Context
The conduct of procurement below the public tender threshold is to apply the standards of probity adopted in the conduct of public tenders. It should be noted that a significant amount of expenditure falls in the value range under the public tender threshold. This area of procurement activity, which is subject to quotation processes, is of importance to small business that rely on government contracts to succeed and grow.
In seeking quotes from the open market it is important to recognise that the small business sector is dynamic and innovative. Given market dynamics, it is important to consider not just inviting the regular businesses known to the agency to quote. Undertaking a simple high level market analysis and researching business information services, for example, the Industry Capability Network (ICN) information base, could identify a broader market of potential suppliers.
Consideration could also be given to making the agency’s general procurement requirements known to Business Victoria and the ICN to facilitate contact between the agency and potential suppliers who could service the agency’s specific needs.
Seeking a minimum of three quotes ensures a value for money outcome by providing a comparison of supplier bids. Consideration could be given to seeking more that the minimum number of quotes to cover any eventuality of one or more suppliers not submitting a bid.
It is important to balance the number of quotes sought with the concern not to burden a large number suppliers with unrealisable expectations of work. It may be advisable to seek additional quotes where the market feedback indicates a limited capacity to undertake additional work or the agency’s requirements are likely to appeal to an emerging market sector with minimal suppliers operating in the innovative business sector of the market.
Key Requirements
1. Purchase of Goods or Services less than $25,000
A minimum of one written quote is to be obtained.
(a department may adopt a practice of accepting a minimum of one verbal quote for values up to 10% of the above threshold. Details of the offer from a supplier are to be documented and filed appropriately)
2. Purchase of Goods or Services valued between $25,000 and $150,000
A minimum of three written quotes are to be sought with one quote to be obtained from a small business if appropriate.
(for the purpose of applying this requirement a small business is defined as an organisation with 20 or less full time employees)
3. Purchase from a Standing Offer Agreement (State Purchase Contracts, Sole Entity Purchase Contracts)
The rules of use adopted for the Standing Offer Agreement apply when purchasing from such an Arrangement.
Other Requirements
1. The Unacceptability of Splitting Identical Need
It is unacceptable to divide a procurement process into separate parts or use a particular method for calculating the estimated total value of a purchase for the purpose of circumventing the above requirements.
2. The Independence of the Quotes Sought
The quotes sought should preferably not be from related entities of the same organisation unless it can be demonstrated that the entity requested to quote operates with a high degree of independence or autonomy from other parts of the business, for example, the building materials division operates independently from the farm produce division.
3. Consistency of Information and Assessment
Information provided to suppliers invited to quote must be identical and the evaluation of offers must be based on identical criteria.
Any subsequent information regarding the purchase requirement must be made available to all potential suppliers.
Consideration should be given to applying a framework for specifying requirements:
- CONTEXT
Background and factors that impact on the requirement including government policy, department priorities, risks, current supply arrangement gaps, potential users of the requirement, expertise of the users who may interface with the requirement, existing settings into which the requirement will be sited, etc.
PURPOSE
The key objectives of the project/requirement that the procurement is to satisfy including the benefits intended to be achieved.
OUTPUT
A description of the project deliverables required of the business including factors that may impact on the deliverables. Consideration should be given to clearly defining what is in and out of scope when defining project deliverables.
SUBMISSION
A schedule of what to submit, the scope of material required, selection criteria, resources of the business to undertake the project, specialist staff to be allocated to the project, warranties, guarantees, costs structure, payment details, suggested milestones, bid delivery instructions and submission date.
OTHER
Project contact officer, opportunity to attend a project briefing session, opportunity to visit site for supply delivery/installation, specific technical information, material available from the VGPB website, etc.
4. Department Related Policy
Departments have the option of adopting additional process requirements for obtaining and approving quotes as part of their business rules having regard to their procurement environment and assessment of risks. Any additional rules must satisfy Efficient Government policy and not add to the regulatory or process burden on suppliers
5. Purchase from a Standing Offer Agreement (State Purchase Contracts, Sole Entity Purchase Contracts)
The rules of use apply when purchasing from a Standing Offer Agreement. There is no requirement to conduct multiple quotes unless the rules of use require such action. An exemption granted from using a standing offer agreement is to apply the relevant procurement policy having regard to the value of the proposed purchase.
Related VGPB Policy and DTF Guidelines
VGPB Conduct of Commercial Engagements Policy
Exemption from Seeking Multiple Quotes, Open or Selective Tendering (Limited Tendering) and ICT IP Default Position Policy
Strategic Procurement - General Guidelines (905 KB DOC)
Related DTF Templates and Forms
Request for Quote (Goods and Services) Template (50 KB DOC)
Request for Quote (Project Specification) Template (62 KB DOC)
Procurement Process Report - Quotations (115 KB DOC)
Links to relevant websites
Nil
Version Control Information
 Version Number | 2.5 |
Release Date | November 2008 |
Further Information | Strategy and Policy, Government Services Division, Department of Treasury and Finance |
Phone | (+613) 868 32944 |
| vgpb@dtf.vic.gov.au |
* all values are GST inclusive
