Context

The decision to approve a procurement process leading to the engagement of one or more suppliers must apply the standard of due diligence in assessing the process and decision steps taken to arrive at a recommendation.

Process approval to engage one or more suppliers ultimately creates a budget and contractual commitment on government in the delivery of a product or service.

The case for process approval should clearly detail the factors that support proceeding with a proposal and that the relevant procurement policy considerations have been addressed. Process approval relating to procurement involving a degree of complexity should be supported by a business case that analyses demand/spend factors, addresses the capacity and capability of the market, market engagement options and contract management procedures.

The party responsible for approving a procurement process, whether that party is the project manager, financial delegate, internal review unit, APU or VGPB, must also be satisfied that the procurement process has considered contextual issues relevant to the project including:

• the strategic context of the proposed purchase at the department level and/or whole of government level
• the principles of strategic sourcing were applied (if applicable)
• standards of probity and accountability were adhered to
• the contract management strategy will deliver on the outcomes
• the governance structure is relevant to the nature of the procurement
• the process satisfies the value for money/fit for purpose objective

The above factors will have different levels of relevance given the nature of the project, the identified risks and complexity of the procurement being proposed. For example, a purchase from a standing offer arrangement may not require a full assessment of the above factors given that these matters would have been considered in the establishment of the head arrangement.

The party responsible for approving a procurement process can have a role in adding value to the process through the identification of process and information gaps or recommend further scoping opportunities that strengthen the case for proceeding with a proposal.

Key Requirements

1. Clarity and Comprehensiveness of Documentation
Documentation seeking process approval should be structured to ensure reporting consistency against all relevant factors. Where appropriate, documentation should adopt the standard form template developed for cross jurisdictional use (Procurement Process Report-Tenders) or develop an appropriate form for single entity or project specific use.

Attachments should be included if using a standard form template or tool where the addition of such information would assist in the understanding of factors relevant to the proposed procurement.

2. Approval of Process Matrix

Process Approval Category	Process Approval Thresholds	Process Approval Party
One off Supply purchase (excluding SPCs and SEPCs, or purchase from an existing standing offer agreement)	Estimated value less than $100,000	Process approval by financial delegate. Financial approval to be provided by an officer with the appropriate financial delegation using an agreed form of contract (or relevant instrument) .
One off Supply purchase (excluding SPCs and SEPCs, or from an existing standing offer agreement )	Estimated value more than $100,000	Process approval by APU if estimated value within department accreditation level. Process approval by VGPB if estimated value outside department accreditation level after consideration and endorsement by APU. Outcome of the market engagement phase is to be disclosed on the Contracts Publishing System within 60 days after award of contract. Financial approval to be provided by an officer with the appropriate financial delegation using an agreed form of contract (or relevant instrument)1.
SPP establishment	SPP process applies to procurement with an estimated value more than $10 million or considered a high risk or complex project of lesser value.	SPP establishment – as above including additional step: Outcome of the market engagement phase to be reported to the VGPB prior to engaging supplier(s).
SPC – Mandated establishment	Any value. Mandated entities are determined in the scope of the business case. Also mandatory for outer budget entities and NFP organisations that commit to use the SPC for the period of the contract	Minister for Finance and the VGPB are responsible for formally approving the business case (including the scope of mandated entities) and the strategy for engaging the market. Accountable Officer for lead entity to take account of any comments by the Minister for Finance prior to approaching the market. Accountable Officer for the lead entity (or financial delegate) is responsible for approving the procurement process prior to the award of a contract or agreement to a tenderer(s). Accountable Officer for the lead entity is also to formally inform the Minister for Finance and the VGPB of the outcome of the market engagement stage. Minister for the lead entity (or financial delegate) is responsible for authorising the contract on behalf of the government.
SPC – Non-mandated establishment	Any value	SPC – Non-mandated establishment as above.
SEPC establishment	Estimated value more than $100,000 Mandatory for the entity that established the SEPC	The Accountable Officer (or financial delegate) for the entity is responsible for formally approving the business case. The Strategic Procurement Planning policy applies (where applicable) for the strategy for engaging the market. The Process Approval for the Procurement of Goods and Services policy applies (where applicable) for approval of the procurement process prior to the award of a contract or agreement to a tenderer(s). The Accountable Officer (or financial delegate) for the entity is responsible for authorising the contract. The Accountable Officer (or financial delegate) for the entity is responsible for overseeing the management of the contract or category management arrangements.
Purchase order contract from an existing standing offer agreement (SPC or SEPC)	Individual purchases are to comply with the 'rules of use' for the contract. The 'rules of use' may require the use of specific forms for obtaining quotations, seeking multiple bids from a panel of suppliers above certain values, require the use of specific supplier engagement forms, and category management reporting/supplier performance forms. The 'rules of use' for the contract supersede normal procurement processes including quotation and tender threshold requirements.	Sourcing and purchase approval processes are to comply with the 'rules of use' for the contract. There should be no requirement to obtain further APU/VGPB process approval unless the entity has adopted internal procedures for further reporting/review. A purchase order contract in excess of $100,000 from an existing standing offer agreement (SPC or SEPC) is to be disclosed on the Contracts Publishing System within 60 days after award of contract. Financial approval to be provided by an officer with the appropriate financial delegation using an agreed form of contract (or relevant instrument)1.

Note 1

An agreed form of contract could be a purchase order, a specific form devised for using the SPC or SEPC, or other departmental instrument.

Legend:

SPP – Strategic Procurement Plan
SPC – State Purchase Contract
SEPC – Sole Entity Purchase Contract
'Rules of Use' – also referred to as 'How to Use this Contract'

Related VGPB Policy and DTF Guidelines

Disclosure of Contracts >$100000* Policy
Accreditation Management Plan Framework - explanatory note

Related DTF Templates and Forms

Procurement Process Report - Tenders (114 KB DOC)
Letter to successful tenderer Template (25 KB DOC)
Letter to unsuccessful shortlisted tenderer Template (35 KB DOC)

Links to relevant Policy websites

Public Records Office Victoria

Version Control Information

Version Number	1.1
Release Date	June 2010

* all values are GST inclusive