Stakeholder Consultation ................................................................................................................................................. 19
Section 2: Request for Tender, Expression of Interest and Select Tender ............................................................................. 22
Scope ................................................................................................................................................................................ 22
Preparing Approach to Market Documentation .............................................................................................................. 22
Drafting the RFT/EOI Document ....................................................................................................................................... 23
Developing the Draft Contract ......................................................................................................................................... 26
Other Internal Documentation ......................................................................................................................................... 27
Approaching the Market .................................................................................................................................................. 29
Out to market ....................................................................................................................................................................... 30
Probity .............................................................................................................................................................................. 30
Changes to Requirements ................................................................................................................................................ 30
Issuing Addenda ............................................................................................................................................................... 30
The next steps .................................................................................................................................................................. 31
The chapter on Evaluation and Selection of Suppliers provides guidance on receiving and evaluating submissions and
selecting a preferred supplier. ......................................................................................................................................... 31
Section 3: Mandatory Written Quotations $10,000 to Below $80,000 ................................................................................ 31
SCOPE ............................................................................................................................................................................... 31
Preparing Approach to Market Documentation .............................................................................................................. 31
Minimum documentation ................................................................................................................................................ 31
Other considerations ........................................................................................................................................................ 32
Approaching the Market .................................................................................................................................................. 32
Out to market ................................................................................................................................................................... 33
Closing the Approach to Market ...................................................................................................................................... 33
Section 4: Verbal Quotations $1,001 to $9,999 .................................................................................................................... 33
Scope ................................................................................................................................................................................ 33

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Evaluate Offers and Select a Supplier .............................................................................................................................. 33
Obtain financial approvals and execute the contract ...................................................................................................... 33
Execute the contract ........................................................................................................................................................ 33
Section 5: Quotations from Panels........................................................................................................................................ 34
SCOPE ............................................................................................................................................................................... 34
Financial Approval for Forms of Order ............................................................................................................................. 34
Competitive approaches within a standing offer Panel ................................................................................................... 34
Closing the Approach to Market ...................................................................................................................................... 35
Section 6: Approaching Multi Use Lists & Whole of Government Arrangements ................................................................. 35
SCOPE ............................................................................................................................................................................... 35
Existing MULs and WoG Arrangements ........................................................................................................................... 35
Multi Use Lists .................................................................................................................................................................. 35
Whole of Government / Coordinated Procurement Arrangements ................................................................................ 35
Financial Approval ............................................................................................................................................................ 36
CHAPTER 4 EVALUATION & SELECTION OF SUPPLIERS ................................................................................................................ 38
Section 1: Introduction and scope ......................................................................................................................................... 38
Introduction...................................................................................................................................................................... 38
Composition of the Evaluation Board .............................................................................................................................. 38
Section 2: Receiving Submissions .......................................................................................................................................... 39
Receiving quotations ........................................................................................................................................................ 39
Receiving Tenders and Expressions of Interest ................................................................................................................ 39
Late Tenders ..................................................................................................................................................................... 39
Opening and registering tenders and EoI ......................................................................................................................... 40
Checking if tenders/EoIs are compliant............................................................................................................................ 40
Section 3 Evaluation of submissions and Short listing .......................................................................................................... 41
General evaluation tips that apply to all procurements .................................................................................................. 41
Additional tips for evaluating the procurement of goods ................................................................................................ 41
General evaluation tips that apply to EoI evaluation ....................................................................................................... 42
Clarifying Reponses .......................................................................................................................................................... 42

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Short listing Suppliers ....................................................................................................................................................... 42
Short list Approval ............................................................................................................................................................ 43
Financial Viability Assessments ........................................................................................................................................ 43
Section 4: Selecting a Preferred Supplier .............................................................................................................................. 44
Completing the evaluation report and supplier recommendation .................................................................................. 44
Notifying Suppliers ........................................................................................................................................................... 44
Record Keeping ................................................................................................................................................................ 44
CHAPTER 5 HANDLING COMPLAINTS ........................................................................................................................................ 45
Section 1: Policy and Legislative Basis .................................................................................................................................. 45
Background....................................................................................................................................................................... 45
Policy ................................................................................................................................................................................ 45
Legislative BasIS................................................................................................................................................................ 45
Section 2: Departmental Complaints Handling Procedure ................................................................................................... 45
2.1 Receiving and Responding to a Complaint .......................................................................................................... 45
Independent Internal Review ................................................................................................................................................ 46
External Review .................................................................................................................................................................... 46
Chapter 6 - Contract Management .................................................................................................................................... 48
Section1: Introduction to Contract Management ................................................................................................................. 48
1.1 Purpose ............................................................................................................................................................... 48
1.2 Scope ................................................................................................................................................................... 48
1.3 Legislative and Policy Framework ....................................................................................................................... 48
Section 2: Contract Management -Principles ....................................................................................................................... 50
Criteria for a contract ....................................................................................................................................................... 50
Contract Management ..................................................................................................................................................... 51
Value for Money ............................................................................................................................................................... 51
Efficient, Effective and Ethical use of Resources .............................................................................................................. 51
Section 3: Developing a Contract .......................................................................................................................................... 53
Developing a Contract Checklist .................................................................................................................................... 53
Identify Resource Needs .................................................................................................................................................. 54

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Assign Responsibilities...................................................................................................................................................... 54
Statement of Requirements ............................................................................................................................................. 54
Term of Contract .............................................................................................................................................................. 54
Contract Variations........................................................................................................................................................... 54
Dispute Resolution Procedures ........................................................................................................................................ 55
Indemnities ....................................................................................................................................................................... 55
Intellectual Property Rights .............................................................................................................................................. 56
Developing Performance Evaluation Checklists ............................................................................................................... 56
Reporting Requirements: Central Contracts Database .................................................................................................... 56
Contract Transition out Plan and Novation ...................................................................................................................... 56
Contract End Date ............................................................................................................................................................ 57
Payments .......................................................................................................................................................................... 57
Section 4: Formalising the Contract ...................................................................................................................................... 58
4.1 Formalising the Contract - checklist .................................................................................................................... 58
Financial Viability Assessment .......................................................................................................................................... 58
Contracting With Specific Types of Entities ...................................................................................................................... 58
Contract Negotiations ...................................................................................................................................................... 60
Contract Document Approval and Signing ....................................................................................................................... 60
Contract Options and Variations ...................................................................................................................................... 61
Monitoring of Contracts ................................................................................................................................................... 62
Section 5: Contract End ......................................................................................................................................................... 65
Evaluate Contract Performance at the End of Contract ................................................................................................... 65
Contract End ..................................................................................................................................................................... 65
Chapter 7 - Work Health & Safety in Procurement ............................................................................................................ 69
Policy and Legislative Basis ................................................................................................................................................... 69
Introduction...................................................................................................................................................................... 69
The WHS Framework ............................................................................................................................................................ 69
Specified Roles in the WHS Act ............................................................................................................................................. 69
WHS Act and Procurement ................................................................................................................................................... 70

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Reasonably Practicable..................................................................................................................................................... 70
WHS issues to consider when procuring goods and services ........................................................................................... 70
Further information .............................................................................................................................................................. 71




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FOREWORD

The DFAT Procurement Operational Handbook sets out the procurement policy for the department. The Handbook
provides departmental officers up to date policy and guidance on procurement and contracts governance matters. The
Handbook should be used in conjunction with other departmental policy documents such as the Chief Executives
Instructions (CEIs), Finance Management Manual (FMM) and other relevant Commonwealth and departmental guidelines
and templates.
The Handbook incorporates requirements under the Financial Management and Accountability Act 1997, the Financial
Management and Accountability Regulations 1997 and the Commonwealth Procurement Rules. Effective management of
the procurement process, from the conception of an idea through contract to project closure and evaluation, is vital to the
department in delivering its outcomes most efficiently and effectively.
The Chief Finance Officer (CFO) is the sponsoring authority for the Handbook. The ultimate objective of the Handbook is to
provide clear guidance on operational procurement and contract management processes and procedures in a user-friendly
and practical manner.
I trust you will find this document to be a useful and informative resource as you conduct your procurement activities in the
department.



Ann Thorpe
Chief Finance Officer
Department of Foreign Affairs and Trade


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INTRODUCTION

OVERVIEW
The guidance provided in the HANDBOOK incorporates mandatory procurement requirements drawn from higher level
Commonwealth procurement guidance, in particular the Commonwealth Procurement Rules (CPRs). These requirements
are mandatory for all departmental officials. The HANDBOOK is the primary reference document for all departmental
officials involved in the procurement process. Departmental officials, for the purpose of this manual, include permanent
and non-ongoing staff and contractors involved in procuring goods and services on behalf of the department or using funds
of the department.
The CFO is the sponsoring authority for the HANDBOOK. Within CMD the HANDBOOK is maintained by the Procurement,
Travel and Comcover section (PTC) in the Finance Management Branch (FMB) with assistance from a wide range of
specialist areas.
COMMONWEALTH PROCUREMENT FRAMEWORK
Procurement conducted by Commonwealth appropriation-funded agencies is governed by a legislative and policy
framework comprising:
the Financial Management and Accountability (FMA) Act 1997;
the FMA Regulations 1997 ; and
the CPRs and related Department of Finance and Deregulation (DOFD) Finance Circulars.
FMA Regulation 7(2)) requires officials undertaking procurement to act in accordance with the Commonwealth
Procurement Rules (CPRs).
Procurement in the Department of Foreign Affairs and Trade is further governed by a series of policy and procedural
documents that apply in the following hierarchy:
Chief Executives Instructions (CEIs); and
Finance Management Manual (FMM)

The FMM Section 8.7 (Procurement) requires departmental officials performing duties in relation to procurement to
comply with the HANDBOOK.
WHAT IS PROCUREMENT?
Procurement encompasses the whole process of acquiring and utilising goods or services. It begins when the department
has identified a need and decided on its procurement requirement.
The procurement cycle continues through the processes of risk assessment, seeking and evaluating alternative solutions,
contract development and award, delivery of and payment for the goods or services and, where relevant, the ongoing
management of a contract and consideration of contract extension options and contract variations.

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In addition to the acquisition of goods or services by the department for its own use, procurement also encompasses a
situation where the department, from its appropriations, is responsible for the procurement of goods or services for other
agencies, or for third parties (e.g. where we procure security services for a site and recover a portion of the cost from other
co-located agencies that benefit from the service).
WHAT IS NOT PROCUREMENT?
This Manual does not cover spending proposals that are not procurements.
While procurement relates to the acquisition of goods or services, it does not include:
grants (whether in the form of a contract or conditional gift);
investment (or divestment);
sales by tender;
loans;
purchases of goods or services for resale or of goods or services used in the production of goods for resale;
any property right not acquired through the expenditure of public money - for example, a right to pursue a
legal claim for negligence;
statutory appointments;
appointments made by a Minister using the executive power - for example, the appointment of a person to an
advisory board; or
the engagement of employees - such as under the Public Service Act 1999, the Parliamentary Services Act
1999 and the department enabling legislation, or under the common law concept of employment.
ROLES AND RESPONSIBILITIES OF PTC
Procurement functions within the department are highly devolved. The department employs procurement specialists to
assist staff in some line areas conducting a high number of and/or high value procurements. In line areas that do not have
dedicated procurement specialists (principally policy divisions and posts), procurement is undertaken by officers on a needs
basis with advice and assistance from PTC, budget and divisional coordinators or Senior Administrative Officers (SAO).
PTCs role involves providing policy advice on departmental procurement matters; procedural advice on high-value, and
high-profile procurements; setting and maintaining currency of the departments procurement policies and associated
guidelines and templates; and providing a governance framework for procurement and contract management matters in
the department through procurement policy oversight, strategic analysis of trends and reporting.
Departmental officers undertaking procurement should, in the first instance, refer to the HANDBOOK for advice regarding
the departments procurement policy, processes, guidance and templates.


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CHAPTER 1 RISK MANAGEMENT
SECTION 1: INTRODUCTION
A documented risk assessment must be completed and kept on file for all procurements valued at or above $50,000. The
result of risk assessments is an important factor in determining the type of contract to be used.
Division 1 of the Commonwealth Procurement Rules (CPRs) encourages officials undertaking procurements to have a
documented risk management strategy that enables procurement officials and contract managers to examine the impact of
each potential risk, meet any compliance standards, make better business decisions, plan proactive communications
including management strategies and enhance the potential for the procurement success.
The risk management process detailed in this chapter is consistent with the framework contained in the DFAT Risk
Management Handbook. The Risk Management Handbook provides the foundation for implementing, monitoring, review
and continual improvement of risk management across the department.
SECTION 2: MANAGING RISK
BACKGROUND
Managing risk is an integral part of good procurement practice. The application of a risk management process improves
procurement outcomes by:
identifying and reducing exposure to risk;
providing greater certainty and insight to support decision-making; and
improving contingency planning for dealing with risks and their impacts.
WHAT IS RISK IN PROCUREMENT?
Risk is the possibility that an expected outcome will not occur or that an unforeseen event, usually detrimental to the
outcome sought through the procurement process, will occur.
Risk is usually measured by: consequences - what will happen; and likelihood - the chances of it happening.
HOW TO MANAGE PROCUREMENT RISKS?
Risk management identifies potential risks, analyses their consequences, and develops mitigations strategies. The aim is to
achieve reliable planning, improved decision making and greater certainty of outcomes.
The risk management process is applicable to all stages of procurement and is an integral part of good procurement
management. Effectively managing risk can lead to significant savings in resources, timely delivery and improved quality of
services and relationships with clients. This should also include consideration of industrial relations, ecologically
sustainable development, Work Health & Safety (WHS) management and economic issues.

Risk management activities should always add value to the procurement process. The effort expended in managing risk
should be commensurate with:
the nature of the procurement;
the cost of the procurement;
the complexity of the procurement; and
the significance of the procurement to DFAT and the Commonwealth.
PROCUREMENT RISK ASSESSMENT
It is mandatory to prepare a risk management assessment, however the level of the risk assessment should be
commensurate to the size and scope of the procurement. Consideration should be given to the requirement of the
delegate, needs of the project, its corporate goals, the services it intends to secure, and the specific strategies adopted.
RISK MANAGEMENT MONI TORING
As risks may change during the course of a procurement project, it is necessary to periodically review and, where
necessary, update the initial risk assessment.

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SECTION 3: THE PROCUREMENT RISK MANAGEMENT PROCESS
BACKGROUND
The process outlined in this section is largely sequential. In practice, however, it is often necessary to revisit previous stages
as the process proceeds and to reconsider earlier decisions when new information becomes available.
The DFAT Risk Management Handbook outlines the departments risk management process in detail. The following
paragraph provides a summary of what each stage in the process entails.
STAGES IN PROCUREMENT RISK MANAGEMENT
ESTABLISHING THE RISK CONTEXT
This is the preparatory stage. It results in familiarity with the proposed procurement, and identifies key parameters and
assumptions. Consider those factors which may influence performance of the procurement activity, and the risks that it will
be exposed to. In particular:
What is the activity to be considered or decision to be made?
What are the circumstances of the activity?

Define the criteria against which to judge identified risks. In the planning stages of the procurement, the criteria will reflect
strategic concerns. In the contract management stage the criteria are likely to concern efficient completion, cost control,
quality and compliance. When identifying risk, it is often helpful to break the activity down into the major elements or
stages. For example, procurement can generally be broken down into planning, approaching the market, evaluating
submissions and contract management stages.
IDENTIFYING POTENTIAL RISKS
This stage identifies the risks that might affect each major element of the procurement process. The aim is to create a
comprehensive list of risks and document what each involves.
Consider all risks, whether or not they are under the control of the department. Think about what, why and how things
might affect the action or decision.
What can happen? Compile a list of the possible events that could have an unwanted or unintended effect on the
procurement. Consider the full life-cycle of the good or service, and include problems that may arise after the goods are
received or the service performed.
How and why could it happen? Explore the events identified in the first question for their possible causes and implications.
ANALYSING RISKS
The next stage is to estimate the likelihood of a risk arising and its potential consequences.
Determine the overall risk level by combining estimates of likelihood, and consequence in the light of existing controls.
Existing controls are the management and other systems that are already in place to control risk.
The analysis of likelihood and consequence may be undertaken to varying degrees of refinement, depending on the scale of
potential risk and information available. The greater the potential risk, the greater the level of analysis required. The main
questions are:
How likely is the event?
What are the consequences of the event?
What is the overall magnitude of the risk?
EVALUATING RISKS
Risk evaluation decides which risks need treatment, and determines priorities for treatment. Think about:
Which risks are acceptable?
Which risks should be avoided?
Which risks require treatment?



