Accreditation:
The process of recognising the capability and capacity of a public authority to perform procurement in an effective manner and in accordance with State Procurement Board objectives.
Acquisition Planning:
The planning process undertaken when commencing the procurement acquisition process and includes the development of procurement objectives based upon a clear understanding of the business needs, and the inclusion of a market approach which reconciles the business needs with the character of the supply market. Acquisition planning consists of three stages: identifying needs; planning the procurement strategy; and preparing the acquisition plan.
Acquisition Plan:
A document that outlines the procurement objectives, methodology and strategy to be undertaken in procuring the required goods or services. The plan is approved by the appropriate approving delegate before the procurement strategy is commenced.
Across- Government Contract:
Across-government contracts are a form of standing offer developed by a central agency or an individual portfolio in its role as a lead agency. The objective of these contracts is to achieve strategic outcomes for the public sector through procurement activity and centralise the evaluation of offers to determine technical compliance; the negotiation of terms and conditions; and contract development.
Alternative Offer:
An alternative or innovative offer which provides a value for money solution that meets the Purchaser’s Requirements.
ANZ Government Procurement Agreement (ANZGPA):
An agreement between the Australian, State, Territory and New Zealand Governments, which provides for the equal treatment of Australian and New Zealand suppliers in the procurement and supply of goods or services. The objective of the ANZGPA is to maximise opportunities for competitive Australian and New Zealand suppliers and reduce the costs of doing business for government and industry.
The ANZGPA applies to the procurement of goods, services and construction (as defined in the ANZGPA) by SA Government bodies, including public authorities, statutory authorities and other bodies controlled by the SA Government.
Assurance Program:
The Assurance Program involves onsite evaluation of the compliance of public authorities with the mandated requirements of State Procurement Board policies, principles, guidelines, standards or direction.
Base Level Public Authority:
A base level public authority is a South Australian Government authority that must comply with the State Procurement Board’s procurement policy framework and has a procurement authority of $220,000.
Bid:
An offer by one party to enter into a legally binding contract with another party, often used interchangeably with quotes, proposals, tenders and offers.
Business Case:
A management tool that supports decision making for a project. It sets out the reasons for a specific project, considers alternative solutions and identifies assumptions, constraints, benefits, costs and risks.
Capability:
Capability describes an individual’s ability to perform tasks or activities effectively. Procurement capability matches the person(s), resources, systems and processes to the requirements of a procurement activity. Procurement officers working with suppliers require distinctive capabilities that are sometimes labelled as ‘commercial awareness’.
Capacity:
Capacity describes a public authority’s ability to execute specific strategies. It is also the ability, measured in quantity and quality, to perform, produce, manage or achieve a particular process and/or objective.
Category:
Category is a term applied to a distinct grouping of goods or services that are relatively homogeneous or have similar characteristics. Professional services are an example of a services category, displaying commonalities between subcategories such as consultancy services and audit services, and possibly sharing common suppliers.
Category Management:
Category management can be applied as either a description of the procurement process, or as a basis for organising procurement resources.
- As a description of the procurement process, category management involves applying the end-to-end procurement process to a specific range of goods or services. This involves all the pre-award processes such as spend analysis and demand management, sourcing or tendering and contract negotiation, as well as the post-award processes such as contract management.
- As a basis for structuring procurement resources, category management involves defining the need, sourcing the market, negotiating the contract and the contract management after the award. In order to ‘scale the role’ so that different categories represent approximately equal challenge, three key factors are considered: the value of spend in each sub-category, the diversity of the sub-categories and the challenge in the supply markets.
Code of Ethics:
The Code of Ethics for the South Australian Public Sector is issued under the Public Sector Act 2009, where it is referred to as the Code of Conduct. It builds on the principles outlined in the Act and sets out the professional standards expected of every employee.
Common Use Arrangements:
Across government or lead agency contracts for the procurement of particular goods and services that streamline the purchasing process and eliminate the need for public authorities to undergo a full procurement process by allowing public authorities to undertake secondary procurements directly from approved suppliers.
Competitive Dialogue:
A procurement approach that enables the purchaser to enter into detailed discussions once market and vendor capability have been determined. It differs from more traditional approaches as the specifications are developed and refined with each supplier during the procurement process.
