POLICY TITLE: PROCUREMENT POLICY AND PROCEDURE
ADMINISTERED BY: GENERAL MANAGER, FINANCE AND ADMINISTRATION
APPLICABILITY: ALL EMPLOYEES
To ensure that the procurement of all goods and services at Global Star enterprises is conducted in an honest, competitive and transparent manner that delivers the best value for money outcome whilst at the same time protecting the business interests of GSE, taking into account the required specification, quality, service, delivery, reliability, environmental and social issues and the total cost of ownership.
This policy is aligned with GSE values, vision and mission and supports the achievement of Global Star Enterprises (GSE) strategic business objectives which is to create sustainable value for shareholders, employees, contractors, suppliers, customers and business partners.
Requests for changes or improvements to this document shall be forwarded to the General Manager, Finance and Administration department.
This policy applies to all GSE employees for all expenditure regardless of department or project.
- Policy statement
The GSE procurement strategy requires accountability for the spending of GSE financial assets which is justified, planned and transparent. Goods and services procured must be ‘fit for purpose’ and represent value for money while being socially responsible and ensuring integrity in the procurement process.
Purchases from all suppliers must be covered by a purchase order unless direct invoice procedures are in place, or where cash or a corporate credit card is used.
Approved Suppliers must be used as a first option at all times. The process of appointing an Approved Supplier is to be undertaken in consultation with the General Manager, Finance and Administration department, as a result of a competitive process.
- Policy objectives
- To ensure that GSE’s requirements for goods, services, construction and facilities are met through an open and fair process that provides the highest degree of competition and value;
- To ensure that all potential suppliers have reasonable notice and opportunity to tender;
- To ensure that GSE financial resources are used efficiently and effectively to contribute toward the values, vision and mission of the organisation;
- To achieve high standards of integrity, transparency, accountability and risk management; and
- To give preference to the procurement of environmentally sustainable goods, services and works
- Maximum threshold values are as follows and are relevant to one (1) transaction excluding GST:
- Goods: $5,000
- Services: $10,000
- Construction: $10,000
- Facilities: up to 1,000 square metres
- The GSE purchase order form for procurement should be completed for each procurement action.
- Requirements exceeding the delegated thresholds listed in this policy will be publicly advertised to all interested bidders through the GSE website and assessed by the General Manager, Finance and Administration department.
- Website notification may be augmented by specific invitations to vendors. Further augmentation by print advertising is optional to solicit responses from individuals or companies.
- Alternative procurement processes may be used subject to the prior approval.
- All procurement actions must be properly recorded, and supported by appropriate documentation and authorised by the General Manager, Finance and Administration department
- Following receipt of the quotation or response to tender an appropriate cost benefit analysis should be conducted.
- All procurement activities will also be subject to compliance testing by the General Manager, Finance and Administration department.
- Guidelines for obtaining quotes for goods and services
- For purchase of goods and/or services from non-Approved Suppliers less than the thresholds listed in this policy, a documented quote must be received from at least two (2) suppliers.
- For the purchase of goods and/or services from non-Approved Suppliers in excess of the thresholds listed in this policy, a minimum of three (3) documented quotes is required.
- Purchases over $25,000 require a formal competitive process administered by the General Manager, Finance and Administration department.
- There are situations where you will not be able to obtain more than two (2) or three (3) quotes. On those occasions document your attempt to obtain three and explain the circumstances that resulted in less. Do not obtain a quote from a company with whom you do not intend to do business.
- Do not contact a product or service provider to change a price after the quotes are submitted as this is regarded as unethical business practice. Each goods or service provider has been given a fair and equal chance to quote; by giving any potential supplier a second opportunity you put GSE’s reputation at risk and may jeopardise future requests for quotes from goods and service providers.
- Documentation of quotations for of each competitive process must be retained for a period of five (5) years.
- Make certain that you know what you are paying for and that you understand the pricing. If you have any questions, have the product or service provider clarify the pricing for you. Check the product or service provider’s calculations.
- Payment terms
- ‘Net payments are 30 days’ is what you will see most often; this means that the product or service provider expects payment within 30 days. However discount terms, such as ‘2/10 net 30’ (a 2% discount if paid within 10 days) can provide savings and may even make a product or service provider the ‘low bidder’.
- Check warranty terms for all supplier quotations and competitive processes. Know when the warranty begins and ends. In some (high-end equipment) cases the warranty should begin when the equipment is installed, tested and has been accepted by GSE.
- If you are buying services and/or the goods or service provider will come onto GSE property for more than a delivery, insurance coverage is required.
- Installation and other unique requirements
- Be sure to include any unusual requirements that you are expecting of the product or service provider when you issue the request for quotations.
- Technical briefs
- In some instances, you will need to prepare a technical brief that outlines the requirements of the item, system or product you want to procures. Brief requirements will vary depending on what is being procured but will usually include:
- Background and business need
- Scope of services
- Outputs and milestones
- Fees and costs
- Selection criteria
- Other additional information as needed
When preparing a technical brief, you should also consider how you are going to manage the contract in terms of quality, service, cost and delivery at this point. A simplistic overview of the procurement process has been provided below: