Context
This policy outlines the requirements for setting up and managing a procurement governance framework.
The Victorian Government goods and services procurement policies are mandatory for all Victorian Government departments and entities captured by section 54A of the Financial Management Act.
A list of entities that the Minister has declared exempt is available at Goods and services mandated agencies.
For the purposes of these policies, these entities are referred to as ‘agencies’.
The policies are supported by good practice guides, tools, templates, and training courses. Agencies may use tools and templates as they adapt them to suit their specific needs.
In meeting the mandatory requirements, the level of detail in the agency's procurement policies and processes will be determined by the Chief Procurement Officer or equivalent and will be commensurate with the agency's procurement profile.
1.1 Procurement governance framework
Governance can be defined as the processes by which an agency holds itself to account for defensible and justifiable procurement decisions and processes. Governance embodies demonstration of leadership, accountability and responsibility.
A procurement governance framework establishes processes, authorities, accountabilities and relationships for the organisation to manage an efficient and effective procurement function. It sets out:
- the structure, processes and roles that drive organisational performance, improve procurement practice, reduce risk and promote value for money
- ensures compliance with goods and services procurement policies.
A procurement governance framework ensures that:
- public sector information assets are protected;
- the accountable officer has developed a strategy, systems, policy, practices and processes to monitor and benchmark performance
- the accountable officer is asking appropriate and regular questions about procurement activity and procurement outcomes
- roles, responsibilities, authorities and accountabilities are clearly articulated and understood
- risks are identified, mitigated and improved
- complaints are treated fairly and in a timely manner
1.1.1 Mandatory requirements
The accountable officer is responsible for establishing the governance framework and is accountable for its implementation. The accountable officer must set up the governance framework before starting any organisational procurement activity.
1.1.1.1 Roles and Responsibilities
The accountable officer must ensure that the governance framework identifies the roles and responsibilities, processes and performance standards to ensure compliance with the goods and services procurement policies.
The role of the chief procurement officer
The accountable officer must establish the chief procurement officer role. The chief procurement officer role encompasses:
- providing expert advice and guidance to the accountable officer on matters related to the governance framework
- overseeing the development, application and ongoing assessment of the governance framework
- ensuring that the complaints management process demonstrates due process and integrity
A person assigned to the chief procurement officer role must:
- hold a qualification in procurement or hold qualifications with a definable procurement component, and/or
- have experience and expertise in managing a procurement function that matches the agency's procurement profile
Note: In relation to public bodies, an accountable officer may choose not to establish the role of CPO depending on the complexity of procurement activity conducted by the agency. The accountable officer must be satisfied that governance structures and reporting requirements are in place to conduct the agency's procurement activity and to maintain compliance with the goods and services procurement policies.
The role of the internal procurement unit
The accountable officer must set up an internal procurement unit. The role of the internal procurement unit is to:
- ensure ICT supply chain risks are managed in the procurement of public sector information assets
- ensure that all procurement activity applies strategies, policies, procedures, practices and probity that comply with the goods and services procurement policies and any other requirements in the Financial Management Act 1994 or imposed by the accountable officer
- assess the procurement capability of the organisation on an annual basis
- manage the preparation of a capability development plan
- identify major procurement categories
- review its own performance and capability at regular intervals
- report annually to the accountable officer on the agency's procurement activities
In relation to a public body, an accountable officer may choose not to establish an internal procurement unit if satisfied that governance structures and reporting requirements are in place to conduct the agency's procurement activities and to maintain compliance with the goods and services procurement policies.
The accountable officer will:
- determine the terms of reference and operational arrangements of the internal procurement unit
- ensure that the expertise and experience of internal procurement unit members are appropriate for the scope, nature and complexity of the procurement activity carried out by the agency.
1.1.2 Developing a procurement strategy
The governance framework is underpinned by a procurement strategy. This strategy provides an overview of the agency's procurement profile and includes the following components:
- procurement activity plan
- contract management planning strategy
- supplier engagement plan
- capability development plan
Requirements for developing these four components are detailed in the respective supporting guides.
The accountable officer must ensure that the procurement strategy is reviewed annually to confirm alignment with the procurement profile of the agency and broader government objectives.
1.1.2.1 Procurement activity plan
The procurement activity plan details planned procurement activity for at least the next 12-to-24-month period. The procurement activity plan must be reviewed at least annually to keep the market informed of changes or developments. A high-level summary plan must be published on the agency’s website to improve transparency for suppliers.
1.2 Emergency Procurement
Emergency Procurement refers to procurement activity undertaken to respond to an emergency.
The purpose of Emergency Procurement is to enable procurement of goods and services in a manner that enables urgent and effective response to an emergency while maintaining Victorian Government values, transparency, responsibility, and accountability for the spending of public money.
Emergency Procurement is undertaken in accordance with an agency's Emergency Procurement Plan.
Procurement-related Victorian Government policies may apply when procuring goods and services in response to an emergency. Those policies may contain provisions for how to apply them in an emergency. Agencies should detail how to apply procurement-related policies in their Emergency Procurement Plans.