Complexity:
The level of intricacy and scope of issues involved in procuring a good or service. In terms of procurement, complexity relates to the level of intricacy and scope of issues involved in procuring a good or service.
Conflict of Interest:
A conflict of interest is a situation (actual, perceived or potential) where a personal, family or business relationship or interest has the potential to unfairly affect or influence the proper outcome of a decision or process.
Consequence:
A risk term which means the outcome or impact of an event affecting the procurement objectives. The consequence may be expressed qualitatively or quantitatively.
A public authority may have its own risk assessment criteria matrix which defines the consequence criteria for the agency depending on the authority’s risk appetite.
Construction Works:
Work involved in constructing, erecting, underpinning, altering, repairing, improving, adding or demolishing a building or other structure.
Contract:
A legally binding agreement (verbal or written) between two or more organisations, signed by the appropriate authorised persons, to undertake or perform a specific task or activity.
Contract Leakage:
The volume of purchases with suppliers other than the contracted suppliers for a given category. Contract leakage can dilute the influence of the public authority in the market, and can also add to the time and cost of another procurement exercise. Good practice is to try to minimise contract leakage, or at the very least explore the reasons behind contract leakage.
Contract Management:
The process of pro-actively managing a contractual relationship between a supplier and public authority, including addressing risks and disputes that arise, to achieve the agreed contractual outcomes.
Contract Management Framework:
Outlines the key processes and activities to be undertaken by public authorities to achieve effective contract management outcomes.
The framework comprises both organisational requirements that apply more generally, and transactional requirements that apply to specific contracts.
Contract Management Plan:
An internal document outlining key strategies, activities and tasks required for managing a contract including but not limited to roles and responsibilities, timelines, performance management and financial matters.
Contract Register:
A listing of each contract entered into by a public authority including information on its purpose, duration, how much will be spent and who it is with. The register gives an overview of a public authority’s procurement profile and supports ongoing contract management.
Contract Value:
The estimated total value of any contractual commitments that may result from a single procurement exercise. It incorporates the cost over the potential life of the contract including optional extensions and is inclusive of GST.
Contract Variation:
A contract variation is an addition or alteration to the terms of the original contract that is mutually agreed to by both parties to the contract. Variations may be proposed by either party and may refer to adding, removing or changing an existing contract provision.
Contractor:
An individual or organisation engaged under a contract (other than an employee) to provide goods and/or services to an agency. (Sometimes referred to as the ‘supplier’ or ‘vendor’).
Control:
A measure that modifies risk. It may be an existing process, policy, device, practice or other action that minimises negative risk or enhances positive opportunities. An assessment of the controls may be required to determine the controlled risk rating for each risk. Control measures are throughout the agency at all levels and in all functions.
Consultant:
A person or firm who is engaged by a public authority for a specified period to carry out a task which requires specialist skills and knowledge not available in the public sector. The objectives of the task will be achieved by the consultant free from direction by the public authority as to the ways it is performed and in circumstances in which the engagement of a person under normal conditions is not a feasible alternative (Accounting Policy Framework, Department of Treasury and Finance, March 2012, APS 4.6).
Debrief:
The process of advising unsuccessful respondents. Suppliers must be offered a supplier debriefing at the conclusion of a procurement process. The primary purpose of a supplier debriefing is to provide the supplier with an accurate and detailed understanding of the selection process and the reasons their bid was not successful.
Demand Management:
Demand management refers to all activities undertaken to reduce consumption, and to manage what is purchased in order to purchase more effectively. Demand management typically involves budget holders and end users, rather than only procurement practitioners.
Direct Negotiation:
Direct Negotiation is a procurement process undertaken by directly approaching and negotiating with one or more suppliers without testing the market. It is usually undertaken when comprehensive market research indicates that there is a limited supply market.
Due Diligence:
The process of reviewing and analysing in detail an organisation’s ability to meet future contract performance requirements. This may include a detailed assessment of the organisation’s financial stability, legal risks, technical capability, resource capacity and infrastructure.