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In the first instance, you should consider whether the risks are acceptable. This may determine whether the risk needs
treatment or whether the activity should be undertaken. This assessment should take account of:
the importance of the procurement;
the degree of control that the department has over each risk, and
the overall impact of the risk (as assessed using the matrix).
A risk treatment is unlikely to eliminate a risk completely. It is important that the residual risk is accurately identified and
that there is a clear acceptance of this residual risk. The acceptable risks and the reasons why they are acceptable should be
documented, together with the results of the assessment.
TREATING RISKS
Risk treatment must be appropriate to the significance of the risk and the importance of the activity.
For high priority risks requiring treatment, this stage involves:
What are the potential treatment options?
evaluating and selecting appropriate options; and
What are the risk treatment plans?

Risk treatment options may include:
avoiding the risk by either discontinuing the activity or using alternative means to achieve a similar outcome;
transferring the risk. Insurance is a common risk transfer strategy. Contracts and specific terms of a contract
between DFAT and its service providers are the primary means of allocating risks between the parties involved in
procurement; or
accepting risk when it cannot be avoided or transferred, or the cost of doing so would not be worthwhile. It is
recommended that risk reduction or impact mitigation measures and monitoring be employed in these
circumstances, as appropriate.
MONITORING AND REVIEWING RISKS
Few risks remain static. Consequently it is necessary to monitor risk treatment options or plan and the effectiveness of its
implementation.
It is not always sufficient to simply undertake a risk assessment at the procurement stage. Risk assessment relating to
procurement should be regularly reviewed to ensure its ongoing relevance, and amended if circumstances change.



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CHAPTER 2 - PROBITY
SECTION 1: INTRODUCTION
SCOPE AND APPLICATION
Policies and principles contained in this chapter apply to all DFAT employees and anyone providing services to DFAT in the
capacity of a contractor or volunteer.
POLICY
Ethics and probity are to be integrated throughout the entire procurement process, from when a need is first identified
through to the ongoing management of a contract.

SECTION 2: ETHICS AND PROBITY IN PROCUREMENT
PRINCIPLES
Probity is the evidence of ethical behaviour, and can be defined as complete and confirmed integrity, uprightness and
honesty in a particular process.
The principles underpinning ethics and probity in Australian Government procurement are:
Officials must act ethically, in accordance with the APS Values (set out in section 10 of the Public Service Act 1999)
and Code of Conduct (set out in section 13 of the Public Service Act 1999), at all times in undertaking procurement.
Officials must not make improper use of their position.
Officials should avoid placing themselves in a position where there is the potential for claims of bias.
Officials must not accept hospitality, gifts or benefits from any potential suppliers during a tender process.
Agencies must not seek to benefit from supplier practices that may be dishonest, unethical or unsafe.
All tenderers must be treated equitably. This means that all tenderers must be treated fairly - it does not
necessarily mean that they are treated equally.
Conflicts of interest must be managed appropriately.
Probity and conflict of interest requirements should be applied with appropriate and proportionate measures
informed by sound risk management principles.
Value for money outcomes are best served by effective probity measures that do not exclude suppliers from
consideration for inconsequential reasons.
Confidential information must be treated appropriately during and after a procurement process.
External probity specialists should only be appointed where justified by the nature of the procurement.
The appointment of external probity specialists does not remove an agencys accountability for the procurement
process.
PRACTICE: ETHICS AND PROBITY IN PROCUREMENT
IDENTIFICATION AND MANAGEMENT OF ACTUAL, POTENTIAL AND PERCEIVED CONFLICTS OF
INTEREST
A conflict of interest arises where an official, an adviser or a supplier has an affiliation or interest that might prejudice, or be
seen to prejudice, his or her impartiality.

The APS Code of Conduct requires APS employees to disclose, and take reasonable steps to avoid any conflict of interest
(real or apparent) in connection with APS employment.

Officials should seek to eliminate actual, potential and perceived conflicts of interest. When this is not possible (such as
where it would exclude needed expertise or the conflict is so widespread as to be impossible to avoid completely), effective
management strategies should be implemented.


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Officials must be mindful of potential conflicts of interest that might arise and must not use their position to gain or seek to
gain a benefit for themselves or any other person. Officials should strive to avoid situations in which there may be actual,
potential or perceived of conflicts of interest including not allowing themselves to be improperly influenced by family,
personal or business relationships.

Effective management of conflicts of interest does not require conflicts to be avoided at all costs; rather, they must be
managed appropriately.
PROCESS ADVISERS, PROBITY ADVISERS AND PROBITY AUDITORS
External probity experts may include process advisers, probity advisers and probity auditors:

A process adviser generally provides advice on the overall tender process to appropriately address any probity
issues, as well as on specific probity related matters. Such an adviser could provide advice on drafting,
implementing and monitoring compliance with a comprehensive procurement plan.

A probity adviser would typically advise on probity issues as they arise during a tender process, possibly in
accordance with a probity plan that provides guidance on how probity is to be addressed during the procurement.
If the probity expert is an adviser and will not be involved in auditing the process, they can offer advice and
solutions if any problems occur.

A probity auditor seeks to report an objective opinion on probity issues, generally after the process has been
completed. A probity auditor should not be called in during a process to try and remedy problems, but could
provide sign-off after a problem has occurred to ensure the probity issues have been addressed and it is
appropriate to continue with the process. If a probity expert is engaged as an auditor, they need to maintain their
independence and objectivity, and should therefore not be involved in offering advice to solve any probity
problems that arise during the tender process.
APPOINTING PROBITY EXPERTS
The appointment of probity experts must be treated as a separate procurement and be undertaken in accordance with the
Commonwealth Procurement Rules (CPRs).

External probity specialists should be appointed where justified, and not automatically just because an open tender process
is being undertaken. The decision on whether to engage an external probity specialist should weigh the benefits of
receiving advice independent of the process against the additional cost involved and include consideration of whether or
not skills exist within the agency to fulfil the role.

The role of a probity expert can be addressed within either a probity plan or a procurement plan. It is important that the
probity plan is carefully drafted and all parties clearly understand the role a probity expert is being engaged to perform.
Before the process commences, all parties should have a clear understanding about the level of assurance that the agency
will be seeking from the adviser. Probity experts should be independent and free from conflicts of interest, and have a
sound knowledge of all relevant government policies and procedures. Sign-off by external probity experts cannot replace
officials own accountabilities and obligations in regard to the proper conduct of procurement activities.
TIPS: ETHICS AND PROBITY IN PROCUREMENT
Mechanisms for assuring probity should be applied sensibly in procurement processes, with the management of probity
issues tailored to each individual process.

Care should be taken to avoid setting requirements which are not intended to be followed or will require an obligation that
does not deliver value for money.

The tender evaluation criteria advertised in the request documentation must be used to evaluate the tenders and must be
related to the tender response requirements.

The tender evaluation criteria in the request documentation must not be altered during the evaluation process without a
formal request documentation amendment process.

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Sound records management is important to demonstrating that probity has been addressed appropriately in procurement
process.

Officials must appropriately protect confidential information and not use inside information (including intellectual
property) provided to the agency in relation to the procurement, either for the material benefit of the official or for
another person.

It is important to clearly demonstrate that all decisions were made using proper and ethical processes. Again, proper
documentation of the issue is important and external assistance may be warranted.

Where elements of the APS Values and Code of Conduct are to be observed by a contractor, the relevant contract should
explicitly state the obligation.

People involved in the tender process should make written declarations of any actual, potential or perceived conflicts of
interests prior to taking part in the process. These people should also have an ongoing obligation to disclose any conflicts
that arise through until the completion of the tender process.

The rules for the tender should:
make clear to tenderers what steps will be taken in the event of actual, potential or perceived conflicts of interest
being identified (arising prior to and during a tender process) in relation to the tenderer;
make clear what steps will be taken in the event of actual, potential or perceived conflicts of interest being
identified; and
include arrangements to deal effectively with incumbent suppliers (if any) during a tender process.

Tender documentation, including any draft contract, should make clear the arrangements that will apply to any actual,
potential or perceived conflicts of interest once a supplier is contracted. Disclosure requirements should be clear, with
appropriate and proportionate measures, informed by sound risk management principles, included in the contractual
arrangements to address any such conflicts of interest.

Tender documentation should make it clear that late tenders will not be accepted.

SECTION 3: CODE OF CONDUCT IN PROCUREMENT AND CONTRACTING
PRACTICE: CODE OF CONDUCT IN PROCUREMENT AND CONTRACTING
Particular situations in which DFAT officials should exercise care include those where gifts, travel, or conflicts of interest
could give rise to a perception of bias.
GIFTS AND HOSPITALITY
Officials must not improperly use their position to gain a benefit, gift or hospitality.

Hospitality can include presentations, demonstrations, briefings and discussions, accompanied by meals. Travel and
accommodation is covered at 3.1.2.

Social contact with potential and known suppliers should be avoided during the period an Approach to Market (RFT, RFQ,
verbal and written quotations etc) is underway and before contractual arrangements are finalised. Offers of hospitality and
entertainment must not be accepted by DFAT staff during these times and must be disclosed in accordance with relevant
DFAT guidelines.




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TRAVEL AND ACCOMMODATION
Usually, DFAT provides for the business travel and accommodation requirements of its staff. A business may only provide
travel and accommodation for DFAT staff in circumstances directly related to a formal contractual arrangement and where
such an arrangement cannot be seen as creating a conflict of interest.
CONFLICTS OF INTEREST
Officials should ensure that all interactions with businesses will be able to withstand public scrutiny.

Examples of conflicts include officials involved in a procurement having material share holdings, controlling interests or
management authority in an entity competing for the departments business, unauthorised disclosure or personal use of
any information which would result in insider trading or a DFAT officials engaging in dealings with suppliers that may
benefit a member of the officials family.

Whether the conflict of interest can be avoided or not, officials must declare it promptly in writing to their supervisor and
arrangements must be put in place to avoid or remove the conflict. This may include excluding the official from any further
participation in a procurement process.

COMMERCIAL-IN-CONFIDENCE
Contracts with DFAT provide specific guidance on the identification and treatment of confidential material, personal
information and freedom of information requirements.

Information exchanged between DFAT and its business partners is frequently classified as Commercial-in-Confidence. As
stated in the departments standard contracts, Commercial-in-Confidence information does not preclude the information
being disclosed where there is a legal requirement to do so including the requirement to disclose information to the
Parliament or its Committees.

Officials must follow the need-to-know principle when handling information that is classified Commercial-in-Confidence.

SECTION 4: PROBITY GUIDELINES FOR EVALUATION PANEL MEMBERS

1. Do not provide information, verbally or in writing, to any individual or organisation concerning the tender process
unless you have been specifically authorised to do (see below for details of the contact officer for the obtaining of
authorisation).
2. Make clear in response to any inquiry that:
a. you cannot provide information concerning the tender process unless you are authorised to do so; and
b. the inquiry cannot be made in-confidence and will be referred to the contact officer.

3. Maintain a record of any requests for information, and report to the contact officer.

4. If authorised to provide information to tenderers, ensure consistent information is provided to all potential tenderers.
For procurements above the relevant procurement thresholds, this may include releasing addenda.

5. Do not disclose any confidential information about a potential tenderer to other potential tenderers.

6. If authorised to respond to tenderers after the tender closing date, do not discuss any information with a tenderer that
comments on or makes a comparison with another tenderers proposal.

7. Ensure the security of all confidential information relating to the tender process.

8. Do not consider unsolicited references or submissions by tenderers outside those provided for in the tender process.

18

SECTION 5: PROBITY GUIDELINES FOR MANAGEMENT OF AND ACCESS TO PROCUREMENT
RECORDS
OVERVIEW
Maintaining the highest levels of confidentiality is essential to ensuring the probity and fair dealing in the departments
procurement processes.

All documents containing sensitive information relating to contract management in DFAT must be classified Commercial-
in-Confidence and must be managed on a strictly need-to-know basis.
ROLES AND RESPONSIBI LITIES
APS STAFF
APS staff are responsible for ensuring that:
only staff that have a genuine business requirement should have be able to access procurement and contract
management information.
Non-APS personnel under their supervision who have a business need to access such records complete a
declaration of no conflict of interest, and sign a confidentiality agreement if one does not already exist. Any
conflict of interest or potential conflict of interest must be managed before providing access.
All disclosures of conflicts should be fully documented and retained on file.
NON-APS PERSONNEL
Non-APS personnel working in DFAT are not to be granted access to records concerning the management of a
procurement or contract unless the access is authorised by the delegate or contract manager, who must be an APS officer
with the appropriate delegation to do so.

Non-APS personnel that have access to DFAT premises and / or systems must:
not engage in any practice, including an improper inducement, which gives anyone an improper advantage over
another;
not engage in any form of collusive practice;
disclose, immediately, any actual or apparent conflict of interest and take steps to avoid that conflict. They must
also promptly identify and disclose to the contract manager or delegate any actual, perceived or potential conflicts
of interest involving themselves, their immediate family or any other relevant relationship; and
complete all details of any declaration of conflict of interest accurately and honestly.



19

CHAPTER 3 - APPROACHING THE MARKET
SECTION 1: INTRODUCTION AND SCOPE
INTRODUCTION
This chapter, Approaching the Market (ATM), takes you through the processes required to undertake an approach to the
market in a manner that is compliant with Commonwealth and DFAT procurement policy.
SCOPE
This chapter encompasses the steps from preparing approach to market documentation, approaching the market and
receiving proposals.
Processes outlined in this chapter are to be used when undertaking the following Approach to Market (ATM) types:

Section 2: Request for Tender, Expression of Interest and Select Tender;


Section 3: Mandatory Written Quotations $10,000 to Below $80,000;
Section 4: Verbal Quotations;
Section 5: Quotations from Panels; and
Section 6: Approaching Multi Use Lists & Whole of Government Arrangements.

This guide is presented in three stages for each ATM type:
Preparing to Approach the Market;
Approaching the Market; and
Receiving proposals.

For information on evaluating and finalising the procurement process, refer to the DFAT Procurement Guide Evaluation
and Selection. The DFAT Procurement Guide Contract Management provides further guidance regarding the
establishment and management of contracts.
RECORDS MANAGEMENT
To ensure compliance with the DFAT Recordkeeping Policy, final approved documentation should be filed in accordance
with DFATs Record Keeping Policy and General Disposal Authority (GDA) 25 of the National Archives Act.

STAKEHOLDER CONSULTATION
Consider which internal and external stakeholders need to be consulted. This consultation provides an opportunity to
obtain agreement about the course of action you propose to take.

INTERNAL STAKEHOLDERS
If your procurement is politically or commercially sensitive you should notify the Procurement Travel and Comcover section
(PTC) early in your planning process. You should also consider consultation with key internal stakeholders such as other
work units, Senior Executive, DLB, Media Liaison etc.

You must consult the following work units for certain types of procurements:
Property / Construction / Fit out: Overseas Property Office;
IT hardware and software: Information Management Division;
Security equipment: Diplomatic Security Branch;
Special Envoys: PTC;
Legal services: International Legal Division.

20

MINISTERS OFFICE
Consider whether you need to notify the Ministers office of the procurement.
EXTERNAL STAKEHOLDERS
You should consider consultation with key external stakeholders (such as other portfolio agencies etc) for procurements
where they have a clear identified role in the procurement activity or where there are benefits in undertaking cooperative
procurement approaches.

PROBITY ISSUES
It is prudent to ensure that stakeholders provided with information regarding the procurement do not have a conflict of
interest. For example, they should not be prospective suppliers or in a close personal or commercial relationship with
prospective suppliers.

21

QUICK GUIDE MINIMUM DOCUMENTATION REQUIRED FOR VARIOUS PROCUREMENT METHODS

For $80,000 and above unless exemptions apply For under $80,000
Procurement Process Stages RFT EoI Prequalified Tender* 3 Written Quotes
Verbal Quotes
Number of Suppliers to Approach All Suppliers through Open
ATM
All Suppliers through Open
ATM
All Suppliers short listed from
EoI Minimum 3 Minimum 2
Minimum Number of Proposals to be Obtained N/A N/A N/A Minimum 3 Minimum 2
Method of Approach to Market (ATM) / Method
of Contacting Suppliers
AusTender Open
Advertisement
AusTender Open
Advertisement
AusTender Select
Advertisement Verbal or in writing Verbal or in writing
Number of Days ATM to be Kept Open
Minimum 25 Calendar
Days
Minimum 25 Calendar
Days
Minimum 25 Calendar
Days
N/A N/A
Method of Receiving Proposals
DFAT Physical Tender Box in R
G Casey Building
DFAT Physical Tender Box in R
G Casey Building
DFAT Physical Tender Box in R
G Casey Building In writing Verbal
Minimum documentation to be provided to the market as part of the ATM
Conditions for Participation Yes Yes Yes N/A N/A
Minimum Content and Format Yes Yes Yes N/A N/A
Draft Contract (including Statement of
Requirement) Yes Yes Yes
Depending on Risk or Type
of Procurement.
Depending on Risk or Type
of Procurement
Evaluation Criteria Yes Yes Yes N/A N/A
Minimum internal documentation to be prepared (and approved) before undertaking an ATM
Procurement Plan Yes Yes Yes N/A N/A
Evaluation Plan Yes Yes Yes N/A N/A
Pre-ATM Regulation 9 Yes Yes Yes N/A N/A


22

SECTION 2: REQUEST FOR TENDER, EXPRESSION OF INTEREST AND SELECT TENDER
SCOPE
This Section is presented in three stages:
preparing to approach the market;
approaching the market; and
receiving proposals.
REQUEST FOR TENDER (RFT)
All procedures outlined in this Section apply to Requests for Tender.
EXPRESSION OF INTEREST (EOI)
All procedures outlined in this Section apply to Expressions of Interest (EoI). An EoI is often the first step in a two-
stage process and is usually followed by a Prequalified Tender. Minimum ATM advertising timeframes of 25 days
apply to both an EoI and following Prequalified Tender.
PREQUALIFIED TENDER (PT)
All procedures outlined in this Section apply to Prequalified Tenders. A Prequalified Tender is often the second
step in a two-stage process and is usually preceded by an EoI. Prequalified Tenders are ATMs to a select group of
suppliers who have been:
shortlisted from an EoI; or
hold a specific license; or
are suppliers in a Multi Use List (MUL). Section 6: Approaching Multi Use Lists & Whole of Government
Arrangements provides additional information regarding purchasing from MULs.
PREPARING APPROACH TO MARKET DOCUMENTATI ON
You have identified that the procurement method for your procurement is to approach the market through a
Request for Tender (RFT) or a Prequalified Tender. Generally an RFT or Expression of Interest (EoI) is used for an
open ATM. All open ATMs must be advertised on AusTender.

