a guide to procurement planning - northern territory · 2019-11-26 · • project planning and...

A guide to procurement planning

Document title A guide to procurement planning

Contact details [email protected]

Approved by Executive Director, Industry Growth

Date approved 18 November 2019

Document review Annually

TRM number DTBI2017/01912-0011~0001

Version Date Author Changes made

0.1 24 March 2017 Procurement Policy Initial version – table of contents only

0.2 6 June 2017 Procurement Policy Second version with text added

0.3 16 June 2017 Procurement Policy Incorporation of feedback received

0.4 27 July 2017 Procurement Policy Further development for consultation

0.5 26 September 2017 Procurement Policy Final changes to enable publishing

1.0 18 November 2019 Procurement NT Draft documentation finalised

Acronyms Full form

APMP Agency procurement management plan

APRO Agency Purchase Requisitions Online

CAL Contractor Accreditation Limited

CAPS Contract and Procurement Services

COE Certificate of exemption

FTO Future tender opportunity

DOIC Declaration of interest and confidentiality

ICNNT Industry Capability Network Northern Territory

ICAC Independent Commissioner Against Corruption

IPP Industry participation plan

NTIBN Northern Territory Industry Business Network

PRB Procurement Review Board

PSPP Project specific procurement plan

SFNT Solicitor for the Northern Territory

TDO Tenders document online

TE Territory enterprise

VFT Value for Territory

mailto:[email protected]


Contents 1. Introduction to procurement planning ...................................................................................................................... 6

2. Governance and accountability ................................................................................................................................... 7 2.1. Accountable officer ................................................................................................................................................ 7 2.2. Procurement and financial delegations .............................................................................................................. 7 2.3. Probity ....................................................................................................................................................................... 7 2.4. Conflict of interest and declaration of confidentiality ..................................................................................... 8 2.5. Defensible decision making................................................................................................................................... 8 2.6. Procurement complaints ........................................................................................................................................ 9 2.7. Internal audit ............................................................................................................................................................ 9 2.8. Independent Commissioner Against Corruption (ICAC) ................................................................................. 9

3. Stage 1: Agency planning .......................................................................................................................................... 11 3.1. Agency procurement management plan ......................................................................................................... 11 3.2. Procurement processes by tier .......................................................................................................................... 12 3.3. Monitoring expiring contracts ........................................................................................................................... 12

4. Stage 2: Define our need ........................................................................................................................................... 13 4.1. Determine business need ................................................................................................................................... 13

4.1.1. Objectives of the procurement activity ................................................................................................... 14 4.1.2. Procurement estimate ................................................................................................................................. 14 4.1.3. Stakeholder consultation ............................................................................................................................ 14 4.1.4. Business case (as needed) ........................................................................................................................... 14

4.2. Existing contracts and agreements ................................................................................................................... 15 4.2.1. Across government contracts .................................................................................................................... 15 4.2.2. Agency specific contracts ........................................................................................................................... 16 4.2.3. Charles Darwin University partnership agreement ............................................................................... 16

4.3. Roles and responsibilities ................................................................................................................................... 16 4.3.1. Project team ................................................................................................................................................... 19 4.3.2. Probity expert ................................................................................................................................................ 20 4.3.3. Other expertise ............................................................................................................................................. 21

4.4. Risk management (project specific) .................................................................................................................. 21 4.4.1. Value and risk segmentation ...................................................................................................................... 21

4.5. Market engagement............................................................................................................................................. 21 4.5.1. Analyse market conditions .......................................................................................................................... 22 4.5.2. Supplier preferencing model ...................................................................................................................... 23 4.5.3. Supply positioning model ............................................................................................................................ 24 4.5.4. Supply chain analysis ................................................................................................................................... 26

4.6. Prepare scope of requirement ........................................................................................................................... 27 4.6.1. Structure of a scope of requirement......................................................................................................... 28 4.6.2. Scope of requirement types ....................................................................................................................... 29

4.6.2.1. Functional ............................................................................................................................................... 29


4.6.2.2. Performance ........................................................................................................................................... 29 4.6.2.3. Technical ................................................................................................................................................. 29 4.6.2.4. Outcome ................................................................................................................................................. 29

4.6.3. Performance standards and measures ..................................................................................................... 29 4.6.4. Consultation on the scope .......................................................................................................................... 30 4.6.5. Endorsement and approval of the scope of requirement ..................................................................... 30

4.7. Future tender opportunities .............................................................................................................................. 31

5. Stage 3: Plan the procurement approach ............................................................................................................... 32 5.1. Consider the procurement approach ............................................................................................................... 33

5.1.1. Open and competitive approach ............................................................................................................... 33 5.1.2. Alternative or restricted procurement methods .................................................................................... 33

5.1.2.1. Direct purchasing .................................................................................................................................. 33 5.1.2.2. Direct contracting ................................................................................................................................. 33 5.1.2.3. Select processes .................................................................................................................................... 34 5.1.2.4. Two stage procurement processes .................................................................................................... 34

5.2. Consideration of local content .......................................................................................................................... 35 5.3. Consideration of Aboriginal opportunities ...................................................................................................... 36 5.4. Procurement rules exceptions and exemptions ............................................................................................. 36