Eligible Contracts:
For the purposes of PC027 (Premier and Cabinet circular 27), an ‘eligible contract’ is a contract between:
- Public authorities and the private sector, involving the expenditure of public funds of $500,000 or more and less than $4 million; and
- Public authorities and a Consultant, involving the expenditure of public funds of less than $25,000.
Eligible contracts do not include contracts under the Public Sector Management Act 1995. Specific information relating to an eligible contract must be published on the SA Government’s Tenders and Contracts website.
Emergency Situation Procurement:
Procurements undertaken by public authorities in response to an emergency, in accordance to the provisions of the State Emergency Management Plan, or formal arrangements outlined in other state or commonwealth emergency service related legislation.
eProcurement:
The online conduct of business-to-business procurement processes using web based applications.
Established Government Facilities:
Government owned and managed agencies, organisations, entities or statutory authorities that are able to provide goods or services to other areas of government.
Ethical Behaviour:
Refers to behaviour that is honest, proper and ethical in dealings with suppliers and other stakeholders.
Expression of Interest (EOI):
An EOI is a formal market approach and the first step in a multi stage procurement process. Usually it is to shortlist based on capability and capacity for the second stage, and/or to obtain further information from suppliers on the goods and services being sought to inform the second stage procurement process.
Evaluation Criteria:
The criteria that are used to evaluate the compliance of market approach responses. These include measures to assess how well competing responses meet requirements and expectations such as criteria to shortlist or rank suppliers. All evaluation criteria must be clearly stated in the request documentation.
Evaluation Plan:
A plan of the processes that will be followed in evaluating the quotes, suppliers, responses, proposals, etc, received. It includes timing, membership and weightings.
Forward Procurement Plan:
A plan that details forthcoming purchases of goods or services over a specified timeframe.
Free Trade Agreement (FTA):
An international treaty that aims to remove barriers to trade and facilitate stronger trade and commercial ties, contributing to increased economic integration between participating countries (or Parties to the agreement). A FTA ensures that Australian and certain overseas suppliers are treated equally and not discriminated against when undertaking government procurements over a specified value threshold. FTAs can cover entire regions with multiple participants (multilateral) or just two parties.
Goods:
Goods are defined as tangible supplies and include expenditure on software and expenditure on construction goods for construction projects valued at $165,000 or less (GST inclusive) and excludes expenditure on salaries and employee costs (overheads); water rates and taxes; real estate and building rentals; and mandated internal charges and fees where there is no discretion for their use (eg crown law, audit fees).
Industry Capability Network (ICN):
ICN is part of a network of offices throughout Australia and New Zealand that offer free and confidential services to buyers and suppliers. The ICN’s primary role is to assist buyers to identify competitive local suppliers of goods and services.
Industry Participation Policy (IPP):
The IPP aims to ensure that capable South Australian small and medium enterprises are given full, fair and reasonable opportunity to offer and participate in significant publicly funded or supported projects.
Intellectual Property:
Any patent, copyright, trade mark (whether registered or unregistered), trade name, business name, company name, trade secret, know how, discovery, invention, secret process, design, semiconductor or circuit board layout right, improvement in procedure, innovation, confidential information, any right to register any type of intellectual property right or any other intellectual property right created, invented, made or discovered.
International Obligations:
Legal obligations in relation to a range of bilateral free trade agreements that the majority of public authorities are required to comply with where the South Australian Government is a party to these agreements.
Invitation to Supply:
A formal request where potential suppliers are invited to supply goods and/or services.
Lead Agency Contract:
An arrangement sponsored by a public authority where that authority is the prime user of the good or service and where one or more other public authorities may also utilise the arrangement.
Life Cycle Costing:
A methodology for identifying and calculating the total costs and expenses associated with the purchase of goods, related services or integrated projects. This includes all initial and future costs over the entire life cycle, including design, planning, capital, installation, operating, maintenance and disposal costs, discounted to reflect the net present value (NPV).
Likelihood:
A risk term that looks at the chance / probability / frequency of an event happening that may impact on the procurement objectives. A public authority may have its own likelihood table which defines the risk criteria or ratings for that agency.
Limitations of Liability:
Where a limit is placed on the financial consequences of a supplier’s actions.
