Defining an individual procurement activity
As noted in , the Social Procurement Framework applies where Government provides any level of procurement funding to an individual procurement activity undertaken by, or on behalf of, a department or agency.
In most cases, an individual procurement activity will involve one contract between Government and the preferred supplier. Whether the preferred supplier, in performing the contract, unbundles or subcontracts components of the activity, is irrelevant.
Some individual procurement activities involve multiple, discrete packages of work. In these circumstances:
- Government enters more than one contract with preferred suppliers to deliver the packages of work; and
- the individual procurement activity is defined to include all packages of work (that is, each package of work is not characterised as its own individual procurement activity). Therefore, the value of the individual procurement activity is the combined value of all packages of work.
Whether any supplier, in performing its package(s) of work, unbundles or subcontracts components of the activity is irrelevant.
This distinction between individual procurement activities that involve one contract and those that involve multiple, discrete packages of work is important for determining which individual procurement activity requirements apply to the activity (for more information, see and .
Purpose of determining the value of an individual procurement activity
The purpose of determining the value of an individual procurement activity is to identify which requirements apply to the activity, rather than working out whether the Social Procurement Framework is applicable or not.
Unlike other Government procurement policies, such as , which apply to procurement activities that meet a minimum value threshold set by Government, the Social Procurement Framework applies irrespective of the value of the individual procurement activity. As noted in Scope of the Social Procurement Framework, the Social Procurement Framework applies to the procurement of all goods, services and construction undertaken by, or on behalf of, departments and agencies from 1 September 2018.
In other words, the Social Procurement Framework requirements are relevant to everything from small purchases of catering services to ‘high value high risk’ infrastructure projects. To accommodate such a wide range of activities, the Social Procurement Framework adopts a scalable approach to setting individual procurement activity requirements. That is, the Government’s minimum expectations escalate to remain proportionate to the value of the individual procurement activity and the opportunity to deliver social and sustainable outcomes. The scalable approach of the Social Procurement Framework is explained in more detail at .
Methodology for determining the value of an individual procurement activity
The value of an individual procurement activity is determined according to the total budget allocated over the life of the activity.
The total budget is the amount of procurement funding that the department or agency has internally allocated to the procurement activity. The total budget is therefore not determined by reference to the amount detailed in the State’s Budget papers, although in some instances it may be an equivalent amount. This is because the appropriation funding allocated to an activity in the State’s Budget papers:
- is often aggregated and may include many different individual procurement activities; or
- may include funding that is not procurement funding.
- In determining the life of the individual procurement activity, any options to renew or extend a contract should be ignored.
For example, if the procurement funding internally allocated by an agency to an individual procurement activity is $400,000 per annum over three years (with an option to extend the contract for one year), then the value of the activity is $1.2 million.
Where there is no specific budget allocated to the individual procurement activity, then the value of the activity is determined according to the anticipated contract value when the government buyer approaches the market. This may be the case for low value, intermittent procurement activities where the department or agency has allocated a pooled annual budget from which individual procurement activities are funded.
For example, a $600 purchase order for catering services may be funded from a pooled ‘operational’ budget of $25,000 allocated to catering by the department or agency – here, the value of the individual procurement activity is $600.
Tools and support
Reviewed 09 October 2019