5.4.1. Using a procurement exception ................................................................................................................. 36 5.4.1.1. Example: Territory enterprise exception .......................................................................................... 36

5.4.2. Using a procurement exemption ............................................................................................................... 37 5.4.2.1. Example: public procurement exemption ........................................................................................ 37

5.5. Develop a project specific procurement plan................................................................................................. 38 5.5.1. Determine process plan and timetable .................................................................................................... 39 5.5.2. Determine budget considerations ............................................................................................................. 39 5.5.3. Determine the period of contract ............................................................................................................. 39 5.5.4. Determine insurance requirements .......................................................................................................... 40 5.5.5. Determine limitation of liability ................................................................................................................. 41 5.5.6. Determine intellectual property ................................................................................................................ 41 5.5.7. Identify the conditions of offer and contract .......................................................................................... 42

5.6. Develop an assessment plan .............................................................................................................................. 42 5.6.1. Assessment criteria ...................................................................................................................................... 42 5.6.2. Assessment weightings ............................................................................................................................... 43

5.6.2.1. Paired criteria analysis .......................................................................................................................... 43 5.6.3. Assessment panel membership .................................................................................................................. 43 5.6.4. Scoring methodology ................................................................................................................................... 44 5.6.5. Shortlisting ..................................................................................................................................................... 44

5.7. Consider advertising period ............................................................................................................................... 44 5.8. Develop the request for offer documents ...................................................................................................... 44

5.8.1. Request for quotation (tiers 1 to 2)........................................................................................................... 44


5.8.2. Develop the request for tender (tiers 3 to 5) .......................................................................................... 45 5.9. Next steps .............................................................................................................................................................. 45

6. Appendix A ................................................................................................................................................................... 46


Department of TRADE, BUSINESS AND INNOVATION 18 November 2019 of 47

1. Introduction to procurement planning Planning is an integral part of any procurement process. It comprises of whole-of-agency planning and project specific planning. This can include consultation with key stakeholders, analysis of the market, determining the best procurement approach and measuring and managing risks.

Within the Northern Territory Government, planning covers the following three steps:

1. agency planning (refer section 3)

2. define our need (refer section 4)

3. plan the procurement approach (refer section 5).

Officers are to use this guide in conjunction with the procurement governance policy, procurement rules and procurement circulars. Agencies are encouraged to follow this guide and may establish agency specific processes consistent with the procurement framework.

Agencies must also ensure that procurement practices comply with any internal policies or processes in place. Appropriate procurement processes will help agencies and its personnel to deliver value for Territory through compliant procurement processes.



2. Governance and accountability Successful procurement activities rely on many structures already in place, in particular:

• project planning and management

• a sound financial management framework based on the Financial Management Act

• audit and fraud prevention programs and frameworks

• good standards in governance

• a framework and processes to identify, analyse, allocate and treat procurement risks

• professional conduct and capabilities of staff, based on Office of the Commissioner for Public Employment requirements (employment instrument number 12)

• an appropriate level of procurement capability for the agency’s purchasing profile

• maintenance of proper records of procurement activities by following the Northern Territory Government records management standards and guidelines.

Due to the different agency organisational structures, recognition can only be given to generic project and contract management structures. Some interpretation will be needed in agencies to accommodate this approach. Staff undertaking procurement activities must ensure consideration of their agency structures, delegations and processes.

2.1. Accountable officer The chief executive (however described) is the designated accountable officer in relation to the Procurement Act and the Financial Management Act. The accountable officer and all employees are bound by the provisions of the Procurement Act, Procurement Regulations, procurement governance policy, procurement rules, and procurement circulars.

The accountable officer is responsible for:

• providing strategic leadership, direction and oversight of the procurement lifecycle and associated governance in their agency, and

• approving the annual five-year agency procurement management plan by 1 August.

2.2. Procurement and financial delegations All agencies are required to procure supplies in accordance with their procurement and financial delegations. Delegations should be assigned to position levels, as opposed to individuals. In developing delegations, agencies should note those functions that cannot be delegated by the accountable officer in the procurement rules (e.g. negotiation on price).

Each agency should also have established processes for obtaining endorsements and approvals.

2.3. Probity Probity aims to maintain the integrity of the public sector by adopting and following well-considered procedures and processes to ensure that procurement decisions are fair, transparent and defensible.



At each stage of the procurement lifecycle probity impacts on procurement systems, policies and procedures should be considered, including:

• procurement planning

• internal organisational and decision-making processes

• security and confidentiality arrangements

• communication with respondents

• offer evaluation and selection

• contract award

• debriefing respondents

• contract management

• promoting a probity-oriented culture

• management of probity issues.

2.4. Conflict of interest and declaration of confidentiality Each person involved in a procurement activity must declare any actual, potential, or perceived conflicts throughout the procurement lifecycle. This may be through completing the declaration of interest and confidentiality form.

If a declaration is made, the chairperson must manage the conflict in accordance with the procurement rules and their agency’s governance requirements.