Market Approach:
The formal process of notifying potential suppliers of a procurement opportunity and inviting them to respond. For example, an invitation to supply on the SA Tenders and Contracts website.
Multi-use list:
A list of pre-qualified suppliers who have satisfied the conditions for participation for inclusion on that list. A multi-use list is intended for use in more than one procurement process. A multi-use list is not the same as a panel arrangement.
Free Trade Agreements allow the establishment of multi-use lists (or prequalified supplier lists) provided they publish annually or continuously a notice inviting interested suppliers to apply for inclusion on the list.
Multi-stage process:
A combination of market approaches to help identify the best service providers in a particular market. The first stage will often limit the number of potential suppliers to those that can demonstrate the requisite capability.
Negotiation:
A process between two or more parties seeking to reach a mutually satisfactory agreement on, or settlement of, a matter of common concern. In procurement, this may be the process of finalising the terms and conditions of an agreement or contract, through discussions between buyer and seller.
Offer:
The documents constituting an offer lodged by a supplier to meet the public authority’s requirement in accordance with the invitation to supply. This may also be known as a quote, tender, submission, registration or bid.
Opportunity Analysis:
Opportunity analysis is the periodic review of expenditure with a view to identifying potential opportunities to create value through changes to the way the goods and services spend is specified, procured, consumed or managed. Opportunity analysis helps guide the public authority on how and where to focus effort, and can help with scheduling priorities and resource allocation.
Panel Contracts:
A contractual arrangement established with at least two suppliers for the anticipated provision of goods or services, as and when required, over a specified period of time.
Post Contract Review:
A post contract review is the review at (or near the end of) a contract period to consider how the contract has performed in relation to the KPIs and the original performance goals of the contract.
Post Sourcing Review:
A post sourcing review is a review after the purchase recommendation has been approved evaluating the extent to which the sourcing or market approach phase of the procurement project met the original procurement objectives. A post sourcing review enables all of the issues to be addressed by considering lessons learned and contribute to continuous improvement.
Prescribed Public Authority:
An organisation that has been declared by the State Procurement Regulations 2005 to be a prescribed authority (i.e. exempt) for the purposes of the State Procurement Act 2004.
Prequalification:
Assessing a business eligibility to supply based on specific criteria (including expertise and capability) for a particular category of goods or services.
Principal Officer:
Generally comprises the chief executive officer of the public authority as declared by the regulations to be the principal officer of the authority. The principal officer is responsible for the efficient and effective management of the procurement operations of their authority, subject to and accordance with the policies, principles, guidelines, standards and directions of the State Procurement Board. This responsibility extends to the delegates of the principal officer.
Probity:
Probity refers to the evidence of ethical behaviour commonly associated with the practice of adopting and following well-considered procedures and processes to ensure that procurement decisions are fair, transparent and defensible. Probity aims to maintain the integrity of the public sector by minimising conflicts and problems and by avoiding improper practices (actual or perceived).
Probity Advisor:
A probity advisor is a person who provides independent advice and works actively with the organisation’s procurement team to ensure key probity issues are considered and actioned during the procurement process.
Probity Auditor:
An independent auditor who confirms if a procurement process has been conducted fairly and in accordance with probity principles.
Procurement:
Procurement refers to the end-to-end process of buying goods and services that begins with defining the need, approaching the market, engaging the supplier/s through to contract management and close out of the supplier, as well as the disposal of the goods.
Procurement Authority:
The authority to approve a proposed course of action, strategy or recommendation relating to procurement (acquisition plan or purchase recommendation) to a specified dollar amount as delegated to a public authority’s principal officer by the State Procurement Board.
Procurement Governance:
The overall management structure and organisation for procurement in the public authority, including roles and responsibilities of staff, delegations, capability and localised purchasing practices, controls and review processes.
Procurement Governance Committee:
A committee comprising nominated senior officers that oversee the purchase of goods and services within a prescribed delegation. It is the role of the committee to support principal officers in procurement decision-making and strategy development.
Procurement Profiling:
The collection and analysis of procurement spend data to determine purchasing patterns and identify opportunities for better consolidated buying.
