Beruflich Dokumente
Kultur Dokumente
procurement planning
Document details
Document title A guide to procurement planning
Contact details procurement.policy@nt.gov.au
Date and version 26 September 2017
Version 0.5, Draft
Approved by Director, Procurement Strategy and Capability
Date approved 16 October 2017
Document review Every four months
Change history
Version Date Author Change details
0.1 24 March 2017 Procurement Policy Initial version – table of contents only
0.2 6 June 2017 Procurement Policy Second version with text added
0.3 16 June 2017 Procurement Policy Incorporation of feedback received
0.4 27 July 2017 Procurement Policy Further development for consultation
0.5 26 September 2017 Procurement Policy Final changes to enable publishing
Acronyms
The following acronyms are used in this document
Acronyms Full form
APMP Agency procurement management plan
NT Northern Territory
NTG Northern Territory Government
TDO Tenders document online
Disclaimer
This guide is a draft only and is still under development. Feedback on this guide can be emailed to
procurement.policy@nt.gov.au by Friday, 12 January 2018 for inclusion in version 1.0.
Staff must ensure that all procurement activities undertaken comply with the procurement rules and
procurement governance policy1 found on nt.gov.au.
1 https://nt.gov.au/industry/government/procurement-conditions-framework/procurement-directions
Contents
Disclaimer...................................................................................................................................... 3
1 About this guide ..................................................................................................................... 6
2 What is planning? .................................................................................................................. 7
3 Governance ............................................................................................................................ 9
3.1 .......Accountabilities ............................................................................................................. 9
3.1.1 ........ Procurement and financial delegations .................................................................. 9
3.2 .......Probity .......................................................................................................................... 9
3.3 .......Defensible decision making ........................................................................................ 10
3.4 .......Risk management ....................................................................................................... 10
3.5 .......Internal audit ............................................................................................................... 10
4 Roles and responsibilities ................................................................................................... 12
5 Step 1: Agency planning ..................................................................................................... 14
5.1 .......Agency procurement management plan ..................................................................... 14
5.2 .......Procurement management approach .......................................................................... 15
5.2.1 ........ Category management ........................................................................................ 15
5.2.2 ........ Demand management ......................................................................................... 15
5.3 .......Relationship management .......................................................................................... 16
5.4 .......Engagement of stakeholders ...................................................................................... 16
5.5 .......Procurement processes by tier ................................................................................... 17
5.6 .......Monitoring expiring contracts ...................................................................................... 17
6 Step 2: Define our need ....................................................................................................... 18
6.1 .......Determine business need ........................................................................................... 18
6.1.1 ........ Procurement methods .......................................................................................... 18
6.1.2 ........ Objectives of the procurement activity.................................................................. 19
6.1.3 ........ Procurement activity budget ................................................................................. 19
6.1.4 ........ Stakeholder consultation ...................................................................................... 19
6.1.5 ........ Business case (as needed) .................................................................................. 20
6.2 .......Existing contracts........................................................................................................ 20
6.2.1 ........ Across government contracts ............................................................................... 21
6.2.2 ........ Agency specific contracts..................................................................................... 21
6.3 .......Project specific governance ........................................................................................ 21
6.3.1 ........ Project steering committee ................................................................................... 21
6.3.2 ........ Project team......................................................................................................... 21
6.3.3 ........ Probity team......................................................................................................... 22
6.3.4 ........ Conflict of interest declaration .............................................................................. 22
6.4 .......Project specific risk management ............................................................................... 22
6.4.1 ........ Value and risk segmentation ................................................................................ 23
6.5 .......Market engagement and analysis ............................................................................... 24
6.5.1 ........ Undertake industry briefings ................................................................................ 25
6.5.2 ........ Supply positioning model ..................................................................................... 25
6.5.3 ........ Supplier preferencing model ................................................................................ 27
6.5.4 ........ Supply chain analysis .......................................................................................... 29
6.5.5 ........ Analyse market conditions ................................................................................... 30
6.6 .......Prepare scope of requirement..................................................................................... 31
6.6.1 ........ Structure of a scope of requirement ..................................................................... 32
6.6.2 ........ Scope of requirement types ................................................................................. 32
6.6.3 ........ Performance standards and measures ................................................................ 33
The guide must be read in conjunction with the procurement governance policy, procurement rules
and procurement circulars. In addition, agencies must ensure that activities comply with any
internal processes in place. This will enable agencies and its personnel to adopt compliant
procurement practices that strive to deliver value for Territory.
The various templates and factsheets supporting this guide are listed in Appendix A and are
referenced throughout the guide with the prefix P1, P2, P3 etc.
Figure 1
2 What is planning?
Planning is an integral part of any procurement process. It comprises of whole-of-agency planning
and project-specific planning. This can include consultation with key stakeholders, analysis of the
market, determining the best procurement approach and measuring and managing risks.