The following topics and documents must be included as part of all RFT, EoI and Prequalified Tenders and must
be prepared using relevant DFAT procurement templates.

Document Distribution Key Topics Covered (not limited to)
Request for Tender (RFT) All potential suppliers
through AusTender.
Topics covered in RFT, EoI and PT:

minimum content and format
requirements;
conditions for participation;
evaluation criteria;
any industry briefing information (if
applicable)
insurance requirements;
tender rules such as closing dates,
contact officer etc.
Expression of Interest (EoI) All potential suppliers
through AusTender.

Prequalified Tender (ST) only potential suppliers
shortlisted through an EoI;
or
only potential suppliers who
are participants in an
already established Multi
Use List; or
only all potential suppliers
who hold a specific license.
Draft contract based on DFAT
standard form contracts:

Distribution depending on
the type of approach
document (RFT, EoI) as
outlined above.
Statement of Requirements;
Insurance requirements;
indemnities

23


The following documents must be prepared and approved by the relevant financial delegate (FMA Reg 9, FMA
Reg 10, FMA s.44 delegate/s depending on the request) prior to any approach to market for above the relevant
threshold procurements:

Document Distribution Key Topics Covered (not limited to)
Evaluation Plan Only DFAT APS officers Evaluation criteria;
Weightings for evaluation criteria;
Method of evaluation;
Tender Evaluation Board details;
Probity considerations;
Governance and approval
arrangements.
Deeds of Confidentiality and
Conflict of Interest Declarations
Only DFAT APS officers
DRAFTING THE RFT/EOI DOCUMENT
MINIMUM CONTENT AND FORMAT REQUIREMENTS
Suppliers need guidance on minimum content and format (MCF) requirements to submit a tender response.
MCF requirements are specified by DFAT in the RFT/EoI document. DFATs templates for RFTs and EoI contain
the departments standard requirements. For example, the RFT template states that tenders must:
be presented in English;
unless otherwise specified, express all measurements in Australian legal units of measurement;
contain a Compliance Statement in accordance with Section 5, Schedule 3 (Tender Response);
Include a signed Tenderers Declaration for Compliance with the Fair Work Principles in the form set out
at Section 7, Schedule 3 (Tender Response); and
include a signed Tenderer's Declaration in the form set out at Section 8, Schedule 3 (Tender Response).
You should exercise care when inserting additional mandatory MCF requirements in your RFT / EoI.

Please note that proposals that do not meet MCF requirements must be eliminated from further consideration.
Further information is provided in the DFAT Guide Evaluation and Selection of Suppliers.
CONDITIONS FOR PARTICIPATION
Conditions for participation (CFP) are mandatory requirements, usually requiring a Yes or No response.
A supplier that does not comply with a CFP must be excluded from further evaluation.

CFPs describe minimum standards or essential characteristics that suppliers must meet for their submissions to
be considered. DFATs templates for RFTs and EoI contain the departments standard requirements. For
example, tenderers must demonstrate compliance with the following Condition for Participation:

the tenderer (and any of its proposed subcontractors) must not be named as not complying with the
Equal Opportunity for Women in the Workplace Act 1999 (Cwlth).

If you wish to insert additional CFPs in your RFT/EoI, considerable care should be taken to ensure that the
requirement can be evaluated through a simple yes/no analysis. If the supplier cannot answer yes or no, then it
is unlikely that your requirement is a CFP. Instead you should include it as part of the evaluation criteria.


24


Example of a CFP:
If your requirement is for services in which the industry has certification standards, such as accounting services
which require that the personnel have a Certified Practicing Accountant (CPA) qualification, you may require the
suppliers to state if they have this qualification in the form of a Yes / No answer. You might then ask the
suppliers to provide evidence of the CPA qualification as part of the minimum content and format requirements..
Example of what is not a CFP:
The tenderer must have extensive experience providing accounting services to Commonwealth Agencies.
This is not a CFP because the response could be subjective. It would be better to include this question in the
Statement of Requirements or as one of the evaluation criteria.
CONTACT OFFICER
You must nominate a contract officer for all RFTs and EoIs. Contact information must include:
position of the contact officer;
generic email address (not the persons email address)
o you should use or create a specific email address for your tender or panel. This email address
should ideally reflect the name of the process;
o it is your responsibility establish a unique email address for the ATM. This can be done by
getting your delegate to email the Global Support Centre with a suggested title for the email
account and a list of APS officers who should have access to the mailbox.

All contact from prospective tenderers MUST be in writing.
LODGEMENT DETAILS
The process and address for lodgment of responses must be specified in the RFT/EoI. Responses for Canberra
based procurement processes must be submitted at the DFAT Tender Box in hard copy. Standard DFAT
templates include the R G Casey Building tender box address. State Offices and Posts may nominate their own
lodgment location as long as tenders can be kept safely and not be opened until after the nominated closing
time for the process.
ELECTRONIC TENDER SUBMISSIONS
All RFT and EoI responses must be lodged in hard copy at the designated tender box. DFAT does not currently
accept RFT and EoI submissions in any other format.
CONDUCTING INDUSTRY BRIEFINGS OR SITE VISITS
It is not mandatory to conduct industry briefings or site visits as part of the procurement process. You should
consult PTC if you are considering conducting industry briefings or site visits. You should also consult your
probity adviser if you have appointed one. It is important to ensure that all potential tenderers have equal
access to information about the tender.
PURPOSE OF INDUSTRY BRIEFINGS
Industry briefings are usually only conducted if the procurement subject matter is very complex. The industry
briefing is used to explain the procurement and ensure that suppliers have understood the requirement.
Industry Briefings can sometimes be useful to:

explain certain aspects of the statement of requirement;

25

avoid uncertainties on the part of potential bidders;
clarify any problems or difficulties potential bidders may have;
clarify for procurement staff the abilities and capabilities of the marketplace; and
provide a forum to promote mutual understanding of each partys position and requirements.
PURPOSE OF SITE VISITS
A site visit is usually conducted where suppliers are not able to accurately respond to the RFT/EoI unless they
have visited the site. For example, suppliers that wish to respond to a building fit-out may need to see the
interiors of the building because the floor plans may not provide sufficient information.
INDUSTRY BRIEFING/SITE VISIT DOCUMENTATION
An industry briefing or site visit can be either optional or mandatory for tenderers to attend. Where mandatory,
it must be stated as a condition for participation in the ATM document. All tenderers that do not attend the
mandatory briefing or site visit must be eliminated from further consideration as they will not have complied
with the conditions for participation.

In all instances, whether mandatory or optional, relevant details of industry briefings or site visits must be
specified in the ATM document and should be brought to the attention of suppliers through the AusTender
advertisement and, if required, any other media advertisement.
PROBITY WHEN CONDUCTING INDUSTRY BRIEFINGS/SITE VISIT
You should consider the following factors when conducting an industry briefing or site visit:
require attendees to provide their details (ie. company name, name, position, contact details) for
information , security purposes and, where applicable, registering in the Visitor Management System;
appropriate venue - you may need to book a meeting room;
if you are expecting a large number of attendees you may wish to limit the number of people attending
on behalf of each tenderer.
A checklist is attached at Attachment 1 Industry Briefing Checklist.
ATTENDANCE REGISTER
An attendance register containing relevant details should be prepared. DFAT should ensure that all attendees
sign the register.
NON-ENGLISH SPEAKING BACKGROUND
Potential respondents who may not be conversant in English are welcome to bring an interpreter with them to
ensure that they do not miss opportunities to ask questions and seek clarification.
EVALUATION CRITERIA
Evaluation criteria are at the core of the evaluation process and are used to establish the capability and capacity
of suppliers to meet the departments requirements. Evaluation criteria also provide information to the supplier
about what you are looking for in a supplier.

Generally, as the value, risk and complexity of procurement increases, so does the importance of the evaluation
criteria. Great care needs to be taken in the choice of evaluation criteria. Evaluation criteria should be
measurable, clear and transparent.

The DFAT RFT / EoI template lists general criteria. You can change these criteria as required to meet your
evaluation needs.




26

DEVELOPING EVALUATION CRITERIA
Evaluation Criteria may be weighted or a combination of weighted and non-weighted criteria.

WEIGHTED CRITERIA
Weighted evaluation criteria should be measurable, clear and transparent and align with the statement of
requirements. Each criterion should be scored using a scoring system. A standard 5 or 10 point scale is
recommended, based on how well the offer satisfies the criterion (eg. 2/5 or 3/10).

Weighted Criteria: Must Total 100%

Weighted
criteria
(Total 100%)
Criteria Examples to check suitability
Capability
Infrastructure - whether the tenderer has
the internal infrastructure to support
delivery of the good/service e.g. enough
manpower, support etc
a) Organisation structure and profile of top
management team
b) Quality Assurance systems/procedures
c) Staff training and WHS policies/procedures
d) Demonstrated experience delivering similar goods /
services.
Capacity
Experience - relevant experience and
organisational capacity to deliver
Personnel - the relevant experience, extent and
availability of personnel specified for the project
Proposal Timeframe - delivery/response times
a) The degree to which the project proposal or
proposed project methodology will achieve the
desired project performance
b) outcomes/deliverables set out in the Statement of
Requirement [SOR]
c) Risks inherent in the offer
NON-WEIGHTED CRITERIA
Non-weighted criteria often include cost, financial viability risk, agreement with contractual terms, and special
value add features of the tender.
CHANGING EVALUATION CRITERIA DURING THE APPROACH TO MARKET
Where there is a requirement to change the evaluation criteria or plan (including weightings) prior to closing an
approach to market, you must consult PTC. You will also have to issue an addendum to communicate the
change, extend the timeframe, or potentially cancel the procurement.

Allow the industry sufficient time to address any changes in their submissions before the tender closing time

DEVELOPING THE DRAFT CONTRACT
A draft contract MUST be attached to and distributed with all RFT/EoI. For an open ATM, the RFT/EoI document
and draft contract must be attached to the advertisement on AusTender. The draft contract should be based on
DFATs standard form contracts.

Prospective suppliers need to know the departments terms and conditions when formulating their proposal and
price.

27

DEVELOPING THE STATEMENT OF REQUIREMENT
The Statement of Requirement (SoR) is part of the contract. You should use the departments Statement of
Requirement template included in DFATs standard form contracts as the basis for preparing your SoR.
A well written SoR will present the departments requirement in a manner that addresses the following key
areas:
Functional: characteristics that define the function or duty to be performed, e.g. an automated
recordkeeping system;
Performance: characteristics that define the performance required, e.g. an automated recordkeeping
system that allows multiple users to edit the same record at the same time; and
Technical: characteristics that define the technical and physical specifications, e.g. an automated
records keeping system that allows multiple users to edit the same record at the same time and is based
on the Microsoft Active Directory server platform.

Where possible, requirements should include goals and objectives which translate to outcomes and outputs
rather than simply being focused on processes. For example, in the SoR tell suppliers what property or services
you want provided rather than how to provide the service.
OTHER INTERNAL DOCUMENTATION
PROCUREMENT PLAN
All procurements valued at or above $80,000 must have a procurement plan that is approved by the relevant
financial delegate before proceeding to a formal approach to market (RFT, EoI etc). A procurement plan differs
from a business case in that a business case explains why procurement is being undertaken, while the
procurement plan explains how the procurement will be undertaken. The procurement plan maybe attached to
the request for approval to approach the market if required.

The DFAT Procurement Plan Template can be used to prepare your Procurement Plan. The procurement plan
must summarise the following:

1. Introduction:
2. Purpose;
3. Background;
4. Justification for the procurement:
5. Analysis of market and possible suppliers;
6. Proposed method of procurement;
7. Evaluation criteria;
8. Indicative Tender Evaluation Plan;
9. Probity plan;
10. Confidentiality measures (mandatory for procurements with risk rating of high and above);
11. Indicative timetable;
ADDITIONAL GOVERNANCE ARRANGEMENTS
Procurements that are highly sensitive or carry a risk rating of high or above may require additional governance
arrangements such as steering committees or secretariats to assist in procurement and decision making
processes.
INDICATIVE TIMETABLE
The Timeline for the procurement should be developed early in the process using P3M3 principles. Depending on
the complexity of the procurement, you should plan on the process anywhere from six (6) to eight (8) months
from inception to completion.

The example provided below is based on the timeline for an above the relevant threshold procurement of
reasonable complexity:
P
A
R
T
2

P
R
E
P
A
R
I
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G
Y
O
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R
A
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A
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E
T
P
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T
2

P
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E
P
A
R
I
N
G
Y
O
U
R
A
P
P
R
O
A
C
H
T
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A
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A
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T
2

P
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O
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R
A
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P
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O
A
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H
T
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A
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E
T

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Key Planning Milestone
(All days are working days)
Cumulative Days

From the indicative contract signing date, count back 15 days. This period is to allow
for contract negotiations, updating of contract terms and execution of contract.



15 days

From the date of commencement of contract negotiations, count back 30 days. This
is the period after tender close and finalising evaluation recommendations. During
this period, the Tender Evaluation Board would assess all compliant tenders, prepare
an evaluation report and secure delegate approval to commence contract
negotiations with shortlisted suppliers.

45 days


From the date of tender close count back 25 days. This is the minimum duration for
which tenders must be kept open on AusTender.

60 days

From date of tender release count back five (5) days if you require advertise the
tender on media other than AusTender.

OR

From date of tender release count back one (1) day for PTC to release (advertise) the
tender only on AusTender.

65 days

From date of forwarding tender documents (for release) to PTC count back 30 days
required for preparation of tender documents and pre-approach to market FMAA
Regulation 9 for the spending proposal and tender documentation including draft
contract.

95 days

Count back 30 days from commencement of preparation of tender documents for
approval of procurement project. This includes preparation and approval of a
procurement plan.

125 days

Count back 30 days from commencement of preparing the procurement plan to allow
time for identifying and defining the procurement need and procurement method.
This includes further developing the concept, market research and considering
alternate methods of procurement such as procuring from an existing panel.

155 days
TOTAL DAYS

155 days

EVALUATION PLAN
A formal evaluation plan is required for all approaches to market. The evaluation plan should be finalised and
approved by the Evaluation Committee and relevant delegate before an approach to market.

You should use the departments evaluation plan template as the basis for preparing your evaluation plan.
Further guidance is held within the Evaluation Plan template.
The evaluation plan includes key matters about the evaluation process such as evaluation criteria (including
weightings), Evaluation Board and probity requirements.



29

EVALUATION BOARD
The role of the evaluation board is to evaluate the responses received and make a recommendation, to the
financial delegate, regarding the preferred supplier.

The committee should be structured on the following basis:

the committee should be comprised of at least three individuals, one of which takes on the role of
chairperson;
members should possess the necessary technical/subject matter knowledge to effectively assess
submission;
each member should possess a sound understanding of departments procurement-related probity
guidelines.
PROBITY PLAN
The DFAT Procurement Guide Probity in Procurement provides guidance regarding probity principles. The
majority of procurements undertaken will generally use the DFAT evaluation plan template which incorporates a
section on probity. If your procurement is high risk, commercially sensitive or politically sensitive you may need
to seek expert probity advice and draft a separate probity plan that details how the process will be managed
with particular references to how probity risks will be managed. [Contact GCL if you require expert probity
advice.]
APPROACHING THE MARKET

Formal approaches to the market must not be undertaken without approval. Once all documentation has been
approved by the appropriate delegate you need to approach potential suppliers to invite them to tender for the
work.
APPROACHES TO BE OPEN FOR 25 DAYS
In most cases, open approaches to market must be advertised on AusTender and be open for submissions for at
least 25 calendar days. If the procurement has already been listed on the DFAT Annual Procurement Plan for at
least 30 calendar days, the mandatory open approach period for that procurement can be reduced to no less
than 10 days. The delegate has the discretion to increase approach open times based on the complexity of the
procurement.
MANDATORY ADVERTISING ON AUSTENDER
All open ATMs such as RFTs and EoIs must be published in AusTender through PTC.

