Using a procurement framework to ensure consistency and compliance

Written by Joneil Palenzuela, Senior Procurement Advisor

Using a Procurement and Contract Management Framework (PCMF) can lead to cost and time savings while delivering services and critical infrastructure tailored to local needs and delivering benefits to the community.

A PCMF is a step-by-step process adopted by an organisation that streamlines the purchasing process by eliminating unnecessary actions in procurement while delivering efficiencies and organisation wide risk mitigation along with other direct and indirect benefits.

This article provides a framework that you can use to ensure legislative compliance, help manage enterprise wide risk, respond to supply chain and resource constraints, project delivery assurance and lifecycle management.

How to implement a Procurement and Contract Management Framework (PCMF) in local government 

Alignment with Council strategy and planning documents are essential to the successful implementation of the PCMF to ensure projects in the operations and strategic plans are delivered within the required timeframe.

A framework, at a minimum, should address the goods and services’ entire lifecycle. This includes the concept and design, operational requirements, and end-of-life or end-of-contract replacement. Using a framework provides the opportunity to identify the potential impact on maintaining financial sustainability and recognising the socio-economic impact on the community and the region.

The framework dispels ambiguity of the planning and approach required for transactions that must be undertaken to comply with organisational policies. Following the steps in the framework also allows for better management of various organisational risks and assisting with meeting compliance requirements in a highly legislated and regulated environment, such as work health and safety requirements, free trade agreements, council specific policies and commonwealth, state and local laws. 

Adopting a procurement and contract management framework improves organisational and community outcomes 

1. Plan

The presence or absence of a framework, particularly a PCMF, determines how successful a procurement activity or transaction will be in obtaining input and approval from internal and external stakeholders (such as CEOS, Financial Services, Contract Managers, service providers, material suppliers etc). It also provides clear steps that allow for collaborative internal participation throughout the sourcing and buying process and helps to identify the desired approach to market, including the option to leverage Local Buy LGA Arrangements as part of your strategy.

It is best practice to implement a PCMF that is underpinned by a strategic approach or plan that is directly aligned with the organisation, including its vision, objectives and legal requirements. Applying a strategic approach alongside the framework will improve outcomes for overall annual category spend, and each specific procurement process, by analysing and planning various spending categories that account for most of an organisation’s expenses.

2. Engage

Glen Duff, Director, Nex Gen Procurement & Partnerships, explains the ‘Engage’ phase consists of ‘going to market’ through a tender process, typically via an open market release or quotation leveraging Local Buy LGA Arrangements where possible to do so.

The execution of this phase is critical in meeting the obligations of The Local Government Regulation and ensuring the best outcomes are aligned to operations and strategic plans. - Glen Duff, Local Buy

The party inviting Tenders in this phase is exposed to the challenges of the supply market and subjected to legal, legislative, financial, and regulatory compliance requirements. The benefit of using the PCM framework addresses these challenges including the specific local or State Procurement policy and guidelines with regard to Tender and Contract process.

The party inviting Tenders should not assume that prior to the acceptance and execution of a contract, a binding relationship exists with the respondent. We can take the experience of Air Services Australia in a case against them by Hughes Aircraft Systems  (1997) FCA 558 where they were sued for not following the Tender process.  

Having approved and sufficient funds prior to going to market is essential to comply with Section 18 of Australian Consumer Law’ which states that “a corporation shall not in trade or commerce engage in conduct that is misleading or deceptive or is likely to mislead or deceive”.  

During the evaluation and selection stages of this Phase, clarifications between the buyer and the supplier(s) will be key in ensuring negotiations of both commercial and service level delivery requirements are validated and confirmed to deliver both Contract performance and Sustainable Supplier Chain management.

3. Management

A PCMF approach has great potential to improve value for money and legislative compliance, manage organisational risk and respond to supply chain and resource constraints. Following the steps in the ‘Management’ phase, allows teams to realise the benefits of purchasing goods and services, including delivery assurance and lifecycle management. 

And it is vital to ensure existing systems, processes, procedures and practices are integrated into the PCMF in a truly structured and integrated way, and that they align with local and state social, economic and environmental targets. This needs to involve internal and external stakeholders to achieve the outcomes sought from procuring goods and services to meet the needs of the organisation.  

Why is procurement and contract management important for local government? 

The procurement and contract management function is a critical component of any commercial entity, particularly local government, as it imposes structure, transparency, risk management and compliance through to community engagement, legal and regulatory requirements that impact on public trust of government administration (Council) as a whole.

Adopting an enterprise-wide PCMF ensures that everyone in the organisation takes procurement and transaction management seriously, consistently and in compliance with internal policy and procedures, as well as legislative requirements.  

What a PCMF looks like:

Our procurement staff have experience working with Councils across the country, managing the procurement process through the implementation of the PCMF. Our understanding of local government requirements and the procurement and contract management process benefits councils through improved outcomes for Council and its community.  

We’re here to support your council to start in the Plan phase, where we can lead the Needs Definition and Sourcing Analysis phase through the Contract End phase where we focus on and manage procurement and contract activities. This ensured your organisation is best placed to deliver the outcomes in your operational plan.

To enable you to operate more strategically to mitigate risks and deliver strategic outcomes for your community, we can assist with: 

• Procurement Office Service: Procurement and Contract Management Consulting and Advisory, Managed Procurement Services, Procurement Office Retainer Service
• Grant Program Office Service: Grant Writing Service and Grant Program Management Service 
• Professional Advisory: Project Planning, Management and Assurance, Strategy and Corporate Planning Services, Community Consultation and Stakeholder Engagement.
• Energy Advisory: Renewable energy feasibility studies, zero net carbon and energy audits, efficiency reviews, demand management, power factor assessments, tariff analysis and contestable marketing advisory.

If you’d like to discuss how we can support your organisation in any of the above areas, please contact Brian Jackson, Director Consulting Services bjackson@wearepeak.com.au 0467 767 825. Our People. Your Team.