Each step of planning is further explained in sections 5 to 7 of the guide as noted above.
Good planning considers the risk and complexity of the activity and sets the course for subsequent
activities within the procurement lifecycle. It ensures the most appropriate procurement strategy is
selected to meet the objectives of the agency and results in:
Importance of planning
Why is planning important? enables procurement activities to be aligned with agency
strategic objectives
Achieve value for Territory improved value for Territory outcomes can be achieved
outcomes through a properly planned procurement activity, which may
include joint agency or business unit approaches
3 Governance
To ensure the success of the NTG’s procurement processes, there is reliance on a number of
structures already in place in agencies, in particular:
professional conduct and capabilities of staff, based on Office of the Commissioner for Public
Employment requirements
Due to the varying agency organisational structures, recognition can only be given to generic
project and contract management structures. Some interpretation will be needed in agencies to
accommodate this approach. Staff undertaking procurement activities must ensure consideration of
their agency structures and processes.
3.1 Accountabilities
The chief executive (however described) is the designated accountable officer in relation to the
Procurement Act and the Financial Management Act. The accountable officer and all employees
are bound by the provisions of the Procurement Act, procurement governance policy, procurement
rules, and procurement circulars.
Each agency should also have clearly established processes for endorsements and approvals to
be obtained.
3.2 Probity
Probity is the process of having strong moral principles, including conducting business ethically
and fairly. In procurement, it is important to ensure that all businesses and industries have a fair
opportunity, and that the process is transparent, accountable, impartial, and equitable. All
procurement activity should be clear, open, well understood and applied equally to all parties who
are engaged in the process.
provide accountability
maintain integrity
ensure that all offers will be assessed against the same criteria
lawful behaviour
It is important to ensure that all procurement activities are always conducted with adequate probity
in mind.
Further guidance on defensible decision making is provided at P1: Defensible decision making.
There are three fundamental risks inherent in government procurement. These are:
Agencies should have a risk management framework in place that can be used to analyse strategic
risks associated with the management of its procurement function, as well as project specific
procurement risks.
In accordance with the procurement rules, the accountable officer must establish an internal audit
program for their agency that incorporates the requirements of the value for Territory assurance
program. The value for Territory assurance program is an overarching program of audit and
assurance activities that evaluates:
internal NT Government and externally industry compliance with the buy local plan
Evaluation of these criteria is achieved through the direct and indirect activities of the buy local
industry advocate, with the assistance of the buy local subcommittee of the Procurement Review
Board. These activities are to be designed to measure the effectiveness of and compliance with
the buy local plan.
Agencies contribute to this through their internal audit programs which must incorporate evaluation
of the three points mentioned above.
Clarity of roles and responsibilities is critical in achieving efficient and effective planning. It is
recommended that roles be allocated early in the procurement lifecycle, ideally in the planning
stage to provide personnel with the opportunity to be aware of, and provide input into, the planning
and sourcing stages.
Where necessary, the same employee can be assigned to more than one role. However, agencies
should ensure appropriate segregation of duties. For example, the project manager should not be
the delegate and members of the assessment panel should not be approving assessment
outcomes.
Agencies should provide all staff with the support and training necessary to obtain the procurement
skills required to perform their roles effectively.
Roles Responsibilities
Project manager manages a specific project for which procurement activities
are undertaken
Project sponsor a senior agency executive responsible for ensuring the overall
objectives of the specific procurement activity are delivered
and the proposed benefits realised.
Roles Responsibilities
Steering committee group formed from stakeholders to guide the development and
progress of a project (as applicable)
Agency planning is essential so that project-specific related procurement decisions are not made in
isolation, and so consideration can be given to the overall picture, to enable coordination of
approaches leading to economies of scale and value for Territory outcomes.
What are the risks if agency an inadequate procurement plan put in place that does not
planning is not performed address agency objectives
effectively?
ineffective allocation of agency planning resources, without
proper consideration of value and risk
The APMP sets out the agency’s strategies for improving their procurement procedures and for
ensuring the agency’s procurement related expenditure is well managed. As part of this process,
Agencies need to develop a good understanding of their procurement expenditure profiles, key
supply markets, local supply markets and the position of the agency within these markets, the
agency’s procurement organisation, systems, procedures and staff capabilities.
Further guidance and templates to assist with preparing the APMP is provided at P2: APMP guide
and template.
The process is employed by government where demand cannot be met and additional resources
either within government or the private sector are not available. It involves managing the service
delivery cycle to influence demand for services and the economic, financial, and human resources
required for effective delivery of those services.
identifying strategies to match demand with the relevant agency’s capacity to meet it
staging the provision of resources to match forecasts of service demand over time
Key agency stakeholders should be involved in the demand management procedure to identify
strategies, assess risk and make decisions. This involvement will enable a clear understanding of
the impact changes in the availability of resources and services will have. In particular, other
agencies that may be affected should be included in the process to ensure that demand is not
simply shifted from one agency to another.