Procurement Strategy:
Procurement strategy involves both the overall strategy for the procurement process in the public authority, and the development of a procurement strategy for each key acquisition.
Public Authority:
In accordance with the State Procurement Act 2004 (Act), a public authority is:
- an administrative unit or other agency or instrumentality of the Crown;
- any incorporated or unincorporated body (established for a public purpose by, or under, an Act; or established or subject to control or direction by the Governor, a Minister of the Crown or any instrumentality or agency of the Crown);
- a person or body declared by the regulations to be a public authority for the purposes of the Act.
The Act states that a public authority does not include those prescribed public authorities in the regulations.
Public Private Partnership (PPP):
A long term contract between the public and private sectors where government (or direct users) pays the private sector to deliver infrastructure and related services on behalf of, or in support, of government’s broader service responsibilities. PPPs usually make the private sector parties who build the infrastructure responsible for its condition and operation on a whole of life basis.
Public Value:
Public value considers the broader contribution of public services to society as a whole. It focuses on meeting the needs of the public as citizens as well as consumers, and creating value is a key driver rather than just achieving targets. By focusing on achieving benefits for the community as a whole, it promotes increased legitimacy of the procurement function and strengthens the delivery of outcomes.
Purchase Order:
An official document used to authorise and record the purchase of goods, works or services.
Purchase Recommendation:
A document that seeks approval of the recommended supplier before the contract is awarded, as a result of undertaking an acquisition process. It must demonstrate that the acquisition process and practices undertaken have been consistent with the acquisition plan, and in a manner reflecting high standards of professionalism, ethics and probity.
Quotation/Quote:
An offer to supply goods and/or services, usually in response to a request for quotation. Often used interchangeably with proposal, tender, bid and offer.
Request for Information:
An RFI is an informal means of researching the particular good or service and the possible solutions or approaches available in the market. As such, informal market research and the gathering of intelligence through an RFI do not require any formal procurement approvals to be sought.
Request for Quotation:
A formal request inviting offers to supply goods and/or services from suppliers. This is generally used for lower value purchases, when there are a limited number of potential suppliers. A Request for Quotation is not usually advertised publicly.
Residual Risk:
Residual risk is the risk that remains after risk treatment or mitigation. It represents an estimate of the future level of risk once treatments have been implemented.
Once the risks have been identified, those that are considered unacceptable (after analysis and evaluation) will be treated. But treatment will not completely eliminate all the risks so some risks will remain (albeit at a decreased likelihood and maybe also a reduced impact) and this is residual risk. (May also be known as ‘retained risk’ or ‘treated risk’).
Reverse Auction:
A type of auction in which several buyers compete (on a price basis only) for the right to provide a good or service, with the bid price typically decreasing over the course of the bidding process. The bid price for each supplier is then inserted into the normal procurement process and all suppliers considered on a value for money basis.
Risk:
The effect of uncertainty on objectives. Risk is the chance (or likelihood) of something happening (an event) that will have an impact (or consequence) on the achievement of the procurement.
Risk Level:
The magnitude of a risk or combination of risks, expressed in terms of the combination of consequences (or impact) and their likelihood (or probability). Risk level = likelihood X consequence.
Risk Management:
Risk management in procurement is about ensuring the risks associated with the purchase of goods or services are identified, assessed, managed and monitored to ensure unexpected or undesirable outcomes are minimised whilst achieving the objectives of the procurement.
Risk Management Plan:
A document that is used to specify the nature and treatment of risks throughout the procurement cycle, as appropriate. The level of detail will be commensurate with the procurement’s complexity and value. A risk register may be used to help develop a plan.
Selective Invitation to Supply:
A procurement method in which the procuring agency invites specific potential suppliers to submit tenders. Selection may be from a multi-use list, a list of potential suppliers that have previously responded to an expression of interest or a list of potential suppliers that have been granted a specific licence or comply with a legal requirement.
Services:
Services are defined as intangible supplies or effort (including consultancies). Services include software but excludes expenditure on salaries and employee costs (overheads); water rates and taxes; real estate and building rentals; and mandated internal charges and fees where there is no discretion for their use (eg crown law, audit fees).