Failure to declare a conflict of interest may result in penalties under Employment Instruction 7 (Discipline) issued under the Public Sector Employment and Management Act.

Templates are provided at:

• P15: Declaration of interest and confidentiality (NTG staff), and

• P16: Declaration of interest and confidentiality (non-NTG staff)

2.5. Defensible decision making The agency and its personnel must ensure that all procurement recommendations, decisions and actions are defensible and documented. Defensible decisions are decisions that consider circumstances of the situation and information readily available at the time. All decisions made throughout the procurement lifecycle must be defensible.

Agencies must maintain documented evidence of compliance with mandatory procurement rules. Record keeping must meet the requirements of Northern Territory Government’s records management standards and guidelines and be held for at least three years after contract award.

Further guidance on defensible decision making is provided at P1: Defensible decision making.



2.6. Procurement complaints A procurement complaint is a complaint about potential breaches of the procurement framework, government policy, or corporate governance principles. To comply with the procurement rules, all agencies must:

• have a procurement complaints management procedure in place

• report all procurement complaints to the agency responsible for procurement policy (Procurement NT) within one week of receipt of the complaint

• report the outcome of resolved procurement complaints to Procurement NT, within one week of the complaint being finalised.

Procurement NT has established a centralised whole of government complaints register for this reporting.

Further information can be found within the P27: procurement complaint management fact sheet.

2.7. Internal audit The procurement rules state that each agency must maintain an internal audit program that incorporates the value for Territory assurance program.

An independent function of the agency should periodically review procurement activities. Procurement should feature in the agency assurance framework, particularly within the strategic or annual audit plan(s).

The value for Territory assurance program is an overarching program of audit and assurance activities that evaluates:

• internal Northern Territory Government compliance with all mandatory procurement rules

• internal Northern Territory Government and external industry compliance with the buy local plan

• the effectiveness of the buy local plan

• the impact of the buy local plan (including unintended impacts).

The Buy Local Industry Advocate administers the value for Territory assurances program, with the assistance of the Buy Local Sub-Committee.

More information on the value for Territory program can be found on NTG Central1.

2.8. Independent Commissioner Against Corruption (ICAC) There is a mandatory requirement under the Independent Commissioner Against Corruption Act 2017 for all staff in all agencies to report suspected improper conduct where there is a reasonable suspicion. The Act defines improper conduct as:

• corrupt conduct

• misconduct

• unsatisfactory conduct

1 http://ntgcentral.nt.gov.au/ntg-tools-services/procurement-and-contracts/understand-more-about-procurement-policies/value

http://ntgcentral.nt.gov.au/ntg-tools-services/procurement-and-contracts/understand-more-about-procurement-policies/value





• anti-democratic conduct

• conduct constituting and offence under the Independent Commissioner Against Corruption Act

• secondary conduct in relation to the conduct mentioned in (1) through (5) above.

Reports made to the Office of the Independent Commissioner Against Corruption must directly relate to public administration and must fall within the definition of improper conduct.

The Independent Commissioner Against Corruption has published mandatory reporting directions and guidelines for public officers, public bodies and the community on their website2.

2 https://icac.nt.gov.au/

https://icac.nt.gov.au/

https://icac.nt.gov.au/



3. Stage 1: Agency planning This stage focuses on agencies incorporating procurement requirements and processes into its strategic and operational planning at the corporate level.

Agency planning ensures that upcoming procurement activities consider agency priorities, economies of scale, and value for Territory.

The below table shows the importance of this stage:

Importance of agency planning

Why is agency planning important?

• maximises the opportunities for economies of scale and the delivery of value for Territory outcomes through coordinated processes

• improves the alignment of procurement activities with strategic objectives

• facilitates transparency and accountability in procurement decision making

• promotes integrity, impartiality, and ethical behaviour

• encourages agencies to allocate sufficient resources to build the capability of staff involved in procurement processes.

What are the risks if agency planning is not performed effectively?

• an inadequate procurement plan that does not address agency objectives

• ineffective allocation of agency planning resources, without proper consideration of value and risk

• failure to deliver value for Territory outcomes

• loss of transparency and accountability in the procurement planning process.

3.1. Agency procurement management plan Procurement planning needs to be incorporated into the agency’s annual planning cycle in a similar manner to other corporate plans, as each area of planning influences the other. Agencies must produce a five-year agency procurement management plan that is approved by the accountable officer.

The agency procurement management plan sets out the agency’s strategies for improving their procurement performance and for managing procurement expenditure. In planning their procurements, agencies need to have an understanding of their purchasing profile, local supply markets, key supply markets, and their position within these markets. The planning process will also consider the agency’s procurement organisation, systems and staff capabilities.

Agency procurement management plans are due to the procurement review board by 1 August and should be published on the staff intranet to assist with prioritising procurement actions.

Further guidance and templates to assist with preparing the agency procurement management plan are provided at P2: APMP guide and template.



3.2. Procurement processes by tier The procurement rules establish the minimum requirements for each tier. Agencies must ensure that they have procurement systems, processes and resources to comply with the procurement rules and manage their procurement activities. This may include consideration of how procurement services are delivered to agency staff (e.g. dedicated procurement unit, centralised service etc.).