Agencies should put a benefits realisation plan in place for relationship management, so there is a
clear sense of what value is to be generated for both parties. Furthermore, there should be a focus
on capturing innovation from business and industry where necessary or valuable.
building strategic relationships between the key stakeholders in the organisation and business
and industry
establishing operational relationships between the agency and business and industry.
Similar categories of supplies across multiple divisions or agencies offer further opportunities for
market-based solutions and establishing whole of government contracts.
One way to systematically review developments and trends in particular market sectors is to carry
out regular strategic market sector scanning. This process can assist in:
providing a better understanding of the capability of market sectors relevant to the category
assessing the capacity of the market and structure of the relevant market sector
Ideally, strategic market scanning will inform the market engagement strategies when preparing a
procurement activity plan.
Refer Appendix A for a list of flowcharts and checklists for each tier. Agencies may adapt these to
suit their internal processes but must ensure overall compliance with the procurement framework
(for editable copies of the flowcharts, please contact Procurement Policy).
Period contracts should be recorded in a register upon award and updated as necessary. It is
recommended that this function is performed by the agency’s procurement unit to ensure a
consistent approach, with one or two individuals responsible for monitoring expiration dates.
An example register is provided at P14: Period contract register. Other options include using
contract management systems such as Contrax (once available to all agencies).
It is important that agencies consider the amount of time that will be required to renew or extend a
contract to avoid a lapse in services. The time required will largely depend on the nature of the
contract and whether it is being renewed or extended. For example, an extension of a cleaning
contract may only require a few weeks, whereas the renewal of a large panel contract will likely
require a minimum of six months.
What are the risks if defining poor identification of needs may lead to incorrect supplies
our need is not performed being sought or offered, resulting in additional time, effort and
effectively? cost
A clear and justifiable business need linked to the agency’s strategic objectives or procurement
strategy needs to be established. Options to satisfy this business need (including non-procurement
alternatives) are to be explored to determine whether procurement is the best means to deliver a
value for Territory outcome. There may be an existing contract that can meet the identified need
(including across government contracts).
In the absence of clearly established business needs, the project manager should undertake the
process prior to commencing the procurement activity on behalf of the agency.
identifying/agreeing on the outcome and determining best purchasing options in terms of policy
requirements, risk, cost and other management issues
For all significant procurements (particularly those identified as high risk and/or high value), a
business case should be prepared.
The estimated value of the supplies is not published as standard practice. However, as part of
some procurement processes (particularly where the supply is complex and/or difficult to define) it
may be appropriate to include an estimated value, benchmark or comparator to assist respondents
with preparing their offer.
Unless there are exceptional circumstances, agencies should not use budget limitations to
terminate a procurement process once the request has been put to the market. Agencies should
first explore other options, such as negotiation to reduce the scope of requirement.
It is important to identify key stakeholders, both internal and external, and consult to determine
their needs. Consultation with key stakeholders should consider the purpose of the procurement,
those parties impacted by the procurement, the key stakeholders and their expectations, as well as
the needs of any major external users or recipients of the supplies.
The business case should be prepared with the involvement of key stakeholders, including where
and if possible, the end users. It should be approved in line with the agency’s policies, procedures
and delegations.
The business case is a working document and should form the basis of the post-implementation
review and be used as a management tool to ensure that the original outcomes and benefits have
been achieved.
Business cases come in all shapes and sizes. They should, however, all have the same purpose,
which is to:
justify the resources and investment or funding necessary to undertake procurement over the
whole-of-life
provide a vehicle for approving funding which supports transparency and probity
assist the agency to prioritise the project against other public policy/business initiatives.
Not all procurement activities require the development of a business case. Agencies are
encouraged to check their agency policy to determine when a business case is required.
Agencies may utilise period contracts established by other agencies with approval from the
delegates of both agencies and the supplier. Accessing contracts established by other
governments (i.e. federal, another state or territory) require approval from the Procurement Review
Board.
The agency must be able to demonstrate that accessing another agency/government’s contract will
deliver best value for Territory over other the preferred procurement method for the relevant tier.
The project steering committee oversees the general progression and direction of the specific
project, ensuring risks are identified and managed appropriately, and decisions are made when
required.
The project team should possess a mix of relevant skills and experiences to enhance on
knowledge and requirements, the team composition may include:
procurement specialist
2 http://ntgcentral.nt.gov.au/ntg-tools-services/procurement-and-contracts/contracts/across-government-contracts
commercial/financial expert
legal advisor
probity advisor.
It is advantageous, if possible, to retain some or all of the original project team members, or at
least the core team throughout the procurement. In this way, the project team will be responsible
for assessing the needs, defining the specification of requirements, designing an appropriate
assessment methodology, assessing offers, inputting into performance standards, measures and
developing contractual requirements. Such continuity is likely to strengthen the procurement
process and outcome.