AusTender, www.tenders.gov.au, is the Australian Governments procurement information system. It is
mandatory under the Commonwealth Procurement Rules for DFAT, as an FMA agency, to publish on AusTender
advertisements of all open approaches to market (ATM).

In Australia, it is generally the case that only procurements valued at or above $80,000 are undertaken as open
ATMs (open tenders).
OTHER MEDIA ADVERTISING (NON-AUSTENDER)
All open approaches to market must be advertised on AusTender. In addition to this, an open approach to the
market can also be advertised in the media. AusTender is generally well known across the commercial market in
Australia. Media advertising is often used where there is a niche market or an industry that would generally not
use the internet for day to day business.
The content of your media advertisement must be the same as what is provided on AusTender. Your media
advertisement must direct suppliers to the AusTender website for further information.

30

HOW TO ADVERTISE IN THE MEDIA
All ATM advertising must be placed with Adcorp, the whole-of-government contract provider. You should inform
PTC regarding media advertising requirements as soon as possible to avoid missing booking deadlines.
COMMUNICATIONS WITH SUPPLIERS ABOUT AN APPROACH TO MARKET
When answering questions from suppliers regarding the advertisement date or a proposed RFT/EoI, you should
state that all open business opportunities are advertised on AusTender, www.tenders.gov.au. Suppliers can
register on AusTender to receive email notifications of particular categories of open business opportunities or to
receive notifications of all opportunities.
OUT TO MARKET
PROBITY
It is a legal requirement that all suppliers are given the same, clear information at the same time and essential
that any change in requirements is not perceived as favouring a particular supplier or group of suppliers.
Tenderers are advised through the RFT/EoI document that additional information may not be sent to them
directly, but will be published as addenda on AusTender.

The RFT/EoI document states that the department will not respond to any request for clarification from a
Tenderer, if received less than five (5) business days prior to the closing time.
PUBLISHING RESPONSES TO QUESTIONS FROM SUPPLIERS
All questions from potential suppliers must be received in writing to the contact officer through the mechanism
specified in the RFT (e.g. email).

All clarifications and responses to questions must be de-identified so that a suppliers commercial position is not
compromised by including information that identifies the supplier.
CREATE A REGISTER OR FILE TO RECORD COMMUNICATIONS WITH ANY THIRD PARTY
You must file all correspondence and file notes pertaining to suppliers that request further information and
clarification regarding the request documentation. It should at a minimum record:
the time and date of contact;
the name of supplier representative and DFAT representative;
the contact details for supplier representative;
the question asked and answer provided; and
whether, and how, the question and answer were published to other prospective suppliers.
CHANGES TO REQUIREMENTS
An addendum must be published on AusTender if DFAT identifies a need to change DFATs statement of
requirements or the procurement process outlined in the RFT. You must contact PTC in the first instance to
discuss changes in requirements and the need for issuing addenda. In some circumstances, you may have no
other choice but to cancel a procurement process or extend the tender closing time where changes are
considered material and would result in the industry not having sufficient time to respond in a timely and
adequate manner.
ISSUING ADDENDA
All suppliers that have registered for the RFT / EoI and accessed the documents will receive an automatic email
notifying them of the addenda and providing instructions regarding accessing them.



31

PROBITY ADVISER
Where there is an appointed probity adviser for your process, it is strongly recommended that the probity
adviser attend briefings/site visits and that he or she clears any information prior to its dissemination, including
scripted answers.
ATTENDANCE RECORD
You should keep a record of attendees at any industry briefings or site visit.
OFF-SITE CONSIDERATIONS
When conducting industry briefing on premises outside of DFAT you should consider if there are any insurance
and security issues. The procurement of the off-site location or facility in itself may have to be undertaken as a
separate procurement process.
AFTER THE INDUSTRY BRIEFING
Following an industry briefing you should draft an addendum that includes information provided at the briefing
and questions and answers. The addendum should then be emailed to PTC at procurement@dfat.gov.au to
publish on AusTender. .
THE NEXT STEPS
THE CHAPTER ON EVALUATION AND SELECTION OF SUPPLIERS PROVIDES GUIDANCE ON
RECEIVI NG AND EVALUATING SUBMISSIONS AND SELECTING A PREFERRED SUPPLIER.

SECTION 3: MANDATORY WRITTEN QUOTATIONS $10,000 TO BELOW $80, 000
SCOPE
This Section is presented in three sections:
Preparing to Approach the Market;
Approaching the Market; and
Receiving proposals.
PREPARING APPROACH TO MARKET DOCUMENTATI ON

You must obtain at least three (3) written quotations for all procurements valued between $10,000 to $79,999.
You must secure written approval from the financial delegate if you do not intend to meet this requirement. This
approval could be part of the FMA Regulation 9 approval minute.

MINIMUM DOCUMENTATION
REQUESTING WRITTEN QUOTATIONS
When seeking written quotations for procurements valued between $10,000 and $79,999, you may approach
suppliers verbally or in writing. PTC recommends you approach them in writing and use the DFAT Formal
Quotation Template to do so.



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RECEIVING WRITTEN QUOTATIONS
A written quotation must be provided by a supplier in writing and could be in the following forms:
email;
formal letter from the supplier on the suppliers letterhead;
facsimile from the supplier

A suppliers written quotation may include terms and conditions, possibly in one of the following forms:

link to intranet page that specifies the suppliers terms and conditions;
an attachment to the quotation;
part of the quotation.

It is common for such quotations to contain terms that, by default, signifies DFATs acceptance of terms and
conditions when the department responds (either by signing, where indicated, or by email). Where you have
identified that the supplier has included their terms and conditions as part of a quotation you must seek advice
from GCL or PTC to ensure that they are acceptable to DFAT.
OTHER CONSIDERATIONS
INDUSTRY BRIEFINGS AND SITE VISITS
Where you decide to conduct industry briefings or site visits you must ensure that a consistent approach is
adopted and that all suppliers are given access to the same information. This means that you will need to
establish clear procedures and protocols in advance of any industry briefings or site visits.
EVALUATION CRITERIA
All procurement decisions must be based on some form of evaluation. The extent of the evaluation should be
commensurate with the complexity and risk of the procurement. The underlying principle in all cases must be
obtaining best value for money and thus evaluation considerations should not be limited to price alone.

$10,000 to $49,999 Recommended.
$50,000 to $79,999 Mandatory.

For procurements valued at or above $50,000, you must identify and seek written delegate approval for a set of
evaluation criteria as part of your in-principle approval to proceed.
PROCUREMENT DOCUMENTATION APPROVAL
You should seek in principle approval from the financial delegate in writing prior to approaching the market for
written quotations.
APPROACHING THE MARKET
METHOD OF SEEKING WRITTEN QUOTATIONS

You must ensure that all suppliers are provided the exact same information when seeking quotations.
DURATION OF APPROACH
There is no minimum duration that approaches to market for written quotations need to be kept open for. It is
recommended that suppliers be provided with at least 7 calendar days. However, the duration should be based
on the complexity of the requirement and the suppliers ability to provide a quality response in the timeframe
provided.

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OUT TO MARKET
RESPONDING TO QUESTIONS FROM SUPPLIERS
It is recommended that, where possible, all questions be received in writing and clarifications and responses to
questions be de-identified and communicated in writing to all suppliers.
CLOSING THE APPROACH TO MARKET
All quotations should be received by the timeframe specified in your communications to suppliers. You should
ensure that late quotations are excluded from further consideration to ensure a fair and equitable procurement
process.
SECTION 4: VERBAL QUOTATIONS $1,001 TO $9,999
SCOPE
All procurements valued at $1,001 to $9,999 must seek more than one verbal quotation.
In circumstances where only one quotation is able to be obtained, you must provide sufficient information to
enable the delegate to make an informed decision regarding value for money.

All verbal quotations must be recorded in writing (eg: as part of the Regulation 9 minute).
In all cases, the method of procurement and the level of competition used should be commensurate with the
size and risk profile of the particular procurement.
EVALUATE OFFERS AND SELECT A SUPPLIER

Procurements valued at $1,001 to $9,999 usually do not have detailed evaluation criteria or evaluation plans.
You are required to make a value for money assessment on the basis of the price offered, quality, fitness for
purpose and compliance with delivery requirements and any mandatory requirements.

It is important to record evaluation and selection decisions, together with their rationale for accountability, audit
purposes and as a means of informing others involved with managing and monitoring the procurement.
OBTAIN FINANCIAL APPROVALS AND EXECUTE THE CONTRACT

Once a preferred supplier is determined, seek delegate approval for FMA Regulation 9.
It is common for procurements valued at or below $10,000 to be largely for off-the-shelf or pre-fabricated
goods or already designed services such as public training programs. The most common type of contract in such
circumstances would be purchase orders that are sent to suppliers or registration forms that are forwarded with
credit card or invoicing details.
EXECUTE THE CONTRACT
In instances where there is no formal contract, procurement officers should ensure that the agreement is
documented in writing. This could be a letter or an email to the supplier outlining what the department is
procuring and the agreed price.

In the case of purchase of pre-defined or off the shelf goods, the issue of a purchase order or completing and
signing an order form will generally create a contract.

In instances where there is a formal contract, where possible, two copies of the final contract (original plus one
duplicate) should be signed first by the supplier and then by the departmental representative in order to reflect
the final agreement reached by the parties. The supplier is given a copy of the final contract and the department
retains the original contract. In instances where this is not possible it is still important to retain a copy of signed
documents for your records.

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SECTION 5: QUOTATIONS FROM PANELS
SCOPE

For the purpose of this Section, the document used for placing orders under a standing offer panel will be called
Form of Order. A Form of Order is also commonly known as Work Order. A Form of Order is the document
that forms the contract under a panel arrangement.
FINANCIAL APPROVAL FOR FORMS OF ORDER

Placing an order against an already established standing offer panel requires the following financial approvals:
Regulation 9 approval and if required Regulation 10 prior to approaching suppliers;
Section 44 approval before signing / executing the Form of Order

Orders placed under a standing offer must be publicised on AusTender where they are valued at $10,000 or
more.
COMPETITIVE APPROACHES WITHIN A STANDING OFFER PANEL
The form in which you must seek quotations from panel members will usually be specified in the Deed of
Standing Offer that the supplier entered into with DFAT. The Deed of Standing Offer specifies the agreed terms
and conditions, pricing and the scope of services that the panel will provide. Some Deeds specify the number of
suppliers you must approach to seek quotations. Other Deeds may permit you to seek as many quotations as
you wish, ie. one or more. Where the Deed does not specify a minimum number of quotations, you should
follow the following DFAT policy:

$1,001 to $9,999 2 Verbal Quotes Recorded in Writing
$10,000 and above
3 Written Quotes Mandatory (Form of Quotation template usually
included in the Deed)

If the DFAT Deed of Standing Offer template was used to establish the panel, there is a request for quotation
template, called a Form of Quotation, contained within the Deed. The Form of Quotation includes guidance
notes on the fields that you are required to complete. You should send the Form of Quotation to each supplier
that you approach. The Deed may specify the manner in which you must contact suppliers, however, it is
common for a Form of Quotation to be emailed to suppliers.
DURATION OF APPROACH

You should check the Deed to determine if suppliers are required to respond within specific timeframes. If a
period is not specified, a general rule of thumb is 7 calendar days for suppliers to respond. However, the
duration should be based on the complexity of the requirement and the suppliers ability to provide a quality
response in the timeframe provided.
RESPONDING TO QUESTIONS FROM SUPPLIERS

It is recommended that, where possible, all questions be received in writing and clarifications and responses to
questions be de-identified and communicated in writing to all suppliers.


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CLOSING THE APPROACH TO MARKET

All quotations should be received by the timeframe specified in your communications to suppliers. You should
ensure that late quotations are excluded from further consideration to ensure a fair and equitable procurement
process.
SECTION 6: APPROACHI NG MULTI USE LISTS & WHOLE OF GOVERNMENT ARRANGEMENTS
SCOPE
This chapter defines Multi Use Lists (MUL) and Whole of Australian Government (WoAG) arrangements and
provides guidance regarding procuring from such arrangements.

Usually, MULs and WoAG arrangements are established at the Whole of Government level to benefit FMA Act
agencies when they procure goods and services. WoAG arrangements may take the form of a contract or Deed
of Standing Offer.

These contracts and arrangements have been established by various lead agencies including the Department of
Defence and the Department of Finance and Deregulation (DoFD). Some WoAG contracts and arrangements are
mandated and others recommended.
EXISTING MULS AND WOG ARRANGEMENTS

Where a Multi-Use List or WoAG arrangement is mandated DFAT must use it.
MULTI USE LISTS
An MUL is simply a list of suppliers capable of providing goods or services relating to the particular mandated
procurement who have been shortlisted by a lead agency (most likely DoFD) from an Expression of Interest
process.

If an MUL that falls within the scope of your procurement exists, you may approach the suppliers on the MUL
through a Prequalified Request for Tender (Prequalified Tender).

The manner in which you approach suppliers will be dependent on the value of your procurement and any
specific rules that may apply to approaching suppliers on a particular MUL.

In the event a procurement process is not mandated, you should then follow the procurement process specified
for your approach to market.

For example, if your procurement is between $10,000 and $49,999, three quotes must be obtained. If your
procurement is valued at $80,000 or more, you must follow the procurement method for a prequalified tender.
WHOLE OF GOVERNMENT / COORDINATED PROCUREMENT ARRANGEMENTS

The Government may decide that for certain goods or services a WoAG arrangement will deliver better value for
money than individual agency contracts. These WoAG arrangements are referred to as coordinated
procurement arrangements. Where the Government establishes a coordinated procurement arrangement for
certain goods or services, DFAT must use the arrangement unless an exemption is provided. An exemption will
only be granted if both the Minister for Foreign Affairs and the Minister for Finance are satisfied that DFAT has a
special need for the alternative supply.

When procuring any good or service, you must first confirm whether there is a WoAG arrangement that
mandates the use of that arrangement. A listing of all mandated coordinated procurement arrangements are

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available at DoFDs Coordinated Procurement Contracting website. Please contact PTC for guidance in the event
a WoG arrangement applies to your procurement.
FINANCIAL APPROVAL

Procuring from MuLs and WoAG arrangements require the same financial approvals that apply to all
procurements.
Regulation 9 approval and if required Regulation 10 prior to approaching suppliers;
Section 44 before signing / executing the Form of Order



ATTACHMENT 1 INDUSTRY BRIEFING CHECKLIST


INDUSTRY BRIEFING CHECKLIST

PROCUREMENT TITLE: BRIEFING DATE:
BRIEFING LOCATION: BRIEFING TIME:

BRIEFING PREPARATION
Ensure briefing details (venue, date and time) are in the Approach to Market (ATM) documentation
(e.g. RFT, EOI or select tender)
Ensure access for physically impaired people
Prepare attendance register
Prepare briefing team

CONDUCTING THE BRIEFING
Welcome and introduce briefing team and their roles
Remind attendees to register
Reiterate published ATM documentation including scope of task, desired outcomes, timing
Brief explanation of the Commonwealth Government procurement evaluation processes
Record all questions of significance for later distribution in writing to all potential respondents (de-
identified)
Explain that if discrepancies exist between the responses given at the briefing and the released
addendum, the addendum takes precedence.
Express appreciation for attendance

POST BRIEFING
Respond to questions in writing (including a record of Industry Briefing) by issuing a published
procurement documentation addenda
Maintain an audit trail of the briefing on the tender file


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CHAPTER 4 EVALUATION & SELECTI ON OF SUPPLIERS
SECTION 1: INTRODUCTION AND SCOPE
INTRODUCTION
The processes outlined in this chapter are to be used when evaluating quotations received as a result of
approaching the market through a Expressions of Interest (EOIs), Select Tender or a Request for Tender
(RFT).

While the guide is focused on procurements of a more complex nature, principles outlined in this guide can
also be used for evaluation procurements undertaken through a quotation process.

This Guide takes you through processes required to be followed in order to undertake a successful
evaluation. It includes the following stages:

1. receiving submissions
2. evaluating submissions
3. short listing
4. selecting a preferred supplier; and
5. notifying successful and unsuccessful suppliers
6.
You must not open submissions until such time a formal evaluation plan has been prepared and approved
by the financial delegate. The DFAT Evaluation Plan template can be used to prepare the evaluation plan.
COMPOSITION OF THE EVALUATION BOARD

For EOIs, Select Tenders and RFTs, all evaluations must be undertaken by an evaluation board. The role of
the evaluation board is to evaluate the submissions received and make a recommendation regarding the
preferred supplier.