The procurement tiers are as follows:

• tier 1: less than $15 000

• tier 2: $15 000 to less than $100 000

• tier 3: $100 000 to less than $500 000

• tier 4: $500 000 to less than $5 000 000

• tier 5: $5 000 000 and over.

Refer appendix A for a list of flowcharts and checklists for each tier. Agencies may adapt these to suit their internal processes but must ensure overall compliance with the procurement framework (for editable copies of the flowcharts, please contact Procurement NT).

3.3. Monitoring expiring contracts Agencies also need to consider how they will manage and monitor expiring period contracts. Expiring contracts must be renewed or extended before their expiry date to remain valid. Actively managing expiring contracts ensures that agencies continue to receive supplies under the agreed contract.

Period contracts should be recorded in a register upon award and updated as necessary. The agency should perform this function to ensure a consistent approach, with one or two individuals responsible for monitoring expiration dates.

Agencies are encouraged to use Contrax to monitor expiring contracts. An example register is provided at P14: Period contract register. The Procurement Review Board is provided reporting on contract close out and variations on a quarterly basis.

Agencies should consider the time it takes to renew or extend a contract to avoid a lapse in services. The time required will largely depend on the nature of the contract and whether it is being renewed or extended. For example, an extension of a cleaning contract may only require a few weeks, whereas the renewal of a large panel contract will likely require a minimum of six months.



4. Stage 2: Define our need The focus of this stage is defining the requirements and desired outcomes in preparation for planning the procurement approach.

The below table outlines the importance of this stage:

Importance of defining our need

Why is defining our need important?

• enables a clear and consistent understanding amongst stakeholders of the business need to be met by the procurement activity

• aligns procurement activities with the agency’s strategic objectives

• clarifies the purpose of the procurement activity

• maximises the opportunity to consult with relevant stakeholders

What are the risks if defining our need is not performed effectively?

• may lead to incorrect supplies being sought or offered, resulting in additional time, effort and cost

• a procurement outcome that does not meet the business need or agency’s strategic objectives

• a lack of buy-in from affected stakeholders due to a lack of consultation throughout the procurement process

• procurement decisions made without an evidence-base

4.1. Determine business need Procurement is a means to satisfy a business requirement, and establishing the business need is one of the critical drivers of the procurement process. This step involves clearly defining the business need for the purchase and specifying what is to be purchased.

The step links the business need to the agency's strategic objective or procurement structure. Agencies need to consider multiple options to satisfy their business need (including non-procurement alternatives) and determine if the procurement will deliver value for Territory.

There may be an existing contract that can meet the identified need (including an across government contract or contract established by another agency).

Activities that can assist in establishing the business need include:

• undertaking research to identify purchase and potential suppliers

• identifying/agreeing on the outcome and determining best purchasing options in terms of policy requirements, risk, cost and other management issues

• preliminary cost-benefit analysis.

A business case can assist with determining and justifying the business need for significant procurements (particularly those identified as high risk and/or high value).



4.1.1. Objectives of the procurement activity Before proceeding with a procurement activity, agencies should clarify the context, background and key objectives for the procurement. Procurement objectives should be based on a clear understanding of the business needs and the inclusion of a market approach. Specific procurement objectives are likely to relate to quality, service, cost, risk, social, and environmental factors. Objectives need to be realistic, measurable and capable of being achieved in light of the specific procurement strategy proposed.

4.1.2. Procurement estimate Agencies must estimate the total value of the procurement (inclusive of all applicable taxes and option periods). Before commencing a procurement activity, the accountable officer or delegate will verify the availability of sufficient funds to procure the supplies.

As a standard practice, the procurement estimate is not typically published. However, there may be instances where it is appropriate to include an estimated value, benchmark or comparator in the request for offer. These include where the supply is complex or difficult to define.

Unless there are exceptional circumstances, agencies should not use budget limitations to terminate a procurement process under assessment. Agencies should first explore other options, such as reducing the scope of requirement through negotiations.

4.1.3. Stakeholder consultation Stakeholder consultation involves the development of a constructive, productive relationship with key individuals, groups or organisations involved or influenced by the procurement. Stakeholder consultation may help clarify supply requirements and identify trends and emerging challenges. Stakeholder feedback and information is valuable in improving outcomes and may help identify and control internal and external risks.

Efficient stakeholder consultation will assist in:

• identifying and tracking needs and expectations

• identifying and tracking perceptions and attitudes

• providing feedback on specific planned developments

• evaluating implementations and actions.

Stakeholder consultation results in the following benefits:

• more informative decision making

• greater satisfaction from stakeholders and the agency

• increased chance of a successful implementation.

Engaging with key stakeholders (internal and external) can assist agencies in determining their business need. This engagement should consider the key internal stakeholders and their considerations and the requirements of any significant external clients.

4.1.4. Business case (as needed) Not all procurement activities require the development of a business case. Staff are encouraged to check their agency policy to determine when a business case is needed.



