Purchasing and Asset Management
Finance has a range of policies and processes in place to ensure the department undertakes its purchasing and asset management functions in accordance with sound practice and government policy. This chapter outlines Finance’s policies and performance in relation to both the department’s own purchasing, consultancies and air travel as well as whole of government functions performed by the department for coordinated procurement contracting, government advertising, asset management and motor vehicle fleet management.
Departmental Purchasing and Asset Management
Finance’s procurement framework is consistent with the Commonwealth Procurement Guidelines1 (CPGs) and reflects the core principle governing Australian Government procurement – value for money. Finance applies the CPGs to its activities through the department’s Chief Executive’s Instructions (CEIs) and supporting operational guidelines.
Finance’s procurement policies help to ensure the department: undertakes competitive, non-discriminatory procurement processes; uses its resources efficiently, effectively and ethically; and makes decisions in an accountable and transparent manner. Specified officials in Finance’s business groups have responsibility for procurement – generally senior executive service officers, financial managers or cost centre managers. The department supports this decentralised approach by providing information and training about procurement to all staff and maintaining a single point of contact for staff to seek advice on the CPGs, the CEIs and tendering processes.
The department has a framework to help manage risks associated with procurement activities. Finance’s CEIs require staff to undertake risk assessments for all procurements and a formal risk assessment is required for complex or high-risk procurements. The department conducts probity reviews of all procurements valued at $80,000 and above and formal two-stage probity reviews for all procurements assessed as high-risk or valued over $500,000. During 2008-09, Finance completed 18 probity reviews to provide assurance that final purchasing outcomes were in accordance with the CPGs, the CEIs and departmental probity and procurement guidelines.
Finance has standard tendering and contracting documentation to ensure consistent procurement practices are employed across the department. As part of these arrangements, Finance has standard access clauses included in tender documents and in contracts that provide Finance and the Auditor-General with access to the contractor’s premises.
The department entered into one contracting arrangement during 2008-09, worth over $100,000, which did not provide the Auditor-General with access to the contractor’s premises. This was the Microsoft Volume Sourcing Head Agreement signed by Finance on 29 January 2009. Microsoft refused to include the standard clause allowing Finance and the Auditor-General to access their premises. However, the agreement does require Microsoft to comply with any requests for information made in accordance with the Auditor-General Act 1997. For further information on the Microsoft Volume Sourcing Agreement, please refer to Chapter 7 - Outcome 4: Effective and Efficient Use of Information and Communications Technologies by the Australian Government.
The CPGs require that the details of certain agency agreements and Commonwealth contracts be published on AusTender. However, they state that “if the Chief Executive of an agency decides that details of an agency agreement or Commonwealth contract (including standing offers) are exempt matters under the Freedom of Information Act 1982, the Chief Executive may then direct, in writing, that details are not to be published”. Finance did not issue any directions of this type during 2008-09.
Finance publishes information about significant procurements the department expects to undertake during the following year in an annual procurement plan which is available from the AusTender website at www.tenders.gov.au.
During 2008-09, Finance entered 342 new consultancy contracts involving total actual expenditure of $16.7 million. In addition, 54 ongoing consultancy contracts were active during the 2008-09 year, involving total actual expenditure of $6.2 million. This led to a total actual expenditure on consultancies in 2008-09 of $22.9 million, compared to $12.2 million in 2007-08 and $42.4 million in 2006-07.
Details of the consultancy contracts let in 2008 -09 with a contract value over $10,000 are available from Finance’s website at www.finance.gov.au. Information on the contract value of contracts and consultancies is available from the AusTender website at www.tenders.gov.au.
Finance’s air travel is mainly same-day travel on the Canberra-Sydney and Canberra-Melbourne routes. The department compiles weekly internal management reports on all domestic air travel undertaken by Finance employees and these reports also record the airlines used by departmental staff.
In accordance with government policy2, Finance travels on Virgin Blue and small airlines on sectors where these airlines have flights available and where they provide the best fare of the day. The best fare of the day is defined as the cheapest fare that suits official requirements. For the 2008-09 year overall, 75.9 per cent of all domestic Finance travel was on Qantas Airways Limited (including Qantas subsidiaries), 23.0 per cent on Virgin Blue Airlines Pty Ltd, and 1.1 per cent on small airlines.
Government policy3 requires Finance to set a target of 25 percent for the use of smaller airlines for the department’s official travel on the Canberra-Sydney route. For the 2008-09 year, 21.5 per cent of Finance’s travel on the Canberra to Sydney route was on Virgin Blue Airlines and 78.5 per cent was on Qantas Airways Limited.
- Financial Management Guidance No.1, Commonwealth Procurement Guidelines, December 2008.
- Finance Circular No. 2008/02, Use of Best Fare of the Day for Official Air Travel.
- Finance Circular No. 2008/01, Official Air Travel on the Canberra-Sydney Route: 25 per cent Minimum Usage Target for Smaller Airlines.