Where stages in procurement are done by separate individuals or other groups it can compromise
the quality of the outcomes.
Procurement must be conducted with probity in mind, to ensure purchasers and business and
industry interact on the basis of mutual trust and respect, and ensure integrity. Probity should be
integrated into all procurement planning.
A conflict of interest declaration form should be signed as soon as the person is appointed to the
team. For those making financial approvals or other key decisions the declaration can be provided
at the relevant time of making the decision during the procurement lifecycle.
If a declaration is made, the delegate must make a decision about that person’s participation in the
procurement activity. Declarations should be updated at regular intervals as appropriate (i.e. when
offers close).
The basic principle is that management of a particular risk should be allocated to the party best
placed to manage it. Project managers should be prudent when transferring the responsibility for
the management of risks between parties. Clear communication and acceptance of risk transfers
are required.
The risk register should consider risks in all stages of the procurement lifecycle. It is an active
document which should be added to, updated, corrected and completed as required throughout the
lifecycle. The creation of a risk register is particularly important for high risk contracts.
Below is a classification framework that categorises contracts into one of four types, segmenting
contracts on the basis of value and risk, resulting in the following classifications:
A copy of the VRS should be kept with the procurement records. The VRS tool is provided at P18:
Value risk segmentation tool.
The table below outlines the recommended planning approach for each contract classification as
determined by the VRS. Procurement activities identified as high risk and high value require
experienced project managers and greater rigour than those identified as low risk. As a result, the
approach to each planning step can vary.
Leveraged Low High With low risk and high value contracts, the focus
will be on how to leverage value from the resultant
contract. This may include planning for how spend
monitoring, minimising the cost per unit and
management efficiencies can be achieved.
Strategic High High High risk, high value contracts require a significant
amount of effort and attention in order to
safeguard the organisation and ensure the
effective delivery of agreed outcomes and
services. It is recommended that a suitably
qualified project manager with procurement
experience is appointed to lead the planning
stage, with suitable advisors included (i.e. probity,
legal, procurement).
There are various avenues available to obtain information about the market, including:
own knowledge
previous experience
internet research
other buyers
professional bodies
In addition, market engagement ensures agencies gain an understanding of the changing aspects
of the market and identify where improvements can be made to enhance desired procurement
outcomes. Engaging with the market can help:
Project teams must carefully consider the timing of industry briefings, particularly when a
procurement activity is out to market. It is important to allow sufficient time for industry to see the
briefing opportunity and subsequently prepare their offer following the briefing.
Under the procurement rules, all agencies are required to consider opportunities to provide
industry briefings as part of their APMP preparations.
The level of risk/exposure will be determined by various factors including (but not limited to) the
following:
supply availability – risk/exposure is less where there are many businesses and industry and
supply is plentiful, however shortages or market limitations will position the procurement higher
on this scale
quality requirements – risk/exposure is less where there are commonly accepted industry
standards and greater where there are strict unique specifications to be met and where there is
little tolerance for error
These factors will vary for each agency and will determine where each procurement activity is
positioned on the risk/exposure axis of the supply positioning model. This will help inform the
procurement planning strategy, and the amount of time and effort required in undertaking the
procurement process.
The following table identifies and describes each of the supply positioning quadrants and the
procurement planning considerations that need to be assessed.
consider alternative
supplies.
performance measures
(risk, value)
medium/long term
contracts
contingency planning.
one-off contracts/purchase
orders
simplify acquisitions
process
purchase cards
automatic systems.
promote competition
detailed specifications.
level of expenditure
By understanding these factors from the business and industry perspective, more effective
procurement planning strategies can be developed by agencies to either make the procurement
activity more attractive to business and industry or to maximise the opportunity for value for
Territory outcomes.
The following table outlines the key aspects of each quadrant from the potential supplier point of
view and describes what agencies might consider in developing an appropriate acquisition strategy
and framing a market approach.
Planning
Quadrant Description Actions
considerations
Development Opportunity: nurture customer capitalise on the
opportunity to
low relative cost expand business maximise value
still attractive. seek new improve the
opportunities. capability and
performance of the
supplier
Core Key customer: retain customer
develop good
high relative cost defend rigorously business
relationship.
highly attractive high service and
response.
core business.
ensure a fair
allocation of risk
between the
parties.
The types of organisations that comprise a supply chain will depend on the nature and complexity
of the supplies. Organisations may include primary producers, manufacturers, traders,
Supply chain analysis seeks to promote a more integrated, seamless, cooperative and low risk
arrangement between the key players as the success of the procurement will ultimately depend on
the performance of each link in the supply chain.