The board should be structured along the following lines:
comprised of at least three individuals, one of which takes on the role of chairperson;
each member of the board should make a declaration that no conflict of interest arises with
respect to the procurement, however where a conflict does arise (whether at the commencement
or during the procurement process) the relevant member should make a declaration to this effect
and include details of the conflict;
where a member has made a declaration that a conflict of interest exists, the chairperson of the
board should decide whether the member can continue to participate as a member of the board,
or where the member continues to participate on the board, how the conflict may be managed by
the board;
the chairperson of the board should report any conflicts of interest, and management strategies to
resolve, to the relevant authority (e.g. chair of the steering board, probity advisor or internal
auditor) as set out in the governance arrangements of the submission evaluation plan;
members should possess the necessary technical/subject matter skills to effectively assess
submission; and
each member should possess a sound understanding of the requirements to run a fair, unbiased
process and to maintain confidentiality and probity.

At the outset, it is critical that the board agrees on the substance of the request document and the
submission evaluation plan as these provide the criteria on which the evaluation will be based. At this early
stage, the board should also agree and formalise a management strategy for dealing with any inquiries on
the procurement which arise during the process. This should also be described in the submission evaluation
plan.


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It is permissible for an external expert(s) to be brought in for the technical part of a submission evaluation.
They will be required to agree to abide by confidentiality requirements and will need to make a declaration
that they have no conflict of interest. The expert is not a board member.
SECTION 2: RECEIVING SUBMISSIONS
RECEIVING QUOTATIONS

The way in which quotations or tender submissions are received depends on the methodology specified in
the approach documentation
RECEIVING TENDERS AND EXPRESSIONS OF INTEREST
DFAT Tenders and EoI cannot be lodged electronically via AusTender
DFAT Tenders and EoI must be physically delivered to the nominated tender box. This requirement must be
specified within the request and evaluation documentation.

Tender box keys for Canberra are held by the Procurement, Travel and Comcover Section (PTC). The contact
officer nominated in the request documentation (or other nominated personnel) will need to liaise with PTC
prior to the closing time to arrange for a PTC officer to be present to open the tender box. Two tender
personnel are required to be present at the DFAT Canberra Security Desk at the closing time, or other time
as agreed with PTC. Only tenders that specify the relevant tender reference number will be signed out to
the tender personnel. Any tenders that do not specify the relevant tender reference number will be signed
out by PTC. PTC will review the contents of the package, and contact tender personnel for collection if
appropriate or return the package to the tender box.

Tender personnel should ensure that ample secure storage is available for all tenders.

If you are closing a tender in a location other than the tender box in Canberra please contact PTC. Some
things to consider include:
Submissions should be lodged in a safe and secure location.
There should be provisions to security screen packages received.
Receiving staff should register, but not open, the receipt of the submissions (time received, number
of packages).
A minimum of two staff must collect the submissions and ensure any late tenders are identified.
LATE TENDERS
Late tenders and EoI must be excluded from further consideration unless a tender is late as a
consequence of DFAT mishandling.
All late tenders and EoI must be returned, with a covering letter in the DFAT Late Tender Notification
Letter for RFT or EOI template, to the tenderer within 10 working days of tender close.
Late tenders and EoIs are tenders that are submitted after the closing time indicated in the approach
document. Late tenders and EoIs must be excluded from evaluation unless the tender or EoI is late as a
consequence of DFAT mishandling.

DFAT mishandling does not include mishandling by a courier or mail service provider engaged by a potential
supplier to deliver a tender.

In Canberra, security guards maintain a register of the time of submission for all submissions to the DFAT
Tender Box. Security guards also issue a receipt to all tender box deliveries. Posts and state offices
undertaking tenders and EoIs must maintain a similar system for all tender submissions.

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In Canberra, late tenders which are present in the DFAT Tender Box at the time of tender collection will be
signed out to the two tender personnel. PTC will notify the contact officer of any late tenders that arrive
after the time of tender collection.

All late tenders must be returned to the tenderer within 10 working days of tender close. Late tenders must
be returned unopened to the tenderer to:

ensure that they are not accidentally evaluated or compared with tenders which were submitted
by the due time and date;
demonstrate to other tenderers that the process for receiving tenders is fair and impartial; and
eliminate scope for any suggestion that the tender was rejected for any reason other than because
it was late.

It may be necessary to open a late tender where there is no return address or any indication of which tender
process the tender is for.
OPENING AND REGISTERING TENDERS AND EOI
You must not open submissions until such time a formal evaluation plan has been prepared and approved
by the financial delegate.

Evaluation personnel should work in pairs when registering tenders received to prevent intermingling
between packages and avoid disputes regarding what was received. This is also a sound probity practice as it
mitigates any claims of intentional misconduct by DFAT.
A registration number must be allocated to each submission (original and copy), notated on the cover of
the document and on a separate register / list established for this purpose, and initialled by both team
members.
All documents must be:

marked commercial in confidence;
kept in locked cabinets and not left unattended in work areas; and
not removed from DFAT premises unless there is no practicable alternative.
CHECKING IF TENDERS/EOIS ARE COMPLIANT
The tender opening team must check that:
the tender is complete;
tenderers declaration is signed and witnessed;
any amendments or deletions are initialled by the tenderer;
any page/length limits are adhered to;
approved Australian Industry Participation (AIP) Plan with approval letter from Department of
Innovation when procurement valued at $20 million or greater
any other matters, as outlined in the tender rules or the evaluation plan, which the tender opening
team is to check; and
any minimum content and format requirements and/or any conditions for participation have been
met.
CONDITIONS FOR PARTICIPATION CHECKS
Conditions for participation are basic mandatory requirements with which potential tenderers must be able
to demonstrate compliance in order to participate in the procurement. In accordance with paragraph 10.13
of the CPRs, conditions for participation must be limited to those that will ensure that a potential supplier
has the legal, commercial, technical and financial abilities to fulfil the requirements of the procurement.


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The conditions for participation listed below are the departments standard conditions for participation.
the Tenderer (and any of its proposed subcontractors) must not be named as not complying with
the Equal Opportunity for Women in the Workplace Act 1999 (Cwlth).

the Tenderer (and any of its proposed subcontractors) must not be named on the list of persons
and entities designated as terrorists under the Charter of United Nations (Terrorism and Dealing
with Assets) Regulations 2008;

the Tenderer (and any of its proposed subcontractors) must not be bankrupt or insolvent;

the Tenderer (and any of its proposed subcontractors) must not have any judicial decision against it
relating to employee entitlements (not including decisions under appeal), that has not been met in
full by the Tenderer;

the Tenderer (and any of its proposed subcontractors) must comply with the relevant requirements
of the Fair Work Principles.

Procedures for opening, registration and compliance check of submissions should be covered in detail in the
Evaluation Plan.

SECTION 3 EVALUATION OF SUBMISSIONS AND SHORT LISTING
GENERAL EVALUATION TIPS THAT APPLY TO ALL PROCUREMENTS

For those submissions which proceed past the compliance checking stage, the evaluation board should, in
accordance with the Evaluation Plan:

assess the quality of the proposed solution against the pre-established Weighted Evaluation
Criteria to determine how well the proposed solution meets the requirements of the department
consider the whole of life cost of the solution as part of the evaluation;
assess overall best value for money taking into account the quality and the total cost of the
solution; any other special features (e.g. value added component above minimum requirements
and whether the cost of the proposed solution is within the budget allocated for the procurement)
document your assessment of each submission;
ensure consistency in allocating scores across submissions; and
explain and document reasons for selecting the preferred supplier in the Evaluation Report to the
delegate.
ADDITIONAL TIPS FOR EVALUATING THE PROCUREMENT OF GOODS

In addition to matters outlined under paragraph 0, when evaluating goods consider the suppliers terms and
conditions for delivery. Issues to look out for include:

clauses seeking an indemnity from the Commonwealth;
clauses requiring payment before delivery of goods the Commonwealths standard position is
that payment should be made within 30 days after delivery;
clauses seeking to limit the suppliers liability, e.g. for defective goods; and
clauses specifying that ownership or title to goods pass to the Commonwealth before delivery of
the goods.

You must record in writing the reasons for the decision you have made.


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You must also check the departments website Australia's Implementation of United Nations Security
Council Financial Sanctions to ensure the prospective supplier is not on the list of persons or entities
designated as terrorists.
GENERAL EVALUATION TIPS THAT APPLY TO EOI EVALUATION

In addition to matters outlined under paragraph 0, EoIs should be evaluated to assess the submissions
overall compliance with the terms and conditions of the EoI as set out in the EoI request documentation.

You should:
assess the extent to which a submission meets the technical and performance specifications of the
procurement; and
limit the number of businesses that you invite to participate in the ensuing Select Tender process,
based on ranking of submissions from the largest possible number of potential suppliers, consistent
with an efficient procurement process.
CLARIFYING REPONSES
BID SHOPPING
Bid shopping is not permitted in departmental procurement. Bid shopping refers to the practice of
revealing one service providers price to another in an attempt to seek lower prices. This practice is
unethical.

Officers are however allowed to negotiate, in good faith, with all suppliers to obtain the best value for
money from procurements. Seeking best and final Offers is one such negotiation tactic.
BEST AND FINAL OFFERS (BAFOS)
After you have performed an initial evaluation of tenders/quotes, it is permissible to ask suppliers for best
and final offers (BAFOs) in order to come in closer to the budget range.

All requests for BAFOs must be made in writing to all shortlisted suppliers.

When calling for BAFOs, suppliers can only be asked to revise their bid, and/or drop any additional work
they have chosen to add to the department's base requirement.

You should have a delegate approved shortlist of suppliers before proceeding to a BAFO. This means that all
suppliers are given an equal chance to proceed to the BAFO stage.
The BAFO process effectively triggers a second round of evaluations and may lead to revised rankings.
You must set a closing date and time that allow suppliers reasonable time to prepare their BAFO. The
same rules that apply to late tenders apply to late BAFOs.
SHORT LISTING SUPPLI ERS
Short listing is the process of eliminating unsatisfactory proposals, usually with the intention of subjecting
the remaining short-listed suppliers to further evaluation (e.g. asking suppliers to make presentations).

Short-listing is generally not necessary in a quotation or select tender process, where there are only a small
number of offers to evaluate.
It is a legal requirement that you evaluate ALL compliant tenders to assess comparative value for money.
This means that before compiling a short list you must conduct an initial evaluation process taking into
account all the evaluation criteria set out in the RFT (other than financial viability risk and agreement with
contractual terms).

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You must be satisfied that the short listed tenders are the tenders that represent better value for money.
Your reasons for eliminating unsuccessful tenders must be documented so that the rationale for the
decision can be justified and explained.
Any short list must be approved by the delegate.
SHORT LIST APPROVAL

Delegates should not approve a short list unless they are satisfied that an initial evaluation has been
properly conducted, and that the short listed tenderers are the tenderers that represent better value for
money.
WHO CAN APPROVE THE SHORT LIST
It is prudent to seek clearance from the same delegate who gave the initial approval to proceed with the
procurement.
FINANCIAL VIABILITY ASSESSMENTS
A financial viability assessment is only required in circumstances where you feel that assessing a suppliers
financial viability will contribute towards determining the selection outcome. You do not have to conduct a
financial viability assessment of all tenderers.

Procuring financial viability assessments must be undertaken as a separate procurement exercise and must
be undertaken in accordance with value based thresholds.

The departments standard RFT templates contain clauses that reserve the departments right to undertake
financial viability assessments where we deem them necessary. The departments standard evaluation plan
templates contain words regarding how and when financial viability assessments may be undertaken.
Financial viability assessments:

identify organisations that are in financial distress or may be heading towards financial problems;
provide a check on the history of directors and proprietors; and
confirm the proper legal name of the entity to ensure that we contract with the correct
organisation.

A positive outcome on an assessment provides reasonable assurance that a supplier has the financial
resources to deliver contracted services. Negative assessments do not prevent you from contracting with
the supplier, but allows the delegate to:

make an informed decision, balancing the degree of risk against program priorities; and
consider what risk mitigation measures could or should be put in place.




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SECTION 4: SELECTING A PREFERRED SUPPLIER
COMPLETING THE EVALUATION REPORT AND SUPPLIER RECOMMENDATION
An evaluation report must be approved by the financial delegate prior to announcing the outcome of
any procurement process. The report outlines the process used to assess the responses and provides a
recommendation for a preferred contractor.
In the case of procurement processes where an Evaluation Report is not mandated, the FMA
Regulation 9 Minute must outline the reasons for recommending a particular supplier/s.
Where a decision has been made to reject potential suppliers based on the evaluation of their
quote/tender then the reasons for rejecting the unsuccessful suppliers must be documented.
NOTIFYING SUPPLIERS
WHEN TO NOTIFY UNSUCCESSFUL SUPPLIERS
Unsuccessful supplier/s should generally be notified at the same time that the result of a procurement
process is announced. DFATs standard RFT and EoI templates have provisions stating that the bidders
offer remains open to be accepted by the department until a specified date or until the bidder is
notified they were unsuccessful.
HOW TO NOTIFY UNSUCCESSFUL SUPPLIERS
Unsuccessful suppliers must be offered a verbal debriefing upon request where an EoI, open or select
tender process has been used. A formal letter using the using the DFAT Unsuccessful Letter Template
should be forwarded to unsuccessful bidders informing them:

they were unsuccessful;
the name of the successful tenderer; and
that they can request that the department provide a verbal debrief to advise the reasons why
the submission was unsuccessful.
DEBRIEFING UNSUCCESSFUL SUPPLIERS
It is acceptable to provide verbal debriefings over the telephone provided that
you keep a careful written record of the conversation.
NOTIFYING SUCCESSFUL SUPPLIERS

Once the delegate has approved the selection of your preferred supplier, the successful supplier should
be immediately notified in writing.
For simple procurements, this notification can be done via email. For complex procurements, this
notification should be done via a formal letter.
RECORD KEEPING
Original copies of submissions must be kept on a file (EDRMS or paper file) in a manner that is
consistent with the DFAT Record Keeping Policy.


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CHAPTER 5 HANDLING COMPLAINTS
SECTION 1: POLICY AND LEGISLATI VE BASIS
BACKGROUND
This chapter applies to complaints received in relation to a DFAT procurement exercise, including the
conduct of the procurement process or its outcome.
This guide DOES NOT cover matters relating to complaints or disputes arising out of a contract.
The use of the word You in this document refers to DFAT officials that undertakes or is involved in
procurement activity.
The document highlights a number of mandatory obligations indicated by the use of the word must.
The term should has been used to identify recommended practice.
POLICY
Officers undertaking procurement are to follow the principles outlined in this chapter when handling
complaints relating to procurement. These procedures apply to procurements of all values.
The existence of a complaint does not, in itself, preclude DFAT from concluding the procurement
process that is the subject of the complaint.

LEGISLATIVE BASIS
Procedures outlined in this chapter have been established in accordance with the principles outlined in
the Commonwealth Procurement Rules (CPRs).

Clause 7.10 of the CPRs requires that Agencies actions in undertaking procurement processes must be
robust and defensible.

Clause 6.8 of the CPRs outlines the requirements for complaint handling in procurement matters. In
particular, these clauses highlight the importance of applying fair, equitable and non-discriminatory
complaint handling procedures.

SECTION 2: DEPARTMENTAL COMPLAINTS HANDLING PROCEDURE
2.1 RECEIVING AND RESPONDING TO A COMPLAINT
In order to lodge a complaint about a procurement process or its outcome, complainants are required
to raise the complaint in writing with the contact person nominated in the tender documentation. You
must ensure a written complaint is received before commencing any departmental action in response.

For procurements above the relevant procurement threshold, an appropriate staff member must be
appointed as a Complaints Officer. For procurements that are below the relevant procurement
threshold, where a complaints officer has not been appointed, one must be appointed upon receipt of
a complaint.

The Complaints Officer should respond to the complainant in writing within 10 business days. The
complainant should be advised that the complaint has been received and outline the role of the
Complaints Officer. The letter should also request any further information that may be required from
the complainant in order to conduct the review.

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The Complaints Officer is responsible for:

ensuring all correspondence in relation to the complaint is recorded and filed appropriately;
investigating the complaint and preparing a response;
preparing necessary briefs for the tender evaluation committee and financial delegate;
advising the complainant in writing of the outcome.

The Complaints Officer may seek assistance or advice from subject matter experts and probity and/or
legal advisers from within and outside the department.
The final response to the complaint should be in writing and outline:

the complaint that has been raised;
an assessment of the complaint and the action that has been taken to examine the it;
options that may be available to the complainant should they be dissatisfied with the
departments response.
INDEPENDENT INTERNAL REVIEW
Where a complainant remains dissatisfied with the departments response, they may lodge a request,
in writing, to the Assistant Secretary - Finance Management Branch (AS FMB).

