Management and Accountability:Purchasing and Asset Management

Purchasing and Asset Management

Finance has a range of policies and processes in place to ensure the department undertakes its purchasing and asset management activities in accordance with sound practice and government policy. The following is an outline of Finance’s policies and performance in its purchasing, consultancies and air travel.

Departmental purchasing

Purchasing policy

Finance’s approach to the procurement of property and services, including consultancies, is consistent with the requirements of the Commonwealth Procurement Guidelines1 (CPGs). The CPGs are applied to Finance’s activities through the Chief Executive’s Instructions (CEIs) and supporting operational guidelines.

Finance’s procurement framework reflects the core principle governing Australian Government procurement – value for money. The department’s policies and procedures also focus on:

  • encouraging competitive, non-discriminatory procurement processes
  • efficient, effective and ethical use of resources
  • accountability and transparency
  • minimising unnecessary internal red tape.

Responsibility for procurement in Finance is devolved to individual business groups. The department supports this decentralised approach by: providing information and training about procurement policies and procedures to all staff; maintaining a single point of contact for staff to seek advice on the CPGs, Finance’s CEIs and tendering processes; and the use of standardised tendering and contracting documentation. Finance also conducts formal probity reviews for all procurement arrangements that are assessed as high risk or valued over $500,000. During 2009-10, a total of 24 such probity reviews were undertaken.

These processes ensured that:

  • Finance did not let any contracts during 2009-10 of $100,000 or more which did not provide for the Auditor-General to have access to the contractorís premises
  • the Chief Executive did not issue any directions under the Freedom of Information Act 1982, exempting publication of details of certain agency agreements and Commonwealth contracts on AusTender.

More information on the procurement that Finance expects to undertake in 2010-11 is published in the departmentís annual procurement plan, which is available from the AusTender website: www.tenders.gov.au. This outlines the more significant planned procurements for the coming year and gives potential suppliers early notice of planned procurements.

Consultants

During 2009-10, 270 new consultancy contracts were entered into involving total actual expenditure of $5.4 million. In addition, 111 ongoing consultancy contracts were active during the year, involving total actual expenditure of $8.5 million. The total spend on consultancies for 2009-10 was $13.9 million, compared to $22.9 million in 2008-09 and $12.2 million in 2007-08.

Details of the consultancy contracts let in 2009-10 with a contract value over $10,000 are outlined in Appendix G. Information on the values of contracts and consultancies is also available from the AusTender website: www.tenders.gov.au [External Site].

Air travel

Financeís air travel is mainly same-day travel on the Canberra-Sydney and Canberra-Melbourne routes. The department monitors all domestic air travel undertaken by Finance employees through weekly internal management reports.

Until superseded on 1 January 2010, the department applied the ‘Best Fare of the Day’ rule in accordance with government policy.2 For domestic travel during the period from 1 July to 31 December 2009, 72 per cent of travel was with Qantas Airways Limited (including Qantas subsidiaries), 27 per cent with Virgin Blue Airlines Pty Ltd and one per cent with small airlines.

Since 1 January 2010, the department has applied the ‘Lowest Practical Fare of the Day’ rule in accordance with government policy. 3 For domestic travel during the period from 1 January to 30 June 2010, 69 per cent of travel was with Qantas Airways Limited (including Qantas subsidiaries), 30 per cent with Virgin Blue Airlines Pty Ltd and one per cent with small airlines.

Government policy 4 also required the department to set a target of 25 per cent of official travel with smaller airlines on the Canberra-Sydney route. For the reporting year, 29 per cent of Finance’s travel on the Canberra to Sydney route was with Virgin Blue Airlines and 71 per cent was with Qantas Airways Limited.

Asset management

Finance manages the government’s non-Defence domestic property portfolio. The portfolio includes 83 properties with a fair value of approximately $997.74 million at 30 June 2010.

United Group Process Solutions Pty Ltd (United) assists Finance to manage these properties through a property management contract. Asset plans for individual properties (which are revised annually) help the department to manage the portfolio.  In developing these plans, Finance incorporates information from property inspections, condition audits, tenant surveys, valuation reports and other independent advice from United or other private sector advisers.

Performance indicators for Finance’s management of the domestic property portfolio are included under Outcome 2.

Footnotes:

  1. Financial Management Guidance No.1, Commonwealth Procurement Guidelines, December 2008.
  2. Finance Circular No. 2008/02, Use of Best Fare of the Day for Official Air Travel.
  3. Finance Circular No. 2009/10, Use of the Lowest Practical Fare of the Day for Official Domestic Air Travel.
  4. Finance Circular No. 2008/01, Official Air Travel on the Canberra-Sydney Route: 25 per cent Minimum Usage Target for Smaller Airlines.

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