Supply chain analysis identifies where the greatest risks are and identifies how each organisation
adds value to the procurement. Supply chain analysis enables the public authority to consider
strategies to influence the nature of the supply chain (if possible) or to undertake the procurement
at a different stage in the supply chain (for example, by sourcing the supplies directly from the
wholesaler instead of the retailer).
For example, consideration of the supply chain enables government to consider sustainability risks
such as only purchasing office furniture made from sustainable forest timber.
Governments can analyse the supply chain by commencing with the first-tier business and industry
and working backwards to identify:
Market analysis is specific research undertaken to identify and describe the factors, conditions, and
characteristics of the market for a procurement activity. The results of a market analysis can help
improve the strategy and procurement process to help achieve better value and reduced costs.
A market analysis is normally undertaken prior to a market approach, to help facilitate the
achievement of procurement objectives appropriate management of risks.
define the objects and elements of the market analysis (e.g. number of businesses and
industry and their capacity and capability)
the performance standards that the resulting supplies will need to address.
It is important to ensure that the scope of requirement clearly describes the following:
detail why the agency is undertaking the activity and the term of contract
explain who will be involved in the delivery: supplier / contract manager etc.
Characteristics Explanation
Complete The scope of document is contained in one document with no missing
information. If the nature of the procurement requires more than one
document, the documents should be clearly structured and linked with no
repetition or overlap.
Consistent Each requirement is consistent with all others and any external
documents that are referenced.
Characteristics Explanation
Current Each requirement is current and can, in some cases, be future focused to
meet planned or predicted future needs.
state the requirement clearly, concisely and logically in functional and performance terms
include enough information for suppliers to decide what level of quality is required
assist in forming the fundamental basis of the contract between buyer and seller.
The scope of requirement should not specify brand names for supplies without clearly stating that
equivalents are allowed unless there is a clearly defensible and demonstrable benefit to
government.
Functional specifications define the task or desired result by focusing on what is to be achieved
rather than how it is to be done. They do not describe the method of achieving the intended result.
This enables suppliers to provide solutions to defined problems.
There is often great scope for variation in this approach, so it is necessary to think carefully about
how to assess the offers received. There may be a wide variance so a structured method of
determining which is the most appropriate is needed.
Performance
Performance specifications define the purpose of the supplies in terms of how effectively it will be
required to perform. Performance is a logical extension of function: performance specifications
define the outcome or desired result by focussing on what is to be achieved, not the method of
achieving it. Performance specifications are usually used in conjunction with functional
specifications. This enables suppliers to provide solutions to defined problems.
There is great scope for variation in this approach, but it encourages innovation. As with functional
specifications, it is necessary to think carefully about how offers are to be assessed.
Technical
Technical based scopes define the technical and physical characteristics and aspects of a product
as well as design details, material properties, maintenance requirements and operational
requirements. Technical based requirements are used when functional and performance
characteristics are not sufficient to accurately define a requirement.
Outcome
Outcome based scopes are encouraged and have the advantage over technical based scopes by
allowing suppliers to offer innovative and technologically advanced solutions that can offer
improved value for Territory.
timeliness: the frequency and promptness - this might include turnaround times, waiting times
or response times
user satisfaction: the level of customer satisfaction regarding any of the above, as well as their
specific requirements
continuous improvement: rates of improvement in any of the above measures over time.
Agencies should select key performance indicator’s (KPIs) and performance measures that are
relevant and which can be measured. Potential examples include:
delivery or response times within agreed timeframe (e.g. 1 hour response time)
complaint resolution
cost tracking (e.g. percentage or proportion of costs that have been invoiced benchmarked
against the agreed contract costs)
service resolution (e.g. percentage or proportion of issues resolved first time without follow
up/escalation).
The chosen measures must be clearly outlined in the scope of requirement to enable reporting in
the contract management stage of the procurement lifecycle.
Agencies must advertise a future tender opportunity at least one month prior to the release of tier 4
and above procurement activities. This linked to requirements for government procurement under
free trade agreements.
What are the risks if an inappropriate approach to the market may result in a poor
planning the procurement or ineffective responses from the market, resulting in
approach is not performed additional time, effort and cost
effectively?
confusion from suppliers as to the requirements of the agency,
resulting in supplies being offered that do not meet agency
needs
The contract management guide3 (available on NTG Central) includes a contract extension review
template that can assist with making the decision to extend a contract.
a. where applicable, this must include an opportunity for contract rates to be reviewed
Note: if using the CAPS contract management service, they will issue the letters for tiers 4 and 5.
For contracts without extension options, the agency should go back to the market. Agencies
should avoid varying in extension options wherever possible. Varying in extension can be
indicative of poor planning and may be subject to criticism in an audit or review.
3 http://ntgcentral.nt.gov.au/ntg-tools-services/procurement-and-contracts/procurement/procurement-documents
Any decision to vary in an extension option instead of going back to the market must be defensible.
An example of where this may be defensible is a short-term extension to see out the completion of
a program of works where going back to at market would not result in better value for Territory
being achieved.