Upon receipt of the complaint, the AS FMB should respond the complainant, in writing, within 10
business days, to advise of the receipt of the complaint and outline in the letter their role in the review
process and how the complaint will be handled. The letter should also request any further information
that may be required from the complainant to conduct the review.

The issue will be examined by AS FMB. The AS FMB may request assistance from the Director,
Procurement Travel and Comcover Section, other subject matter experts and probity advisers from
within and outside the department.

All officers and external experts involved in the independent review must have been, to this point, at
arms length from the complaint and the process or decision in dispute. Where this is not the case, a
suitable alternate staff member or external expert must be appointed.

This group may require access to any tender documentation or other correspondence in relation to the
matter having regard to the commercial-in-confidence nature of the information.

AS FMB may agree with, vary or overturn the complaints officers initial assessment. Upon conclusion
of the review, the complainant should be provided with the outcome in writing. The response should
outline:

the issues raised (i.e. the complaint);
the examinations carried out;
an assessment of the complaint;
the fact that the agency considers the complaint investigation closed; and
a list of other options available to the complainant if they are not satisfied with the outcome.
EXTERNAL REVIEW
A complainant may seek external review of a complaint where it has not been resolved to their
satisfaction through DFATs internal processes.

Complaints may be made to the Commonwealth Ombudsman (www.ombudsman.gov.au) or the
Department of Finance and Deregulations (DoFD) Procurement Coordinator
(www.finance.gov.au/procurement/procurement-coordinator/index.html).

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The Commonwealth Ombudsman has powers to investigate procurement complaints. The Ombudsman
aims to resolve matters by negotiation and may make recommendations to senior levels of the
department and Government in the context of continuous improvement to Commonwealth
administrative processes.

The DoFD Procurement Coordinators role includes handling complaints from suppliers and interested
external parties and reviewing complaints regarding contract administration.

Neither the Commonwealth Ombudsman nor the DOFD Procurement Coordinator is able to overturn
DFATs procurement decisions, nor specifically direct DFAT to vary it.

If a matter is referred to an external body for review, DFAT must provide all relevant documents to that
body as required by law.


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CHAPTER 6 - CONTRACT MANAGEMENT
SECTION1: INTRODUCTI ON TO CONTRACT MANAGEMENT
1.1 PURPOSE
This chapter has been developed to provide information and practical advice regarding the
management of procurement contracts. It provides information specific to the Department of Foreign
Affairs and Trade (DFAT), and covers various elements of contract management including contract
development, formalisation, management and ending the contract.

This guide has been modelled on the ANAO Better Practice Guide: Developing and Managing Contracts
February 2012, and has been modified for the purposes of DFAT.
1.2 SCOPE
This guide applies to the management of all procurement contracts within DFAT and covers contracts
for goods or services including those executed from panel arrangements and standing offers.

Contract law can be very technical area. As such, this document is not exhaustive and is not intended
to replace professional legal advice. This document should be used as general guidance only. If you
require legal advice please ensure you seek advice from a legal professional.
DFAT STANDARD CONTRACT TEMPLATES
Using the departments standard contract templates to form contracts will help ensure compliance
with relevant Commonwealth policies connected to procurement and contracts.

DFAT has standard contract templates for:
Long and Short form contracts - Standard contracts used by DFAT for the purchase of goods
and services;
Deed of Standing Offer (DoSO) Used mainly for establishing Panel Arrangements;
Form of order Used to order goods / services from panels;
Memorandum of Understanding (MOU) - MOUs are non-binding and non-contractual
agreements between Commonwealth agencies. Even though MOUs do not have the same
legal status as contracts, DFAT officers managing the arrangement should manage MOUs with
the same degree of rigor, and apply policies and procedures within this guide;
Special Envoy Contract Standard contracts for engaging special envoys and high profile
contractors. You must consult PTC prior to establishing this type of contract;
IT Contracts Managed by the Information Management Divisions (IMD) procurement area;
and
Construction contracts Managed by the Overseas Property Office (OPO).
CONTRACT TYPE
DFATs standard contracts templates must be used when developing contracts. Using these templates
without modification is recommended for consistency and predictability.

1.3 LEGISLATIVE AND POLI CY FRAMEWORK
The contract management process takes place within a legislative and policy framework. The following
is a list of legislation and policies that must be adhered to when undertaking contract management:

Financial Management Accountability Act 1997 (FMA Act) and associated FMA Regulations;
Specific Program legislation;

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the Commonwealth Procurement Rules 2012 (CPRs) and Circulars;
the Commonwealth Grants Guidelines 2009 (CGGs) and Circulars;
DFAT Procurement Policy;
The DFAT Finance Management Manual (FMM);
Financial Management Guidance No. 19: Public Private Partnerships Contract Management
December 2006;
Financial Management Guidance No. 10: Guidance on Complying with Legislation and
Government Policy in Procurement January 2005;
Financial Management Guidance No. 15: Guidance on Procurement Publishing Obligations
July 2007;
the ANAO Better Practice Guide: Developing and Managing Contracts February 2007;
the Archives Act 1983;
Records Issues for Outsourcing including General Disposal Authority 25
the Privacy Act 1988;
the Freedom of Information Act 1982;
DFAT Chief Executive Instructions (CEIs);
DFAT Risk Management Framework;
DFAT Records Management Policy;
Public Service Act 1999 (PS Act), including the APS Code of Conduct;
The A New Tax System (Goods and Services Tax) Act 1999; and
Any relevant Divisional and or Post based Guidelines.

NOTE: This is not an exhaustive list and there may also be other legislation and policies that apply to
contract management.



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SECTION 2: CONTRACT MANAGEMENT -PRINCIPLES
CRITERIA FOR A CONTRACT
A contract details the legal rights and obligations that are enforceable by law. There is potential for
legal issues and liabilities to arise in the event that any of the parties fail to honour their obligations in
the contract

There are two tests which must be met in order for an arrangement to be classified as a contract.
These are:

Offer and acceptance (agreement):
does it require both a clearly stated offer to do something and definite acceptance of the
terms of the offer?;
Consideration:
does it involve the exchange of something of value?, i.e. consideration. Usually, this is in the
form of money but it may be a right, promise or asset of value;

In addition to this, there are some key requirements that must be met to enable the creation of a
legally enforceable contract:

Intention and capacity:
is it for lawful undertakings?;
is it a result of an intention to form binding relations?, i.e. the parties to the agreement must
understand that the agreement can be enforced at law; is it between parties legally capable of
forming contractual arrangements?; and
has the contract been entered in to with genuine consent? That is not:
through misrepresentation and mistake;
under duress; or
through undue influence.
VERBAL AGREEMENT VS CONTRACT
It is legally possible to enter into a verbal contract. The conduct of the parties what they said, meant
and did must be examined to determine if a meeting of the minds really took place. A verbal
agreement, to be considered a contract, must meet the tests outlined above. A verbal agreement:
may be preliminary and very general.;
there must be proof of a real meeting of the minds with objective evidence. Evidence can be
based on conduct. For example, what would an impartial bystander think has been agreed?
must be entered into freely, with equality in bargaining power and must be of conscionable
conduct.
You must ensure that a contract meets all criteria (offer, acceptance, consideration, intention and
capacity) before it can be treated as a contract for enforcement and reporting purposes.
You must ensure that the contract is executed in writing before the contractor begins work. This
means that arrangements that have been made through verbal exchange should be confirmed in
writing. A written contract is also the most appropriate means for managing risk (this is in
conjunction with adherence to departmental risk management policy).
DRIFTING INTO CONTRACT
One can enter into a legally binding contract by acceptance of conduct (by Implied Terms). However,
sometimes the arrangements between parties are so vague that it is not possible to establish if there is
an identifiable offer and acceptance, even by conduct. In the event of a dispute, where it is not

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possible for a court or adjudicator to determine if a contract exists, it may resort to external evidence
such as conversations, letters and emails to determine this.
Where, on the other hand, a written contract does exist, the court will most probably exclude any
other evidence such as conversations, letters or emails from consideration.
HOW NOT TO DRIFT INTO A CONTRACT WHEN NEGOTIATING ARRANGEMENTS?
The safest way to ensure that a document is not a contract is to insert the words subject to contract
on the document itself. This means that the document and any negotiations are subject to the drawing
up of a written contract. A contract will be formed only when this written contract is executed (signed).
CONTRACT MANAGEMENT
Contract management encompasses all aspects of a contracts life cycle from the initial or original
development of a Statement of Requirement (SoR) (project requirement) through to performance
management, evaluation and contract conclusion. The central aim of contract management is to obtain
the goods or services as agreed and to achieve value for money.

When a contract is awarded, you must assign a DFAT representative to manage the relationship
between DFAT and the contractor, including managing any risks that arise, monitoring the
performance of the contractor, and to ensure that the objectives of the project are being met.
VALUE FOR MONEY
Value for money is one of the core principles relating to the expenditure of public money. Value for
money, in relation to contract management, encompasses not just the contract cost but also the cost
of managing the contract and how well the contract deliverables have been met. A key objective for
the management of any contract is to ensure that it continues to achieve value for money over time.

Value for money in relation to contract management is supported by the underpinning principles of
Efficient, Effective and Ethical use of public money in a manner that is consistent with Commonwealth
policies.
EFFICIENT, EFFECTIVE AND ETHICAL USE OF RESOURCES
Section 44 of the FMA Act requires agency heads to manage the affairs of their Agency in a way that
promotes proper use of Commonwealth resources that is, in ways that are efficient, effective, ethical
and economic and that are not inconsistent with policies of the Commonwealth. This applies to
contracts and their associated procurement processes.
RISK MANAGEMENT
Risk management is the process of measuring, or assessing the risk and developing strategies to
manage it.. Risk management should be an on-going process through the contract life-cycle and, as
such, it is important to identify all possible risks early and assess the likelihood of the risk occurring as
well as the consequences that may follow.

RECORDS MANAGEMENT
Records ensure that the Commonwealths processes are seen to be open and transparent. Well
recorded and documented information and decisions also help the preservation of corporate memory.

The success of a contract will depend on the accuracy and the credibility of the documentation that is
recorded. It is therefore important to maintain and review information gathered pertaining to the
contract and keep it organised for easy access. Recordkeeping is also important to demonstrate that

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actions taken are justified and decisions can be sustained through any administrative, parliamentary or
judicial review.

Documentation of decisions, together with copies of the contract and relevant correspondence,
variations, etc, must be placed on file.
CONFLICT OF INTEREST
Actual or perceived conflicts of interest are potentially damaging for DFAT and its reputation,
therefore, governance arrangements need to identify how any real or apparent conflicts of interest
should be handled.

You should be aware that all dealings with suppliers can be publically scrutinised and as such you must
ensure that your actions in undertaking a procurement process are robust and defensible.
PROBITY
Probity is the evidence of ethical behaviour. It encompasses complete and confirmed integrity,
uprightness and honesty. In conforming to the standards of probity, clear procedures must be
established, understood and observed from the outset.

You must ensure that your behaviour in managing contracts is and can be proven to be ethical and
impartial in accordance with the Commonwealth legislative and policy framework which is applicable
to all APS employees.

You need to ensure that you:
always behave in accordance with the law (including regulations), government policy and with
departmental rules (for example, Chief Executives Instructions);
behave with the highest ethical standards, in accordance with relevant requirements of the
Public Service Act 1999;
keep commercially sensitive information secure and never use it for personal gain;
disclose information that the government requires to be notified; and
disclose to DFAT any form of current or prospective personal interest that might create a
conflict of interest in contract management.
CONFIDENTIALITY
The principle of accountability and transparency suggests that contracting information should not be
confidential unless there is a sound reason, informed by legal principle, for maintenance of
confidentiality of information.

You should ensure that contracts contain clauses relating to how confidential information is to be
identified, handled, and returned on completion of the contract. These clauses must be in accordance
with Financial Management Guidance No.3 Guidance on Confidentiality in Procurement. DFAT
standard Contract Templates contain these clauses. When information in the contract is to be kept
confidential, you will need to ensure that it is properly managed, protected and that the fact that
certain aspects of the contract are confidential, reported as part of the Senate Order on Government
Agency contracts (Murray Report). Refer to the DFAT Procurement Guide - Central Contracts Database
for further information regarding reporting of confidentiality clauses.



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SECTION 3: DEVELOPING A CONTRACT
DEVELOPING A CONTRACT CHECKLIST
The checklist set out below outlines important stages in the contract management process. Paragraphs
in this chapter have been arranged to sequentially address each of these steps.

Have resource needs been identified?
Has there been consultation with stakeholders, including posts where appropriate?
Is the contract based on a standard DFAT contract template?
If not using a standard DFAT contract, have you discussed the contract with PTC or GCL?
Have roles and responsibilities of parties to the contract been clearly outlined?
Have the contract deliverables been clearly worded?
Has a variation clause been included (including price variation clause if necessary)?
Does the contract contain a detailed dispute resolution clause?

Have you agreed to any contingent liabilities and if so secured necessary approvals (including FMAA
Regulation 10 if necessary)?
Have performance indicators been identified?

Has a Risk Management Plan been developed and included appropriate risk mitigation clauses in the
contract?
Has a Performance Monitoring Plan been developed and included in the contract?
Have all reporting requirements on the Central Contracts Database been undertaken (if applicable)?
Does the contract address transition arrangements?
Does the contract specify the circumstances under which DFAT may terminate the contract?
Has the payment clause been clearly outlined?


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IDENTIFY RESOURCE NEEDS
Appropriate resources need to be available for contract development. Sound contract development
requires appropriate skills, knowledge and experience. For more complex contracts it may be
necessary to obtain professional advice at different stages on matters such as defining the contract
deliverables, developing technical performance measures, and the inclusion of particular contract
provisions.
ASSIGN RESPONSIBILITIES
Throughout the life of a contract, there will be many stakeholders within DFAT and the contractors
organisation, who will have roles and responsibilities in relation to the contract. This may include
developing the contract, defining contract deliverables, obtaining stakeholder input and establishing a
performance regime. Identifying roles and responsibilities clearly is essential to the overall contract
management process.
You must ensure that contract officers from DFAT and the contractors organisation are clearly
identified in the relevant section of the contract and their roles and responsibilities are clearly
identified.
STATEMENT OF REQUIREMENTS
All contracts will include some form of statement of requirements or contract deliverables. Larger
contracts usually have a separate schedule outlining all the deliverables agreed under the contract.
Deliverables outline the outcomes or results required under the contract. It is essentially a statement
of work/requirement.
This section of the contract is crucial as it contains the details of what outputs and outcomes are
required for the project.
Contract deliverables must be specified together with the standard to which they are to be delivered
and in what timeframe the project is to be completed. The emphasis on results and outcomes, rather
than on outputs and processes used by the contractor, can allow the contractor the opportunity for
flexibility and innovation. Many contracts also use supporting Key Performance Indicators (KPIs) to
manage these deliverables and expectations.
Depending on the requirements of the contract, deliverables should be written in functional and
performance terms rather than in technical terms.
Contract deliverables should also indicate the importance of each deliverable or each part of the
deliverable where appropriate.
TERM OF CONTRACT
The maximum term of a contract is something that needs to be assessed depending on the type and
value of the procurement. The important thing to consider in setting contract terms is assessing how
value for money will be delivered throughout the term of the contract. If the type of good/service you
are procuring is likely to change in value or capability (i.e. changes in technology result in the same
services being delivered more economically or additional functionality being available for the same
price), a shorter contract term may be appropriate.
CONTRACT VARIATIONS
Contract variations are changes to the contract which are agreed between the parties. Proposed
contract variations must be closely examined to determine the effect on:
contract price and the payment schedule;
the delivery schedule;

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the scope of goods and/or services previously agreed under the contract;
the risk allocation under the contract;
other existing terms and conditions of the contract; and

Where relevant, you must seek additional FMA Reg 9 and 10 approvals before entering into contract
variations. Please consult the FMM for further information.

Contract variations leading to change in scope may result in the requirement to undertake a new
procurement. Please consult PTC in such circumstances.

Most long term or complex contracts change over time and it is the responsibility of the contract
manager to manage all variations to the contract.
All contract variations that result in the total value of the contract equalling or exceeding $10,000
must be registered in the Central contracts Database.
DISPUTE RESOLUTION PROCEDURES

Contractual disputes can occur, for example, over the interpretation of the contract conditions, project
specifications, the performance of either party under the contract, or the effects of unexpected events.
The contract manager can reduce the risk of disputes by maintaining close liaison with the contractor
and resolving disputes as soon as they arise to avoid escalation. Early recognition and prompt attention
to the underlying cause of the dispute provides the greatest likelihood of a solution, which is in the
best interest of all parties.

DFAT standard contracts contain a dispute resolution clause that sets out specific processes which
need to be followed by the parties when disputes arise.
INDEMNITIES
Indemnities, guarantees, warranties and letters of comfort are forms of contingent liabilities.

At law, an indemnity is a legally binding promise by which one party undertakes to accept the risk of
loss or damage another party may suffer. Essentially, it is a promise to hold harmless.