The business case sets out the policy, business and project objectives and identifies the issues that affect the decision to proceed with the procurement and justify the investment. It should seek to establish that the proposed project will meet the need, that it is achievable and affordable, and it should address the following:

• identify the business need and desired outcome(s) of the project

• identify critical success factors

• detail possible alternatives, including existing contracts

• highlight significant risks and potential mitigating strategies

• identify any contingent needs and ramifications of proceeding

• details of an indicative timescale

• identify funding sources.

The business case should include the involvement of key stakeholders, including where possible the end-users. It should be approved in line with the agency’s policies, procedures and delegations.

The business case should form the basis of the post-implementation review and be used to review if the original outcomes and benefits have been achieved.

Business cases come in all shapes and sizes. They should have the same purpose, which is to:

• justify the resources and investment or funding necessary to undertake procurement over the whole-of-life

• provide a vehicle for approving funding which supports transparency and probity

• assist the agency in prioritising the project against other public policy/business initiatives.

4.2. Existing contracts and agreements Before planning the procurement approach and proceeding to market, agencies should determine whether there is an existing contract under which the supplies should be obtained. This may include:

• across government contracts

• agency specific contracts

• partnership agreement between the Northern Territory Government and Charles Darwin University.

4.2.1. Across government contracts If the supplies are available under an existing across government contract, the supplies must be obtained under that contract unless otherwise stated in the contract. Information on across government contracts3, including the buyer’s guides, are available on NTG Central.

The Across Government Contracts unit plans, develops and manages these contracts. For further information refer to P28: guide to using existing panel contracts or contact [email protected].

3 http://ntgcentral.nt.gov.au/ntg-tools-services/procurement-and-contracts/contracts/across-government-contracts


http://ntgcentral.nt.gov.au/ntg-tools-services/procurement-and-contracts/contracts/across-government-contracts



4.2.2. Agency specific contracts Agency specific contracts are contracts arranged for a single government agency. This agency is mandated to use the contract. In some cases, this may only be a specific division, business unit or program of works. Agencies should communicate with staff what contracts are in place and how they are accessed.

Agencies may access period contracts established by other agencies with approval from the delegates of both agencies and the contractor. Obtaining access to other governments contracts (i.e. federal, another state or territory) requires approval from the Procurement Review Board. The Board will consider if accessing another government's contract will deliver value for Territory over the preferred procurement method for the relevant tier. Contact the Procurement Review Board Secretariat4 for further information about accessing other government contracts.

4.2.3. Charles Darwin University partnership agreement The Charles Darwin University partnership agreement is an agreement between the Northern Territory Government and Charles Darwin University. The agreement is designed to strengthen the existing relationship, by identifying common strategic objectives in the areas of education, research, community engagement, capacity building, industry development and social inclusion.

The procurement rules include an exemption to procure services from Charles Darwin University under the partnership agreement. Agencies engage Charles Darwin University using this exemption to develop projects that align with the goals and objectives of the partnership agreement or where mutual interests are evident.

The process for procuring services under the partnership agreement are included as a schedule in the agreement. A copy of the agreement and its schedules (including procurement process) is available on the Charles Darwin University5 website under ‘Partnership Agreement’. For assistance with buying under the agreement, please contact your procurement team.

4.3. Roles and responsibilities The table below defines the key roles and responsibilities associated with the procurement lifecycle. The roles identified in the table may have alternative naming conventions within each agency. Agencies should interpret roles and responsibilities to align with their agencies practices.

Clarity of roles and responsibilities is critical in achieving efficient and effective planning. It is best practice to allocate roles in the planning stage of the procurement as this provides the opportunity to provide input into the procurement activity.

Where necessary, the same employee can be assigned to more than one role. However, agencies should ensure appropriate segregation of duties. For example, the project manager should not be the delegate and members of the assessment panel should not be approving assessment outcomes.

For complex or high-risk procurements, additional technical advice may be necessary during the planning and sourcing stages of the procurement lifecycle. Examples of external expertise include probity experts, legal or financial advisors.

4 [email protected] 5 https://www.cdu.edu.au/government/


https://www.cdu.edu.au/government/


https://www.cdu.edu.au/government/



Agencies should provide all staff with the support and training necessary to obtain the procurement skills required to perform their roles effectively.

Roles Responsibilities

Project manager • manages a specific project requiring procurement activities

• determines if a procurement is covered in the agency procurement management plan and identifies and considers any related projects to determine if efficiencies can be achieved

• establishes the business need prior to commencing the procurement

• coordinates the preparation of project specific procurement plan, project risk register, offer and contractual documents and any other associated pre-offer documentation

• coordinates the development of a scope of requirement

• coordinates the input from the areas responsible for providing feedback and input into the procurement (project team) undertakes an analysis of market conditions

• identifies and manages agency, project and procurement risks

• provides input into the assessment strategy for a project specific procurement

• reports to the project sponsor (as applicable)

• liaises and consults closely with the chairperson of the assessment panel during the assessment process

• identifies the materials and participants required for the assessment process




Chairperson of the assessment panel

• responsible for chairing, managing and coordinating the assessment process

• thoroughly familiar with the project, undertakes governance reviews to determine appropriate approvals and controls and identifies any risks