It is vital that agencies have processes in place to monitor and renew their expiring contracts in
order to avoid varying in extra extensions.
Key benefits of an open and competitive market approach are that all potential suppliers are
subject to the same terms, conditions and requirements; and procurement procedures and
processes are consistent and transparent to agencies, potential suppliers and the public.
Such an approach enables the procurement process to be conducted in an open and transparent
manner, in accordance with the NTG policy and legislation. An open and competitive market
approach avoids processes that only favour the lowest price or are biased towards a business or
industry.
As outlined in the table below, the preferred market approach differs according to the tier:
direct purchasing
available for freely
available supplies that are
low risk and can be
purchased locally.
direct purchasing
available for freely
available supplies that are
low risk and can be
purchased locally.
A range of factors can influence the type of procurement method used, including:
timeframes/implementation
availability
skill requirements
market trends
risk factors
Processes within each tier may not be appropriate for procuring supplies where the risks to the
government are such that simplified conditions may not adequately protect the government’s
interests. As standard processes for each tier have been established to reduce the direct costs to
potential businesses and industries, agencies need to justify departures from the use of the
standard process for the given tier. Agencies may only use a method of procurement other than
the standard process for the tier when demonstrable risks associated with use of this process can
be identified and an alternative process can be justified.
Direct purchasing is a single source procurement method. It involves being directly in contact with
one supplier. Agencies may only use direct purchasing for freely available supplies that are low risk
and can be purchased locally.
Direct contracting involves directly approaching and negotiating with one supplier in the absence of
a competitive tendering process. Direct contracting can only be used with the approval of the
accountable officer where there is a single supplier capable of meeting the requirements and:
there is evidence that it is the most effective manner to deliver best value for Territory, or
Direct contracting does not follow a conventional tender process (i.e. development and release of a
tender document) but still requires appropriate approvals and an assessment to ensure best value
for Territory will be achieved.
Select processes may be used where it can be demonstrated to have significant benefit to
government and potential suppliers. Undertaking a select process involves inviting a limited and
select number of potential businesses and industries to respond to an offer. In certain cases, it may
be that only a sole supplier is invited to submit an offer.
the supplies are required urgently (e.g. where life, property or equipment are at immediate risk
or standards of public health, welfare, security or safety must be re-established without delay),
or where there is an urgent request from a minister
the required supplies are available from a limited or single source (e.g. standardised supplies,
compatibility with existing supplies, availability restrictions, warranty stipulation or restricted
access, patent or copyright restrictions or specific accreditation, certification or qualifications
are required to undertake the supply)
standardisation of supplies, where it can be demonstrated that a similar product will not operate
within the current system or that standardisation will lead to significant cost benefits and
efficiencies in operation
where a public procurement process has resulted in no admissible offers being received
there are warranty, patent or copyright considerations that limit the number of businesses or
industries
supplies are required within a regional council area and it has been established that the
regional council is capable of undertaking the work with a minimum of thirty percent (30%)
aboriginal employment.
With regard to select processes, all approval documents are to be held with the procurement
papers as part of the procurement audit trail.
Where a select process is used, agencies will ensure that the process is competitive. Whilst there
is no minimum number of suppliers who can be invited to participate in a select process, the
number of available businesses and industries should be considered. Furthermore, seeking
responses from a broad range of business and industries will assist in ensuring that the
procurement process remains competitive, and demonstrate commitment to the government
procurement principles of open and effective competition and best value for territory.
Agencies may contact the Industry Capability Network NT to ensure that potential businesses and
industries are not overlooked.
The decision as to whether this method is appropriate will depend on the nature, scope, value,
level of risk and complexity of the procurement. A pre-qualification process is appropriate where
government requirements are complex and responding to detailed assessment criteria may be
costly and resource intensive. Although potentially a lengthier process, the pre-qualification
process could be more efficient as suppliers do not need to expend significant resources preparing
a stage one submission.
In a pre-qualified tender process, all potential suppliers are notified in writing of the outcome of
each stage of the sourcing process, prior to an agency proceeding to the next stage of the sourcing
process. Advice of the outcome of each stage of the sourcing process ensures suppliers are aware
of whether or not there is a prospect that they will be successful in the procurement process. This
provides some certainty to suppliers in terms of planning their workflow and staffing requirements.
conducting rigorous market research to identify Territory enterprises with relevant capability
and capacity, particularly for tier 1 and 2 procurement activities
addressing the risks of excluding Territory enterprises by avoiding procurement activities that:
o are overly-complex
structuring procurement activities that align to local workforce skills identified in market
research, making it easier for suppliers to plan for local content in their offers
considering the potential for disaggregation of a large procurement scope into smaller contracts
to give Territory enterprises with limited capacity the opportunity to win contracts
o this would require an examination of the benefits vs the loss of economies of scale to
ensure that value for Territory will still be achieved.