Australian Accounting Standards Board standard - AASB147 defines contingent liabilities as those items
that are not recognised as liabilities on the balance sheet because they are possible obligations, as it
has yet to be confirmed whether the entity has a present obligation that could lead to an outflow of
resources in the future.

Generally DFAT seeks indemnities, guarantees, warranties etc. from its suppliers and these are
contained in DFAT standard contracts. The most appropriate way to manage the risks associated with
the performance of the contract is for the party best able to manage the risk to have responsibility for
doing so, and it is for this reason that the contractor is asked to indemnify DFAT the contractor is
generally best able to manage the risks associated with contract performance.
HOTEL AND VENUE HIRE CONTRACTS
It is common for venue hire and hotel contracts to contain indemnity clauses that indemnifies the
venue or hotel for any damage caused to the room or for any claim by a third party against the hotel
for personal injury or property damage as a result of a departmental function or an officer staying
there. Such indemnities usually do not extend to damage or injury caused by the hotel or its staff.


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Officers must inform the Comcover Liaison Officer and PTC before agreeing to any indemnity clauses.
The departments insurance arrangements require us to inform our insurance provider, Comcover
before agreeing to any form of indemnity.
INTELLECTUAL PROPERTY RIGHTS
Intellectual property rights relate to rights protected by legislation including copyright, patents,
registered designs and trademarks, together with confidential information and trade secrets protected
under common law or by contract. The contract manager should ensure that provisions are included in
the contract to deal with the ownership and rights to use intellectual property rights created within the
scope of the contract and outside the contract.
DEVELOPING PERFORMANCE EVALUATION CHECKLISTS
Contract managers should develop performance measures, as well as payment schedules that relate to
the work in relation to contracts that they manage. These performance indicators determine which
activities are critical to the success of the contract. Performance measures should be explicitly
identified within the contract and selected on the basis that they are measuring something that is
important and achieving the contract deliverables.
REPORTING REQUIREMENTS: CENTRAL CONTRACTS DATABASE
The contract manager is responsible for ensuring all reportable contracts (including verbal
arrangements, Work or Official Orders and MOUs) with an actual or estimated value of $10,000 or
more are recorded in DFAT Central Contracts Database (CCD).

The CCD is used to fulfil a number of DFAT monitoring and reporting obligations. It issues each contract
with a unique contract number (CRN).
Details of all contracts and agency agreements, including panel and standing offer arrangements
valued at or over $10,000, unless specifically exempt, must be recorded on the CCD as soon as
possible after entering in to the arrangement.
CONTRACT TRANSITION OUT PLAN AND NOVATION
TRANSITION OUT PLAN
The transition phase of the contract relates to the period where one contractor completes their
contract and a potential new contractor takes over.

A transition out plan is required to ensure effective contract succession at the termination of the
contract and the orderly introduction of services by the new contractor at the commencement of the
new contract.

In circumstances where a transition in phase is required, the contract should comprehensively cover
this including:

specify the period of the transition. This may be after a specified period of time or at the date
of the achievement of agreed milestones or service levels; and
detail the contractors (incoming and outgoing) responsibilities during this period. This will
often involve the contractor preparing a detailed transition in strategy or plan that requires
the approval of DFAT. This document should provide for a formal evaluation or review at the
conclusion of the transition period.


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The foundations for managing transition to new contractual arrangements should be addressed in the
initial contract and approach to market documentation or in plans to manage the procurement. The
plan should cover agreed timeframes, transfer of records, maintenance of services and information or
equipment required.
NOVATION
A novation refers to the transfer of obligations under a contract, and all the benefits arising from that
contract to a third party. A novation is generally used where a party to an existing contract wishes to
be substituted by a new party (normally due to a company takeover). A contract transferred through a
novation process effectively terminates the original contract and transfers rights and obligations of
that contract to a new contract owner, including liabilities.
CONTRACT END DATE
Contracts often include a specific End Date on which the contract will come to an end. You must
ensure that there is always an End Date to ensure it is clear to all parties of the contract when the
contract will expire to mitigate any disputes.

It is important to note that even if the date of completion of the contract has passed, this does not
mean all contractual obligations have expired or can be terminated. Some examples are insurance
requirements, any other matters inserted under survival clauses in the contract etc. A contract, or part
of it, may remain current unless and until all the obligations on either side have been fulfilled, or is
terminated as a result of a breach or by mutual agreement.
PAYMENTS
Payment clauses specify the quantum and timing of payments as well as any conditions that must be
met before DFAT is liable for payments under the contract.

The contract should ensure that there is a legal right for DFAT not to pay the contractor or vary
payments in circumstances where the contractor has not met their obligations under the contract.
Payments to the contractor should only be made where there is compliance with all of the obligations
under the contract.

Late payments by DFAT outside the agreed terms and conditions can have a serious impact on small to
medium enterprises, and even larger enterprises. DFAT must comply with relevant Commonwealth
policies relating to payments, including those relating to payments of small businesses see Finance
Circular 2008/10 - Procurement 30 Day Payment Policy for Small Business for further information.



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SECTION 4: FORMALISING THE CONTRACT
4.1 FORMALISING THE CONTRACT - CHECKLIST

The checklist set out below outlines important stages involved in finalising a contract. Paragraphs in
this chapter have been arranged to sequentially address each of these steps.

Has a financial viability assessment been undertaken?

Have contract negotiations been undertaken and approvals received from the relevant delegate (if
applicable)?
Has GCL or PTC advice been sought for changes to standard clauses prior to finalising the contract?
Has the contract been approved by the relevant delegate?
Has the contract been signed by both parties?
Has the successful supplier been notified of the outcome?
Have the details of the contract awarded (worth more than $10,000) been entered in the CCD?

Have unsuccessful tenderers been notified and offered a debriefing (where applicable). Mandatory to
notify for open approaches to market such as RFTs)?
Have the relevant approvals been sought for contract variations (if applicable)?
Are contracts being monitored and performance assessments undertaken?
Has the contractor been informed of underperformance (if applicable)?
FINANCIAL VIABILITY ASSESSMENT
Financial Viability Assessments provide a useful tool in determining whether a contractor has the
financial capacity to carry out the activity.

CONTRACTING WITH SPECIFIC TYPES OF ENTITIES
CONTRACTING WITH A TRUST
A trust is a relationship or association between two or more persons whereby one party holds property
on trust for the other. The property could be land, shares, money or personal property. The first party
is vested with property. The holder of the property is called the trustee. The other party (for whom the

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property is held) is called the beneficiary. Trusts may be made expressly in writing or implied from the
circumstances. A company, for example, may trade as trustee of a trust.

Trusts enter into agreement via the trustee. However, a trustee may only enter into an agreement on
behalf of a trust if the trustee has the power to do so under the trust deed. When entering into an
agreement, it is important to ensure that a trustee has the power to enter into an agreement and
thereby bind the trust. You can do this by obtaining a copy of the Trust Deed.

The primary obligation of a trustee is to act in the best interests of the beneficiary or beneficiaries
under the trust. Sometimes the trust deed will specify other duties and obligations on trustees. Certain
powers are also normally given to trustees under the trust deed.
CONTRACTING WITH A SOLE TRADER
There are specific risks to both the contractor and the department in entering into sole trader
contracts. Any decision regarding entering into a contract with a sole trader must be made on the basis
of consultation with and advice provided by PTC and GCL and approved by the relevant financial
delegate.

The following issues must be considered when entering into a contract with a sole trader.
ISSUES TO CONSIDER SOLE TRADER CONTRACTS
When entering into a contract with a sole trader, the department may have additional legal obligations
to the individual that it would not have if it was contracting with an entity. For example, the law might
require the department to:

pay superannuation for the individual; and
deduct income tax from the amount paid to the individual.
Also, depending on the nature of the work to be done and the manner in which it is done, the
individual may be classified by the law as an employee of the department even though the individual is
described as a contractor or a consultant in a contract. If the law classifies the individual as an
employee of the department, the department must also consider issues such as:

employment law issues such as
minimum wages and conditions
termination provisions, leave entitlements, etc; under awards and agreements;
the departments liability for loss or injury caused by the individual to third parties (ie,
vicarious liability).

In all cases officers must apply the core principle of value for money. If a contractor needs to be
engaged directly in the capacity of a sole trader, officers need to consider the type of contract to be
used:

Letter of appointment;
Special envoy Contract;
Short Form Contract; or
Long Form Contract.
WITHHOLDING TAX
If entering into a contract with a sole trader, they are required to quote their Australian Business
Number (ABN) in a correctly rendered tax-invoice. The department is required to withhold 48.5% in
the event that the sole trader does not have an ABN.


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SUPERANNUATION GUARANTEE CONTRIBUTION
Officers must check whether DFAT has an obligation to pay Superannuation Guarantee Contributions
(SGC) when entering into contracts with sole traders. SGC is not payable when entering in to contracts
with an entity such as a company or partnership. The Department of Finance and Deregulation (DoFD)
has issued a Superannuation Circular No. 2006/9 'Superannuation for Contractors after 1 July 2006) to
assist Commonwealth departments and agencies to determine which persons (or contractors) they are
liable to pay superannuation for after 1 July 2006. The Circular states that "superannuation is payable
for contractors who have been engaged directly (usually not through a labour hire firm) by Australian
Government employers wholly or principally for the labour of the contractor."

Details regarding any SGC to be paid by the department must be clearly reflected in the contract.
Further guidance is available at:
http://www.ato.gov.au/nonprofit/content.asp?doc=/content/4540.htm

The ATO has a questionnaire that will assist officers in determining this and is available at:
http://www.ato.gov.au/individuals/content.asp?doc=/content/00188597.htm&pc=001/002/064/002/0
10&mnu=42869&mfp=001/002&st=&cy=1
CONTRACT NEGOTIATIONS
Negotiation is a common feature of contract formalisation for both straightforward and complex
contracts. Negotiations may be required for various reasons including:
to achieve a full understanding between the parties;
to refine the performance measures;
make changes to the timeframes;
to clarify issues or objections to contract provisions; and
to explore any complex issues.

You should not advise or give any impression that the (or any other) tenderer has been awarded the
contract until the contract negotiations have been concluded and delegate approval has been received.
CONTRACT DOCUMENT APPROVAL AND SIGNING
It is crucial that the relevant FMA Section 44 Delegate approves the content of the contract. This
must be done prior to the contract being signed. It is best practice for the delegate responsible for
the contracting process to also sign the contract.

An FMA Regulation 10, if applicable, approval must be obtained prior to entering into (executing) a
contract. Entering into an agreement can be undertaken by a departmental officer with an appropriate
FMA Act section 44 delegation. By signing the agreement the delegate is signifying that they approve
the terms of the agreement and are satisfied that it represents a proper use of resources.
The FMA Section 44 delegate should ideally NOT sign the contract:

prior to the supplier sending two signed original copies to DFAT;
if the contract been changed from what was already approved in principle*; or
if it is not in the best interests of the Commonwealth to do so.

Two copies of the contract must be forwarded to the contractor to be signed. This allows for a copy of
the contract to be kept with each party. It is important for the final contract to be checked for
accuracy.

It is best practice for the contractor to sign the contract first as this allows DFAT to ensure that the final
contract has not been varied in any way from that which was agreed upon between the parties. On

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receipt of acceptance of the contract by the preferred tenderer (i.e. receipt of two signed copies of the
contract by the department) the FMA Section 44 delegate is required to sign both copies.

*to mitigate the risk of suppliers altering agreed terms and conditions prior to our signature, you could
initial the bottom right-hand corner of each page on all originals prior to sending the contract to
suppliers.
CONTRACT OPTIONS AND VARIATIONS
VARIATIONS INCLUDING VERBAL AND INFORMAL VARIATIONS
Contract variations are changes to the contract which are agreed between the parties and include
changes to any term, condition or schedule of the contract. All contract variations regardless of
whether the contract value or scope is increased require a value for money assessment before
proceeding. The process for contact variations must be consistent with, where applicable, the process
outlined in the contract.

DFAT contract managers should take care not to enter into any verbal or other informal contract
variations.

The courts have found that parties can vary a contract by conduct, even if there is an express
contractual provision stating that variations will only be effective in writing. An example is where a
contract required quarterly meetings that, by conduct, have never been held.
CONTRACT OPTIONS
Contract options are clauses included in the contract under which a party to the contract may extend
the period of the contract or require the performance of additional work. Contract options, if agreed,
could be by unilateral action. This means that it can be affected by the by unilateral action of the
nominated party (in the contract) and without further agreement from the other party. An example of
a unilateral contract option is a clause that enables the contract to be extended for a particular period
of time by DFAT giving written notice to the supplier.

The procedure for exercising a contract option is governed by the terms of the option clause in the
contract and usually involves written notice within a specified period.

Further information on evaluating extension options is available from DOFD.

If an existing contract has no option for extension, then any proposed extension should be treated as a
new procurement in accordance with the CPRs. The exercise of a contract option is an expenditure
related decision. As such, the principle of value for money applies and necessary financial approvals
must be obtained..
PRICE ESCALATION CLAUSES
Price escalation clauses provide a mechanism under which the pricing schedule in a contract may be
adjusted under a set formula. This type of clause can be used when contractors are uncertain about
the level of costs which will be incurred by performing the contract. Examples of the circumstances in
which price variation clauses might be used include:
Consumer Price Index: or
fuel levies.

You should carefully consider the operation of price escalation clauses when seeking financial
approvals.

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FINANCIAL APPROVALS OF CONTRACT OPTIONS AND VARIATIONS
Where a proposed variation (regardless of value) or the exercise of a contract option impacts on terms
of the original spending proposal and involves an increase in contract expenditure, you must seek FMA
Act Regulation 9 delegate approval (and FMA Act Regulation 10 authorisation if applicable) for the
revised total contract expenditure from an appropriate delegate.
INCREASE IN CONTRACT SCOPE AND CORRESPONDING INCREASE IN PRICE
This would require approval by a delegate under FMA Regulation 9 (and if necessary, the approval of
the spending proposal must be authorised in accordance with FMA Regulation 10).

The approval should be obtained from a delegate who holds sufficient delegation to approve a
spending proposal for the aggregate contract value (i.e. the remaining amounts yet to be paid under
the contract including any increase from the variation). Refer to the FMM for further information.
REDUCTION IN CONTRACT SCOPE, NO INCREASE IN EXPENDITURE
Although there is no proposed increase in expenditure under the contract, a contract variation that
significantly reduces the contract scope will impact on the terms of the original spending proposal.

The same approach as set out in section 4.7.4.1 should be taken here.
CHANGE IN CONTRACT SCOPE, INCREASE IN EXPENDITURE
This would require approval by an appropriate FMA Regulation 9 delegate (and if necessary, the
approval of the relevant spending proposal must be authorised in accordance with FMA Regulation 10).

The approval should be obtained from a delegate who holds sufficient delegation to approve a
spending proposal in respect of the amount of the increase in contract expenditure above the initial
FMA Regulation 9 spending approval. Refer to the FMM for further information.
NO IMPACT ON ORIGINAL SPENDING PROPOSAL AND CONTRACT EXPENDITURE
If the proposed variation does not impact on terms of the original spending proposal, for example an
administrative change to contact information, and does not involve additional expenditure, the
variation does not require approval by an FMA Regulation 9 delegate.

The procedures for execution of a contract variation are the same as execution of a contract.
MONITORING OF CONTRACTS
Contract monitoring is an important part of contract management. It involves ongoing or periodic
review of contract performance in comparison with agreed performance indicators and broader
contractual obligations.
DIRECT CONTRACT MONITORING BY DFAT
DFAT officers collect, analyse, report and act on data and information about the contractors
performance. This approach ensures DFAT controls the timing, scope and quality of the monitoring
process.
CONTRACT MONITORING PERFORMED BY THE CONTRACTOR
The contractor can be made responsible for collection, analysis and reporting of performance
information to DFAT. Even if the responsibility of monitoring performance is devolved to the
contractor, accountability for contract outcomes remains with DFAT. It may be necessary to test the
accuracy and reliability of the contractors responses through audit, site visits, spot checks etc.

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In some instances such monitoring is by written reports on progress. Such reports typically provide an
update of the work completed, an assessment of how the service delivered compares with the contract
requirements, performance in relation to established performance indicators, and a comparison of
work with the previous period and a detailed explanation of costs incurred. These reports provide basis
for ongoing dialogue between the contractor and DFAT. It is important to note that any opportunity for
necessary performance management might be lost if the contract manager does not action such
reports in a timely manner.
INDEPENDENT THIRD-PARTY MONITORING
Independent third party monitoring can be performed directly, by giving the responsibility over to an
external monitoring body, or indirectly through an accreditation process. In such a process, service
standards are set, reviewed and monitored generally through an independent body.
AUDITS OF CONTRACTOR PERFORMANCE
Audits are often, though not solely, used for important corporate services such as telecommunications
contracts, travel contracts and provision of IT network services. These functions are characterised by
the service being delivered to many individuals across the organisation, thereby making monitoring by
an individual officer managing the contract a difficult task.