• nominates and appoints assessment panel members, in consultation with senior agency managers

• develops and finalises the assessment plan prior to the release of sourcing documents to the public

• briefs the assessment panel members accurately and fully on the scope, quality, performance, and program required

• employs checklists, tools, and guidelines as appropriate in implementing various sourcing activities

• maintains probity requirements such as confidentiality and conflicts of interest, and ensures compliance with mandatory requirements

• liaises with project manager, identifies, and manages risks specific to the assessment process

• ensures assessment panel members are informed and perform in accordance with the assessment plan

• brings the assessment to a successful conclusion, including preparation of a procurement recommendation paper for the delegate to consider

• ensures all reporting meets expected requirements

• remains mindful of the public perception which recommendations could produce

• explains assessment panel decisions to third parties if required (including scoring outcomes) when subject to third party review

• may manage and conduct respondent debriefs

• provides a handover report to the project manager

Members of the assessment panel

• assesses offers and make recommendations on which offer provides best value for Territory

• brings either a technical or general understanding of the project

• able to maintain probity requirements and act in accordance with the assessment plan

• able to explain their decision (including scoring outcomes) when subject to third party review




Contract Manager • manages the contract after award

• develops and maintains the contract management plan

• monitors and manages contractor performance and compliance with local benefit commitments and other contract deliverables

• ensures contract delivery meets the contracts requirements

• manages correction of any defects and warranties

• manages or oversees the transition in / out of contract

• manages contract close-out and contractor performance reporting

Contract Administrator

• performs administrative activities over the contract management lifecycle, for example, records and information management, cost control, regular checks, key milestones and deliverables are occurring in accordance with the contract requirements

• ensures payments are made in accordance with contractual requirements

Project sponsor (as applicable)

• a senior agency executive responsible for ensuring the overall objectives of the specific procurement activity are delivered and the proposed benefits realised

Steering committee (as applicable)

• a group formed from senior or executive stakeholders to guide the development and progress of a project (as applicable)

• the chairperson of a steering committee for a government project is generally a senior executive of the agency with responsibility for the project

• oversees the general progression and direction of the specific project, ensuring risks are identified and managed appropriately, and decisions are made when required

Delegate • officer in an agency who holds the appropriate procurement delegated authority to approve the scope, program, budget availability, sourcing activities and other key parameters of a specific procurement activity

4.3.1. Project team During the initial stages of the procurement activity it is important to establish a project team. The size and composition of the project team will depend on the nature, scope, value, complexity and risk of the procurement activity. It is important to assemble and facilitate a team of stakeholder representatives who can devote time and think openly and constructively about solutions.

The project team should possess a mix of relevant skills and experiences related to the procurement capable of thinking openly and constructively about the project requirements. The team composition may include:

• policy officer/business owner/project sponsor

• business user/recipient of services

• subject matter technical expert

• procurement specialist



• commercial/financial expert

• legal advisor

• probity advisor.

It is beneficial to retain some or all of the original project team members throughout the procurement. As the project team should provide input into assessing business needs, risk management, market research, preparing the scope of requirements, and contributing to the assessment methodology.

Where stages in procurement are done by separate individuals or other groups it can compromise the quality of the outcomes.

4.3.2. Probity expert Probity provides delegates, respondents and the Territory assurance that a procurement was conducted in a fair, equitable and defensible manner. When a procurement is complex or high risk the project manager may recommend engaging an external probity expert (e.g. probity advisor, or probity auditor).

External probity experts should only be appointed where justified and not automatically because of the value of the procurement. Before engaging a probity expert the project officer should consider the benefits of independent probity advice against the additional costs involved, including considerations of whether skills exists within the agency to fulfil the role. Factors that may be considered include:

• a high risk, complex, unusual or highly contentious procurement

• the integrity of the project may be questioned

• a select tender process is proposed and the integrity of the selection of suppliers to be invited to tender may be questioned

• there has been a history of controversy or litigation in revelation to the matter

• the matter is politically sensitive

• the nature of the marketplace makes supplier grievances more likely (e.g. . commercial confidentiality is particularly important)

• the procurement is such that there is a high expectation of a material conflict(s) of interest.

A probity advisor reviews procurement activities to ensure probity considerations are addressed. In performing this function the probity advisor may observe or advise on the project specific procurement plan (and attachments), tender assessment plan, tender documents, addendums, actions at market (e.g. site inspection, etc.), negotiations, procurement assessment recommendations, and debriefs.

The probity advisor will report to the delegate on any probity issues that occurred throughout the tender process. This report must occur prior to the delegate approving the procurement assessment recommendation. Where a probity advisor is engaged for a procurement the project manager will need to complete a probity plan in conjunction with the probity advisor.

An agency may engage a probity auditor to seek an independent objective opinion for a procurement process that has been commenced or completed. The role of the probity auditor is to ensure identified probity issues have been addressed. If a probity expert is engaged as an auditor, they need to maintain their independence and objectivity, and should not be involved in offering advice to solve any probity problems.