When selecting local content assessment questions, agencies may seek responses in relation to:
enhancement of industry and business capability in the NT (i.e. the extent to which the offer will
improve the NT business environment and subsequent benefits to NT consumers)
improved capacity and quality in supply and service response (e.g. improved practices and
training or a local presence)
Agencies must ensure that the local content assessment criteria questions are designed to elicit
local benefit commitments from suppliers for all tier 3 to 5 activities. These commitments will form
part of the successful respondent’s contract and be subject to audit as part of the contract
management stage of the procurement lifecycle.
A minimum 30% weighting must be allocated to local content for all tiers.
Further information on how to consider local content, including example questions, are provided at
P19: Local content factsheet.
utilising the public procurement exemption where the supplies are to be delivered in a remote
area from a legal entity which has a minimum of 30% of its full-time staff who are Aboriginal.
Assessment questions relating to Aboriginal participation and employment are generally a sub-set
of local content but can also be used as a standalone category. When selecting assessment
questions, agencies may seek responses in relation to:
training programs or other initiatives to be delivered that are aimed at increasing Aboriginal
skills and participation.
the capability and capacity of local industry and businesses to meet supply requirements
a background and a definition of the procurement objective and how it will be achieved
what is known about the market and the demand for the supplies
budget considerations
insurance requirements
probity management.
Though not required, agencies may consider using a project specific procurement plan in the lower
tiers to outline the procurement approach and obtain relevant approvals.
It is important to note that your agency may have different templates in place. You should always
consult with your procurement team early in the planning stage to ensure that the correct templates
are being used in the planning stage.
All relevant approvals must be obtained from the relevant delegate prior to the procurement plan
coming into action and prior to progressing to the sourcing stage.
Plans need to include a realistic timetable for processes. This involves identifying each step in the
process, assigning responsibilities, ensuring sign-offs and approvals are built in and plenty of time
is allowed.
accurate forecasting
identifying goals
identifying limitations
Period contracts are appropriate for supplies which are regularly required and conform closely to
commercial standards. Where a period contract is to be established, the request for offer is to
clearly set out the term of the period contract and any extension options available to government.
Standing offer: these are continuing offers to provide supplies as needed (e.g. stationery).
Although estimated quantities are generally provided, government does not bind itself to any
specific quantity. The period contract establishes the prices/rates and conditions under which
supplies will be provided, if required, over the contract period.
Fixed scheduled service: these are where government binds the contractor to provide set
requirements (e.g. daily cleaning services). The period contract establishes the prices/rates
and conditions under which supplies will be provided, over the period of the contract.
Combination of both: these have elements of both of the above. Government will require set
requirements to be provided and also allow for requirements to be obtained as and when
required.
Public liability Public liability insurance covers the contractor’s liabilities to third
parties arising out the contract. Public liability insurance protects
the government against the financial risk of being found liable to
a third party for death or injury, loss or damage of property or
“pure economic” loss resulting from the contractor’s negligence.
Product liability Product liability covers the contractor’s liabilities arising out of
the goods supplied under the contract. Product liability
insurance protects the government in the event that a contractor
sells, supplies or delivers goods in the form of repair or service
that causes injury, death or damage.
All NT Government arranged contracts require the contractor to carry public liability and workers
compensation insurance. In addition to those listed above consideration should also be given to
other types of insurances that may be applicable to the supplies (e.g. carrier’s liability insurance,
works insurance etc.).
Agencies should not issue a request for offer without the mandatory insurance requirements. If a
respondent seeks to exclude a mandatory insurance, the agency will need to consider the risks of
granting such a request as part of the assessment. This must include consideration as to whether
or not the agency would effectively be providing the respondent with an indemnity, in which case
the appropriate approval is required under the Treasurer’s Directions. Agencies should consider
seeking legal advice in these circumstances.
Refer to the P22: Insurance provisions for further information on minimum monetary values for
each insurance category, and supplies that allow for reduced public liability insurance.
A liability cap limits the liability of the contractor to the maximum amount specified in the cap. If a
liability event occurs and the loss or damages exceed the value of the cap, the NTG bears the
responsibility for the amounts above the capped value.
Although capping contractor liability exposes the NTG to the risk of a loss or damage above the
capped amount which may not be recovered from the contractor, there are key benefits to capping
liability.
These include:
encouraging competitive pricing and reduced supply prices in exchange for capping the
contractor’s liability
While an uncapped liability allows the agency to claim their entire costs from the contractor,
contractors may not have the financial resources meet the unlimited liability and the existence of
such liabilities may impact on the validity of their insurance policies. Accordingly, an unlimited
liability may not result in an agency receiving all monies claimed.