Significant Contracts:
For the purposes of PC027 (Premier and Cabinet circular 27), a ‘significant contract’ is a contract between:
- Public authorities and a consultant, involving the expenditure of public funds of $25,000 or more;
- Public authorities and the private sector, involving the provision of industry assistance of $200,000 or more;
- Public authorities and the private sector, involving the expenditure of public funds of $4 million or more; and
- Public authorities and the private sector, involving asset sales of $1 million or more.
Single Source Approach:
A market approach where only one supplier was approached rather than an open market approach, or a limited market approach.
Small to Medium Enterprises (SMEs):
SMEs are defined as an Australian or New Zealand business or firm with fewer than 200 full time equivalent employees.
Social Procurement:
Social procurement is the generation of positive social outcomes through purchasing and procurement processes which are over and above the delivery of the goods or services required.
Sole Supplier:
Sole supplier contract arrangements are established following a specific requirement for frequently purchased goods or services, and where value for money can best be achieved with one supplier.
Specification:
A clear, complete and concise statement of the description and technical requirements of a good or service. The specification may be functional, performance-oriented, technical or any combination.
Spend Analysis: The systematic review of the public authority’s spending with a view to identifying opportunities for improvement and to create value in a category. The key activities include acquiring the data, cleansing the data, and analysing the data. The term can be considered to be synonymous with expenditure profile.
Spend Portfolio:
Key dimensions of the spend portfolio are the total value of spend, the degree of concentration and the number of low value suppliers. The degree of concentration may highlight the proportion of total spend represented by the top ten suppliers, or the top ten spend types (or categories). This may highlight where the opportunity lies to extract value.
Stakeholders:
Interested parties who are involved in, or impacted by choices that are made during the procurement process. Within public authorities, stakeholders will include end users as well as decision-makers who review proposed acquisition plans, or officers who manage contracts. Suppliers will have sales managers or account managers who are responsible for client relationships, as well as staff involved in service delivery.
Standing Offer:
An arrangement that sets out the terms and conditions, including indicative pricing, under which a supplier agrees to supply specified goods or services to an agency for a specified period.
Supplier:
An entity that could provide, is providing or has provided goods, services or works to, or on behalf of, a public authority or prescribed public authority.
Supplier Relationship Management:
The development of a portfolio of relationships with suppliers. Appropriate relationships need to be developed and managed throughout the procurement life cycle. Contract management is a sub-set of relationship management.
Supplier Selection:
Supplier Selection is the process undertaken to ensure appropriate suppliers are selected to provide the goods or services, whilst ensuring value is achieved.
Supply Chain Analysis:
Consists of the organisations that participate in the flow of goods or services from their original source to the public authority as the final end user. These organisations share linkages of being both a customer and a supplier to some of the other organisations.
Supply Positioning:
Supply positioning is a matrix which segments the spend portfolio by risk and opportunity. It allows the public authority to develop procurement strategies for different acquisitions based on a repeatable and consistent methodology.
Sustainability:
Meeting the needs of the user while also taking into account external and future costs, including costs to the environment, human health and depletion of resources. In practice this means adopting a broader range of decision-making criteria than traditional economic criteria to include environmental merits, as well as the social impacts of alternative solutions.
Sustainable Procurement:
Sustainable procurement refers to the environmental and social features that are incorporated into the procurement process, including the development of appropriate specifications and the evaluation of suppliers against these requirements.
Unsolicited proposal:
A unique or innovative method, concept, approach or idea submitted to a public authority from a private entity, not in response to a formal request and not readily available in the marketplace.
United Nations Standard Products and Services Code (UNSPSC):
A scheme that classifies and identifies commodities. It supports a strategic sourcing process and gives a uniform means of capturing spend data. Classifying goods and services with a common coding system facilitates commerce between buyers and sellers and is necessary for ecommerce. (refer www.unspsc.org)
Value for Money:
Achieving value for money involves determining the extent to which the proposed solutions will deliver the optimum combination of whole-of-life cost and quality (non-cost) factors. Factors that may be considered in assessing value for money include: fit for purpose; whole of life cost; timeliness; flexibility; price; quality; service support and warranty; efficiency and effectiveness; intangible costs and benefits; and contribution to Government priorities.