4.3.3. Other expertise In complex or high risk procurements an agency may need to outsource aspects of the procurement lifecycle to external expertise. This could include engaging:

• legal expertise to develop non-standard contract or advise on changes to conditions of contract and contract negotiations

• financial expertise to develop or review the project budget, or the financial impact of the offer received, etc

• an external subject matter expert to provide technical advice on the procurement when the expertise is not held by the agency

• a quantity surveyor to advise on construction costs and contracts.

4.4. Risk management (project specific) Particularly for large or complex procurement activities, specific project risks should be identified and assessed in accordance with the agency’s risk management framework. The project risk register will document known risks across all stages of the procurement lifecycle. The register would, at a minimum, include identified risks, strategies, actions, owners and resolution dates.

The basic principles of risk management are:

• identify and assess risks in the aim of appropriately managing the risk

• allocate responsibility to the party best placed to manage each risks

• adopt an overall risk management strategy that meets the risk profile of the procurement.

The risk register becomes an active document which should be added to, updated, corrected and completed as required throughout the lifecycle. As a general principle, risks should be allocated to the stakeholder best placed to manage them. A template risk register is provided at P17: Procurement risk register and your procurement team can provide guidance on when it should be completed.

4.4.1. Value and risk segmentation In addition to establishing a risk register, it is recommended that project staff undertake a value risk segmentation to guide the procurement approach. Segmenting contracts based on value and risk in the planning process is needed to effectively identify the key activities and resources required to plan, source and manage a specific contract.

The value risk segmentation tool is provided at P18: Value risk segmentation tool.

4.5. Market engagement The objective of market engagement is to explore the capabilities of suppliers and gain insights from industry to help inform the future direction of procurement activities.

Engaging with the market can help with:

• refining the procurement requirements

• providing a better understanding of the industries’ capabilities

• assessing the capacity and structure of the market



• identifying alternative or new supplies or services

• identifying opportunities to be innovative

• identifying opportunities to improve the delivery of supplies or services

• identifying potential issues and risks

• giving existing and potential suppliers a better understanding of the agencies:

o current and anticipated needs

o commitment to exploring and encouraging innovative service delivery

o interest in different commercial arrangements that may deliver greater value

o need for competitive tension in the market to achieve the best outcome possible.

4.5.1. Analyse market conditions Market conditions are the characteristics and features of a business industry sector. Analysing the market helps procurement practitioners understand how the supply market is working, the direction in which the market is going and the key businesses and industries currently in the market.

Analysing the market can help improve the strategy and procurement process to help reduce costs and achieve value for Territory. This step aims to facilitate the achievement of procurement objectives and appropriate management of risks.

Before undertaking a market analysis, it is important to do the following:

• define the objects and elements of the market analysis (e.g. number of businesses and industry and their capacity and capability)

• determine the local capacity and market capability

• identify potential information sources and analysis methods

• identify the resources required to undertake a market analysis

• define the key activities and timelines.

There are various avenues available to obtain information about the market, including:

• own knowledge

• previous experience

• the Industry Capability Network NT (ICNNT)

• Northern Territory Indigenous Business Network (NTIBN)

• internet research

• existing business and industries

• other buyers including other government agencies

• engaging with the industry through briefings

• market analysis consultant

• professional bodies

• industry bodies (include Contractor Accreditation Limited)



• utilising a market analysis model (as outlined below).

4.5.2. Supplier preferencing model The supplier preferencing model identifies the willingness or reluctance of industry to meet an agency’s procurement requirements by assessing the attractiveness and the cost, relative to total sales, of the contract. The model evaluates the level of effort a supplier will put into a procurement activity. For example a supplier will put in less effort when they perceive a customer as unimportant.

The following graphic highlights the supplier preferencing model.

The following factors contribute to the attractiveness of procurement activities to industry:

• level of expenditure

• scale of agency demand compared to other customers

• profitability of the agency

• reputation of the agency

• potential for the business and industry to grow the account

• ease of managing the account

• procurement specific risk.

Understanding these factors can impact on value for Territory by improving the attractiveness of the procurement with better procurement planning strategies. The following table outlines the key considerations from a supplier point of view.



Quadrant Description Actions Planning considerations Development Opportunity:

• low relative cost

• still attractive.

• nurture customer

• expand business

• seek new opportunities.

• capitalise on the opportunity to maximise value

• improve the capability and performance of the supplier

• develop good business relationship.

Core Key customer:

• high relative cost

• highly attractive

• core business.

• retain customer

• defend rigorously

• high service and response.

Nuisance Indifferent:

• low relative cost

• minimal profit.

• low interest

• low attention

• lose without pain.

• encourage participation by involving business and industry early in the process via market sounding and promoting awareness of the procurement opportunity

• reduce the cost of participation in the procurement process via streamlined/ simplified procurement process

• increase the value of the procurement by consolidating/ packaging like businesses

• ensure a fair allocation of risk between the parties.

Exploitable Interested:

• high relative cost

• but not attractive.

• maximise profits

• drive premium price

• short term advantage

• risk losing customer.

Agencies should consider supplier preferencing considerations in developing procurement strategies and framing the market approach.