In the alternative, an agency may decide to cap a contractor’s liability to reflect the actual value of
the loss the agency expects to claim under the contract. This in turn will reduce a contractor’s cost
of tendering which can then be passed on to the agency through reduced pricing and may increase
the level of competition for the procurement activity.
It is for these reasons that liability capping should be considered for all tier 4 and 5 procurement
activities during the planning phase. In determining whether the contractor’s liability should be
capped, agencies should undertake a risk assessment and identify all sources of liability and the
likely costs of potential liability. If a cap is deemed appropriate, it is included in the official tender
documents released to market.
require alternative contractual terms and conditions. In these instances it is important to seek legal
advice on how to proceed.
Where an agency determines that the standard conditions of offer or conditions of contract are
inappropriate or insufficient for a specific procurement activity, approval must be obtained from the
agency responsible for NTG procurement policy to use alternative or additional clauses.
The types of assessment criteria which may be applied to offers include the following:
Past performance: includes consideration of previous standard of work and product quality,
performance history, previous disputes and claims, references, safe and fair workplace
records, past performance in delivering local benefits.
Local content: includes consideration of local presence, proposed number of jobs for
Territorians or Aboriginal Territorians, enhancement of local business capability, training
programs supported by the supplier, regional development opportunities, research and
development being undertaken in the NT.
Capacity: includes consideration of the supplier’s ability to carry out the works, perform
services or supply products, knowledge and expertise of staff, number of contracts currently in
progress, financial capacity, risk management and quality assurance.
Price: includes consideration of upfront costs, whole-of-life costs and any other facts that may
impact the monetary cost to government.
Assessment criteria cannot be changed once a request for offer has closed. It is therefore vital to
ensure that the right criteria is selected prior to approaching the market. It is recommended that
generic questions are adapted to suit each procurement activity and ensure that the right
information is sought from potential suppliers.
Percentage weightings will be disclosed for tier 3 to 5 procurement activities. Agencies may
disclose weightings for tiers 1 and 2 at their discretion.
Percentage weightings cannot be changed after a request for offer has closed.
Paired analysis is a useful way to establish the weightings on your assessment criteria. In this
approach all criteria are compared, two at a time, against each other. The total number of times a
single criterion is preferred over its competitors determines its relative weighting.
Further information on how to undertake a paired criteria analysis is provided at P26: Paired
criteria analysis.
Panel members assess offers and make a recommendation on which offer provides best value for
Territory. They need to be able to maintain probity and confidentiality, act in accordance with the
assessment plan, and defend their decisions (including scoring outcomes) when subject to third
party review.
The assessment panel should be established during the planning phase and be involved in
reviewing the scope of requirement and assessment criteria questions.
Minimum assessment panel numbers are outlined in section 5.5 of the procurement rules.
Agencies need to allow sufficient time for suppliers to prepare appropriate responses to any
request for offers. Minimum timeframes have been given for each tier but longer response periods
should be considered where the procurement activity is complex and/or of high value or risk.
Agencies should be receptive to industry feedback if requests for extensions are requested.
The minimum invitation period for each tier is outlined in section 5.5 of the procurement rules.
Note: where it can be clearly determined that there is a sole provider for those classes of “supplies
exempted from the public offer requirement”, there is no requirement for a future tender opportunity
to be published. As a consequence, there is no requirement for a mandatory four-week period.
The RFQ outlines the government’s requirements in terms of a specific procurement activity and
includes the scope of supplies sought, the timeframes in which the quotation is to be submitted, the
assessment criteria against which the quotation will be assessed, and the conditions of contract
which are applicable to the specific procurement activity.
The requirements for an RFQ differ according to the tier, as outlined below:
RFQ response schedules must be framed in a logical, clearly articulated, comprehensive manner
so as to receive information that will allow assessment against those criteria that are considered
appropriate for the particular procurement activity.
The RFQ can be generated via TDO4 or your agency may have an alternative form available.
The RFT’s are typically used for tiers 3 to 5 or in the lower tiers where:
the risk of the contract is high and more stringent contractual conditions are required
The RFT outlines the government’s requirements in terms of a specific procurement activity and
includes the scope of requirement, the timeframes in which the offer is to be submitted, the
assessment criteria and percentage weightings against which the offer will be assessed, and the
conditions of offer and conditions of contract which are applicable to the specific procurement
activity.
The requirements for an RFT are identical for tiers 3 to 5, as outlined below:
P2: APMP guide and template 5.1 – Agency procurement management plan
P15: Declaration of interest and confidentiality (NTG staff) 6.3.4 – Conflict of interest declaration
P16: Declaration of interest and confidentiality (non-NTG) 6.3.4 – Conflict of interest declaration
P18: Value risk segmentation tool 6.4.1 – Value and risk segmentation
P20: Project specific procurement plan – tiers 1 and 2 7.6 – Develop a project specific procurement plan
P21: Project specific procurement plan – tiers 3 to 5 7.6 – Develop a project specific procurement plan