An audit provides an independent, third party option as to whether contractor performance meets
requirements. Audits can assist DFAT to effectively manage specific risks that may arise from engaging
a particular contractor and to take appropriate risk management actions. Depending on the nature of
the project the audit may be the main means of measuring performance or it may be in addition to
regular monitoring processes.
REGULAR MEETINGS WITH THE CONTRACTOR
Regular, scheduled meetings between DFAT and the contractor are an important avenue for
monitoring the performance of both parties. Such meetings also form the foundation for building,
developing and maintaining an effective relationship. Regular meetings are particularly important for
long-term contracts. Quarterly and annual reviews are standard contract meeting times but they can
be conducted more frequently if necessary or appropriate. Ideally, such meetings would complement
other forms of performance monitoring.
SITE INSPECTIONS
Site inspections may be appropriate in the case of certain contracts. They should be considered where
other performance monitoring methods cannot give sufficient guarantee of the desired outcome. They
are particularly useful for long term contracts where the activity takes place away from DFAT premises
or for high value capital works projects.
SECURITY INCIDENTS AT PREMISES OF CONTRACTORS
Contractors have obligations to maintain a secure environment at all times for the handling and
storage of physical and electronic contract related material i.e. hardcopy file records, staff/client data,
private mail addresses etc.

Incidents of physical break-ins or hacking of electronic data systems of a contractors premises
including computer systems is a potential risk to DFAT contract related material. Contract terms must
include necessary clauses that require the immediate reporting of such incidents to DFAT.


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MONITORING MOUS
The officer managing the agreement must ensure that the MOU is monitored and reviewed regularly
over the life of the arrangement. The officer managing the agreement must ensure that it continues to
fulfil its objectives and that all parties to the MOU continue their commitment to the relationship.
PERFORMANCE ASSESSMENT
Performance evaluation is an important consideration in assessing whether value for money has been
obtained from the contract. Monitoring and evaluating performance helps maintain accountability and
ensures value for money is achieved.

Once a contractor has been selected and the buyer-contractor relationship has commenced, it is
important to immediately start monitoring and assessing the contractors overall performance. The
purpose of this is to enhance the relationship and thereby control performance. Contractors should be
briefed regarding expectations of their performance and methods for measuring that performance.
UNDER-PERFORMANCE
Effective performance monitoring should provide the contract manager with a timely warning if the
contractor is having difficulty in meeting the terms of the contract or the agreed performance
indicators. Act early if monitoring reveals a shortcoming in the contractors performance, as
preventative action can be taken to minimise the risk of significant problems developing. Additionally,
if you do not advise the contractor of the shortcomings as soon as they are discovered by DFAT, the
courts may view DFAT lack of action as a contract variation based on implied terms.

Strategies for dealing with poor performance may include:
increasing communication between the parties e.g. by way of progress meetings and reviews;
setting more frequent milestones;
closely monitoring performance;
addressing whether a contract variation may be an appropriate solution and then negotiating
the variation; and/or
terminating the contract and seeking damages from the contractor (this should be used as a
last resort). Please seek legal advice before undertaken this option.
You must not hesitate to inform a contractor where there is evidence that performance is
inadequate or behind schedule. Records must be kept of all feedback given and the contractors
response to the feedback.
Performance management must be the first course of action when managing under performance in
contracts. Termination of contracts is an absolute last option and should be pursued only if all other
courses of action fail. You must not terminate a contract or seek compensation from the contractor
without first obtaining legal advice from GCL.


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SECTION 5: CONTRACT END
EVALUATE CONTRACT PERFORMANCE AT THE END OF CONTRACT
All contracts for procurement of goods and services should be evaluated upon completion. This is to
identify the strengths and weaknesses in the procurement process and lessons that can be applied to
other procurements.

The final evaluation of contractor performance should be based on the performance criteria
established at the commencement of the contract. The evaluation should cover all aspects of the
procurement.

As well as DFAT providing feedback to the contractor, it may also be important to invite the contractor
to provide feedback to DFAT concerning contracting policy and procedures. This activity promotes a
partnering relationship, where both parties share information and are willing to adapt their activities to
achieve the best possible results. The results of the contractor feedback can be fed into best practice
strategies, standard documentation, Departmental practices and procedures.
CONTRACT END
When a contract has ended, required closure activities should be completed as soon as possible after
the contract expiry takes effect. Contract closure activities that may be required include:

verifying that all contractual obligations have been satisfactorily completed, including
payments and final accounting;
ensuring that all disputes under the contract have been resolved;
completing records and ensuring there is an appropriate audit trail;
post activity evaluation, analysis and reporting;
ensuring that any transition arrangements required under the contract have been
implemented;
documenting lessons learnt;
where the contract is terminated, ensuring that any requirements set out in the deed of
settlement are met.


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GLOSSARY
Accountability: requires purchasing officers to be answerable for their plans and actions and the
consequences of these. Openness and transparency in administration, by external scrutiny
through public reporting is an essential element in accountability.
Agency Agreement: an agreement for the procurement of goods or services under which an agency is
obliged, or may become obliged, to make a payment of public money to another agency. An
agency agreement will normally take the form of a MOU.
Audit: an examination or review. They are performed to ascertain compliance.
Best Practice: a cooperative and integrated approach to managing, organising and improving
operations during all stages of the procurement process. It equates to the adoption of
consistent standards, policies and procedures, and the use of benchmarks. Best practice is an
ever evolving goal whose performance indicators move higher as it is acknowledged that
someone else is doing better.
Conflict of Interest: arises where a person makes a decision or exercises a power in a way that may be,
or may be perceived to be, influenced by either material personal interests (financial or non-
financial) or material personal associations.
Contract: a legally enforceable arrangement which creates rights and obligations between the parties.
Contractor: include service/property providers, grant recipients, business partners, and any other
individuals/organisations/agencies that DFAT has a contract with.
Contract Deliverables: the goods or services to be delivered under the contract.
Contract Management Plan: a plan outlining the way in which a contract is to be managed
Contract Type: consultancy contract, general services contract or property contract
Debriefing: the process of advising unsuccessful bidders, on a no commitment basis, of deficiencies in
their bids which, if remedied, would make them more competitive for the future needs. (Can
also be used for successful tenderers).
Delegate: an appointed person who holds a delegation. The delegate provides the authority of an
activity to be carried out.
Dispute: an argument or failure to agree
Ethical Behaviour: in the context of procurement, behaviour which ensures that individuals and
organisations are trusted and respected by those with whom they deal. It also ensures that all
parties conduct business efficiently, in a fair and reasonable manner, and with integrity.
Guarantee: a warranty by a manufacturer or supplier that the property being supplied are free from
defective workmanship and materials, together with an understanding that if such defects
arise within a specified period of the use the manufacturer or supplier will rectify such defects
at their own expense.

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Gazettal: the process of inserting notices on to the AusTender website in order to facilitate open and
effective competition by allowing members of the public to compete for Government
contracts and notification of the results of any contracting process.
Insurance: a contract where a person (called the insurer) agrees that money paid to them (called the
premium) by another person to indemnify that second person against loss resulting to them
on the happening of certain events.
Intellectual Property: legal property rights to things that are created or invented. Examples include
patents, copyrights, and trademarks.
Liabilities: liabilities are the future sacrifices of economic benefits that DFAT is presently obliged to
make to other entities as a result of past transactions or other past events. In short a debt
which DFAT owes to another entity.
Memorandum of Understanding (MOU): non-binding and non-contractual agreements between
Commonwealth agencies. Even though MOUs do not have the same legal status as contracts,
DFAT officers managing the arrangement should manage MOUs with the same degree of
rigor, and apply policies and procedures within this guide.
Negotiation: a bargaining process between two or more parties. Each party has its own viewpoints
and objectives but seeks to reach a mutually satisfactory agreement on, or settlement of, a
matter of common concern.
Officer Managing the Contract: a staff member performing the contract management role and having
the responsibility for all aspects of the contract including ensuring stakeholders are kept
informed about relevant matters and contract developments.
Performance: is the efficiency and effectiveness with which outcomes are being achieved against the
objectives set by the Government, the appropriateness and quality of processes, and the
probity with which processes are conducted to achieve the outcomes.
Performance Indicator: provide a way of measuring how well an organisation is performing so that it
can be compared with others or with past achievements. Performance indicators are often
linked with targets and objectives.
Performance Standard: a criterion or benchmark with which actual performance is compared.
Policy: the objectives, ethos, and body of principles underlying the activities of an organisation. A
settled objective or course of action, determined by appropriate authority, prescribed to be
followed by individuals or groups owning some kind of obedience to that authority. Policy is
usually based on principle. Effective policy also recognises the practical considerations which
will bear upon implementations.
Probity: having the consideration of ethical issues. It relates to having strong moral principles such as
uprightness, honesty and integrity.
Procurement: is the acquisition of property and/or services

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Risk Management: the process of implementing and maintaining appropriate management controls,
including policies, procedures and practices to reduce the effects or risks to an acceptable
level. The process involves identifying, analysing, assessing, treating and monitoring risk in all
areas of departmental operations and business.
Stakeholder: internal or external parties whether an individual or group with an interest in the success
of an organisation in delivering intended results and maintaining the viability of the
organisations products and services. Stakeholders influence programs, products and services.
Standard Contract: a standardised contractual document adopted by an organisation to cover all
standard commercial and non-commercial requirements.
Statement of Requirement: the exhaustive list of requirements that define a product or service.
Terms and Conditions: a general phrase used to describe all of the provisions, agreements, obligations
and rights pertaining to a contract.
Value for Money: a way of comparing alternatives for the supply of property and services. The
concept of value for money is not restricted to price alone. The value for money assessment
must include consideration of:
contribution to the advancement and implementation of government policies and priorities;
non-cost factors such as fitness for purpose, quality service and support; and
cost related factors including whole- of- life costs associated with acquisition, use, holding,
maintenance and disposal.
Variation: a change to the contract which is agreed upon between the parties involved.
Warranty: an undertaking either expressed or implied that a certain fact regarding the subject matter
of the contract is presently true or will be true.


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CHAPTER 7 - WORK HEALTH & SAFETY IN PROCUREMENT
POLICY AND LEGISLATI VE BASIS
INTRODUCTION
The States, Territories and the Commonwealth committed to enacting new work health and safety
laws. The Occupational Health and Safety Act 1991 (OHS Act) changed to the Work Health and Safety
Act 2011 (WHS Act) from 1 January 2012. This is a significant and historic change to OHS laws in
Australia and represents a time for review and change in how we look at work health and safety.

Consideration of Work Health and Safety (WHS) is an important part of procurement risk management
practice.
THE WHS FRAMEWORK
The WHS Framework, as espoused in the WHS Act, sets out the health and safety duties of officers
undertaking procurement.

SPECIFIED ROLES IN THE WHS ACT
Primary Duty Holder
The primary duty holder, under the Act, is a Person
Conducting a Business or Undertaking (PCBU) who is
responsible for its overall operation.

The Commonwealth is the PCBU and the
department implements the requirements of WHS
law on behalf of the Commonwealth.

PCBUs owe a duty of care to all workers.
They must ensure the health and safety of
all workers, so far as is reasonably
practicable. PCBUs also have duties to
other persons.
Officer
An Officer is an officer of a PCBU.

An Officer is a person who makes, or participates in
making, decisions that affect the whole or a
substantial part of the business. Officers in the
department include Secretary, permanent members
of the Departmental Executive and HOMs.

An officer of a PCBU has a duty to exercise
due diligence to ensure that the PCBU
complies with its duty.

Worker
A Worker is a person who carries out work in any
capacity for a PCBU and includes an employee, a
contractor or subcontractor, an employee of a
contractor or subcontractor, a labour hire worker,
an outworker, an apprentice or trainee, a student
gaining work experience or a volunteer.

A worker must take reasonable care for
themselves and others, comply with
reasonable instructions and cooperate
with reasonable policies and procedures
of the PCBU.

Others
Persons who find themselves at a workplace,
whether or not they have another duty.

Persons must take reasonable care for
themselves and others and comply with
reasonable instructions of the PCBU.


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WHS ACT AND PROCUREMENT
PCBUs, Officers and Workers must comply with relevant WHS duties as part of the procurement
process, including identifying risk and considering what is reasonably practicable to ensure the health
and safety of workers and others.
The extent to which WHS considerations will require specific treatment in the procurement will depend
on what is being procured, what type of contractor will be involved and how the procurement is
conducted. Risks for consideration include those arising during the:

procurement process;
contract period; and
ultimate use of the goods or services procured under the contract.
REASONABLY PRACTICABLE
Deciding on what is reasonably practicable to the ensure health and safety of workers and others
requires taking into account and weighing up all relevant matters including:

the likelihood of a hazard or risk occurring;
the degree of harm that might result from the hazard or risk;
what the relevant person knows or ought to know about the hazard or risk, and ways of
eliminating or minimising the risk;
the availability and suitability of ways to eliminate or minimise the risk; and
the cost associated with the ways of eliminating or minimising the risk, including whether the
cost is grossly disproportionate to the risk.
WHS ISSUES TO CONSIDER WHEN PROCURING GOODS AND SERVICES
FROM THE PLANNING STAGE FOR THE PROCUREMENT.
Is this type of activity or equipment new for the department? What are the new WHS risks?
Is this the type of activity or equipment where there are known WHS risks?
What WHS risks are inherent in the goods or services? How will the risk be best managed?
Who is best placed to manage these risks?
How will you ensure all potential workers adhere to the same health and safety vision as the
persons conducting a business or undertaking (PCBU)?
Have you considered legal advice?
WHS RISKS WHEN DEVELOPING THE SPECIFICATION.
Does the specification clearly address WHS standards, training requirements, and
performance metrics?
Are there any specific WHS reports, certificates or information to include in the specification?
What will the department do with the goods or services after delivery? Clearly state the
purpose of the goods or services.
SPECIFIC WHS REQUIREMENTS THAT MAY APPLY TO THE ACTIVITIES COVERED BY THE
CONTRACT.
Are there any specific Commonwealth WHS codes of practice, safety standards or
departmental policies relevant to the goods or services, or the purpose to which they will be
put?
Does the contractor hold any necessary licences (for example, an asbestos removal licence or
a high-risk work licence)?
Will contractors and their employees need to be involved in consultation, representation and
participation activities? How will you communicate expectations?

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BE CLEAR IN THE CONTRACT WHO IS RESPONSIBLE IN RELATION TO WHS DUTIES.
Does the contract clearly define WHS roles and responsibilities between parties? How are
obligations and shared responsibilities for WHS matters allocated in the contract?
How will any disputes in relation to WHS issues be resolved?
How will you approach approval of subcontractors, plans, etc under the contract?
Does the contract make clear the intentions of the department regarding taking responsibility
for particular types of risk?
USE AN EVALUATION METHODOLOGY THAT TAKES ACCOUNT OF WHS.
What information will you need to determine if the proposed goods or services will meet your
required WHS standards (as set out in the specification)?
Will WHS be a specific evaluation criterion or part of the overarching risk consideration?
Have you considered the cost associated with controlling a risk against the likelihood of the
risk occurring and the harm that would result?
ENSURE THAT YOU HAVE THE NECESSARY RESOURCES AND EXPERTISE TO SELECT A
SUITABLE CONTRACTOR/PRODUCT.
How will you assess compliance with the requirements of your specifications?
Do you have in-house expertise to consider suitability or do you need to hire-in?
Can you rely on the tenderers statements, or do you need to independently verify compliance
and suitability?
Do you need documentation from the contractor (and subcontractor) regarding health and
safety records, WHS policies and procedures, WHS prosecutions and workers compensation
coverage?
ENSURE THAT ALL PARTIES UNDERSTAND WHS RESPONSIBILITIES.
Ensure officers and others involved in the procurement process are aware that they will be
liable to prosecution for a criminal offence if they fail to comply with their health and safety
duties.
Ensure contract managers understand WHS responsibilities that might be relevant to
managing the contract such as responsibilities for agency staff on contractor premises and
responsibility for contractor staff.
Monitor performance metrics and review them as part of a post-contract evaluation.
Assess, execute and review orientation and training wherever reasonably practicable.
CONSIDER THE IMPACT OF WHS LAWS ON WORKERS TRAVELLING OR BASED
OVERSEAS
Consider how the same duty of care as Australian based workers will be provided to workers
travelling or working overseas.
Ensure the PCBU takes reasonably practicable measures to eliminate or control risks in the
overseas environment.
Ensure officers, workers and others are aware that WHS law may apply outside of Australia.
FURTHER INFORMATION

Work Health and Safety Act 2011 http://www.comlaw.gov.au/Details/C2011A00137
AGS Fact sheets http://www.ags.gov.au/publications/agspubs/factsheets/index.htm
No. 18 Work Health & Safety Procurement
No. 17 Work Health & Safety Officers duty