Buying Journey 3 – Under $50,000

Value for money is the central procurement principle from which all other procurement policies and decisions flow. It is reflected in Western Australian Procurement Rule A1 – Achieve Value for Money.  All purchases, regardless of value, must represent value for money.

Value for money includes a consideration of whether there is a bona fide need to buy the good or service.  Could you borrow the good from another State agency?  Does your agency or the public sector more broadly have the expertise to deliver the service themselves?

Having decided you need to purchase the good or service a value for money decision, for low value purchases, for example a purchase under $500, might be as simple as a mental price assessment at the point of purchase. Ask yourself, could I justify my decision to a member of the community? Would they think the outcome is fair?

Achieving value for money in procurement is much more than choosing the lowest price for a good or service.  

Achieving value for money requires a consideration of:

1. government’s social, economic and environmental priorities;
2. cost; and
3. other non-cost factors.

For further information on the Government’s social, economic and environmental priorities see the Social Procurement Framework.

The price assessment must include both the price; and other non-cost factors including:

• fitness for purpose and quality
• critical timeframes
• supplier capability, performance and financial capacity
• maintenance or operating implications, including service and support

Non-cost factors also include a consideration of risk. For a discussion about risk see the Manage Risk Guideline. The Department of Finance’s Risk Workbook might also be a useful resource to help you define your risks.

Your agency is also likely to have its own risk management framework.

Ensuring all procurement is conducted with integrity and accountability is a key supply policy objective and is reflected in Western Australian Procurement Rule B - Act  Ethically – With Integrity and Accountability.  

State agency employees must apply the highest levels of ethical behaviour in all areas of their work. This is particularly important in procurement, as it involves spending public money and is subject to high levels of public scrutiny.

Ethical behaviour includes being transparent and accountable.  You can be ethical by:

• declaring any conflicts of interest
• treating all suppliers equally
• keeping adequate records

Also ensure you follow your agency’s delegation register and gain the appropriate approvals prior to engaging a supplier.  The key approvals in the planning phase is the approval to spend – often called budget approval – and the approval to go to market.

For further information on acting ethically, including managing conflicts of interest and record keeping, please see the Act Ethically Guideline. You may also find the Department of Finance’s Declaration of Interest and Confidentiality form useful.

Document your agency’s needs, the quantity required and the timelines.  You can use the Verbal Quote template to describe the products or services that are required.  The term of your contract must not exceed five years, unless you get approval to do so.

You can find a suitable supplier by:

• Checking the Aboriginal business registers (Aboriginal Business Directory WA or Supply Nation’s Indigenous Business Direct)
• Checking the Australian Disability Enterprises register 
• Searching on the internet
• Looking at catalogues and other promotional materials
• Speaking to co-workers in your agency
• Contacting other agencies who have recently made similar purchases

Once you’ve found a suitable supplier, you can seek a quote and, if value for money, you can purchase directly from that supplier.  You should directly purchase for most purchases at this value, specifically where the purchase is low risk. Remember to seek quotes or engage different suppliers from time to time to test value for money for regular purchases.

If you are unsure if the quote represents value for money, or if your purchase is higher risk then it’s best to seek quotes from more than one supplier.  This is particularly true in a highly competitive market. 

If you get more than one quote, ensure that the same information is given to all suppliers; and do not use brand names when describing the required products and services.  If you must use brand names then you will be require approval from the appropriate authority within your organisation.  

You can request quotations by phone, email or face-to-face. Give potential suppliers a reasonable amount of time to respond. It’s good practice to give suppliers a date and time to get back to you. This will allow the supplier enough time to develop their quotation and confirm it in writing. 

Advise the suppliers if there are any evaluation criteria other than suitability of purpose and price.

The Verbal Quote template can also be used as a record of these quotes, and you should use it to document the reasons for your decision. 

If the selected quote exceeds the $50,000 threshold, then your Accountable Authority should consider: 

• How much the threshold has been exceeded.
• The benefits of another competitive quotation process.

The authority may still decide to award the contract and if they do, the award details should be published on Tenders WA. The reason for this decision must be recorded.

More information on awarding contracts may be found in the Awarding Contracts Guideline.

If your purchase is high risk, or where you have developed a detailed specification, then consider following the written quote process here.

Advise the successful supplier and confirm by sending the purchase order. 

Advise the unsuccessful bidders of the outcome, if you received more than one quote.

Ensure that the successful supplier provides the products or services in accordance with the quote at the accepted price.

Any variations to the contract must be approved by an accountable officer within your State agency, and must be managed in accordance with Western Australian Procurement Rule E2 – Apply Rigour to Contract Variations.