Procurement conducted under an Emergency Procurement Plan may occur simultaneously with routine procurement activities.
Emergency Procurement does not apply to urgent or unplanned procurement activities undertaken as part of routine operations. Emergency Procurement must not be used to avoid or shortcut procurement planning, approvals or competitive processes.
1.2.1 Definition of emergency
An emergency in Victoria is defined by the Emergency Management Act 2013 (the Act). An emergency is the actual or imminent occurrence of an event that in any way:
- endangers or threatens to endanger the safety or health of any person;
- destroys or damages, or threatens to destroy or damage, any property; or
- endangers or threatens to endanger the environment.
The definition in the Act includes a disruption to essential services (for example transport, fuel, power, water, sewerage). The Emergency Procurement Policy may also be applied to an event that significantly disrupts or threatens provision of an agency's key services.
1.2.2 Emergency Procurement mandatory requirements
Agencies must comply with the mandatory requirements below for developing an Emergency Procurement Plan, activating and ceasing Emergency Procurement, and reporting
1.2.2.1 Emergency Procurement Plan
An agency's Emergency Procurement Plan comprises the necessary procurement governance, procedures and procurement support preparation to respond urgently and effectively to an emergency.
Agencies must develop an Emergency Procurement Plan that:
- is clear and concise, streamlined, flexible, and proportionate;
- is integrated with the agency's emergency response and business continuity plans, including preparation for foreseeable types of emergencies;
- requires application of the procurement principles of value for money, accountability, probity and scalability;
- may allow flexible application of the mandatory requirements of the goods and services procurement policies, but only:
- when necessary,
- to the extent necessary, and
- for the time necessary;
- details how procurement risks are to be managed appropriately, including information asset security;
- requires conflicts of interest to be declared and managed for each emergency procurement activity;
- requires consideration of State Purchase Contracts for each emergency procurement activity;
- requires consideration of the impacts of an emergency on key suppliers and supply chains;
- requires appropriate records to be created and maintained in accordance with records management policies;
- requires contract awards and variations to contracts to be disclosed in accordance with the Contract management and disclosure policy.
1.2.2.2 Activating and ceasing Emergency Procurement
The accountable officer or delegate is responsible for activating and ceasing their agency's Emergency Procurement Plan.
When activating the agency’s Emergency Procurement Plan, the accountable officer or delegate must set a date for review or cessation not exceeding 90 calendar days from the date of activation.
If applicable, on a review date the accountable officer or delegate may set a further date for review or cessation not exceeding 90 calendar days from the date of review.
Activation and cessation must be communicated appropriately to the agency.
1.2.2.3 Reporting
Agencies must report activation of Emergency Procurement in their agency's annual report including the following details related to each activation:
- the nature of the emergency;
- a summary of the goods and services procured;
- total spend on goods and services; and
- the number of contracts awarded valued at $100,000 (GST inclusive) or more.
1.2.3 Emergency Procurement guidance
An Emergency Procurement - goods and services guide and a Template emergency procurement plan is available.
1.3 Assessment to manage procurement activity
An assessment to manage procurement activity informs the accountable officer that the agency has the appropriate governance structure, policies, procedures, practices and probity in place to manage the scope and complexity of its procurement activities.
It reassures suppliers that the agency will apply appropriate standards of probity and process when engaging the market.
Agencies must assess their procurement governance framework to ensure the appropriate governance structure, policies, procedures, practices and probity are in place to manage the organisation’s procurement activities.
The assessment must be reviewed as required to ensure it remains current, including consideration of audit outcomes.
The assessment informs annual attestation of compliance with the Standing Directions.
1.4 Complaints management
A complaint is an issue or concern expressed by a supplier in relation to the process and probity applied by an agency when carrying out a procurement activity. The complaint should be lodged with an agency's accountable officer or chief procurement officer.
1.4.1 Mandatory requirements
The agency must develop a complaints management system that sets out the process and procedures for addressing complaints.
The investigation of a complaint and subsequent response must be overseen by a person not involved in the subject matter of the complaint. An agency's complaints management system must be accessible to a complainant.
The complaints management system must outline:
- how the investigation will be dealt with
- what documentation the organisation requires from the complainant
- contact and lodgement details for all documents
- timelines for conducting the investigation and providing a response
- other government bodies that may be able to assist
The agency must disclose in its annual report the following information in relation to each complaint received:
- the procurement activity to which the complaint relates, and
- the status of the complaint confirming whether the complaint:
- investigation has been completed
- is still under investigation.
The agency must also ensure that its procurement governance framework includes measures that implement a dispute resolution mechanism where required by Australia’s international free trade agreements.
Using this policy
There are 4 other goods and services policies, this is policy 1 of 5.
For a complete policy list, see goods and services policies.
Tools and support
Access a document version of this guide in the Toolkit and library.
For more information about the Governance - goods and services policy, please contact the goods and services team.
Updated