4.5.3. Supply positioning model The supply positioning model can help identify the importance of procurement activities to an agency. The model assesses business risk/exposure and relative costs. This assessment will help inform the market approach, and the time and resources allocated to the procurement activity.

The following graphic highlights the supply positioning model:



The level of risk/exposure is determined by:

• supply availability – risk/exposure is less where there are many businesses in the industry and supply is plentiful, however shortages or market limitations will position the procurement higher on this scale

• quality requirements – risk/exposure is less where there are commonly accepted industry standards and greater where there are strict unique specifications to be met and where there is little tolerance for error

• safety/environmental reliability – risk/exposure is greater where there are significant safety or environmental considerations associated with the procurement activity

• other procurement specific factors – these factors vary for each agency.

These factors determine where each procurement activity sits on the risk/exposure axis of the model. Using the model will assist with the agency’s procurement strategy and indicate the time and resources required to undertake the procurement.

The following table identifies and describes each of the supply positioning quadrants and the procurement planning considerations agencies need to assess.

Quadrant Description Planning considerations

Strategic security

• low annual cost supplies

• strategically important

• limited number of reliable businesses and industry.

Strategy focus:

• security of supply

Considerations:

• risk management

• panel contract/ preferred suppliers

• longer term contracts

• inventory, reserve of stock

• consider alternative supplies.



Quadrant Description Planning considerations

Strategic critical

• high annual cost specialist supplies

• limited number of businesses and industry with capability and capacity.

Strategy focus:

• security of supply

Considerations:

• performance measures (risk, value)

• shared values, common goals

• medium/long term contracts

• contingency planning.

Tactical acquisition

• routine purchases

• low cost/low risk supplies

• many potential businesses and industry.

Strategy focus:

• purchase efficiently and reduce transaction costs

Considerations:

• one-off contracts/purchase orders

• simplify acquisitions process

• minimise time and effort

• purchase cards

• automatic systems.

Tactical profit

• high cost/low risk supplies

• many potential businesses and industry.

Strategy focus:

• cost savings, drive value

Considerations:

• short term contracts (for example one or two years)

• ongoing active sourcing (e.g. reverse auctions)

• promote competition

• seek value adds and discounts

• negotiate post offer

• detailed specifications.

4.5.4. Supply chain analysis A supply chain consists of the organisations that participate in the flow of supplies from their original source to the final end-user. These organisations are both a customer, business and industry to some of the other organisations.



The types of organisations that comprise a supply chain will depend on the nature and complexity of the supplies. Organisations may include primary producers, manufacturers, traders, transporters, importers, wholesalers, distributors, contractors, information systems providers and retailers.

Supply chain analysis seeks to promote a more integrated, seamless, cooperative and low risk arrangement between the key players. The success of the procurement will ultimately depend on the performance of each link in the supply chain.

Supply chain analysis considers where the most significant risks are and identifies how each organisation adds value to the procurement. The analysis enables the agency to consider:

• different procurement planning strategies that may influence the nature of the supply chain

• purchasing at different stages in the supply chain (for example, by sourcing the supplies directly from the wholesaler instead of the retailer)

• sustainability risks (for example, purchasing office furniture made from sustainable forest timber)

• opportunities for innovation

Agencies can analyse the supply chain by commencing with the first-tier business and industry and working backwards to identify:

1. the value that the participant adds

2. where in the supply chain the procurement is currently located and where the best value in the supply chain lies

3. ways to add value and improve the current approach (for example, using technology to better integrate with key businesses and industry)

4. any non-value adding activities in the supply chain that can be removed (for example, dealing with fewer businesses and industry through consolidating spend)

5. any key risks in the supply chain (for example, suppliers that are overly dependent upon a single supplier, the use of child labour, unsafe work practices or non-sustainable new materials.

4.6. Prepare scope of requirement A scope of requirement (i.e. specification) documents the supplies being procured. Once a contract has been awarded, it becomes a key document in the contract management stage of the procurement lifecycle.

The scope of requirement needs to provide information on the following:

• the quantities or volume required

• any technical details that will meet the specific needs

• the performance standards or key performance indicators that the resulting supplies will need to address.

It is important to ensure that the scope of requirement clearly describes the following:

• why the supplier is required to do it

• what the supplier is required to do

• when the supplier is required to do it.



The following points may assist in developing the scope of requirement:

• detail why the agency is undertaking the activity and the term of the contract

• outline what results the contract will achieve

• explain where the supplies will be delivered

• outline what quality and standards apply

• detail where the supplies will be provided or delivered

• detail when the supplies be provided or delivered

• explain who will be involved in the delivery: supplier / contract manager etc.

• consider opportunities for respondents to provide alternative or innovative solutions that improve business processes.

The following table details key characteristics of a good scope of requirement and can be used to check against when writing a scope document:

Characteristics Explanation

Complete The scope of document is contained in one document with no missing information. If the nature of the procurement requires more than one document, the documents should be clearly structured and linked with no repetition or overlap.

Unambiguous Each requirement is concisely stated without recourse to technical jargon, acronyms (unless defined elsewhere in the document). It expresses objective facts, not subjective opinions. Vague language is avoided. Negative statements and compound statements are discouraged.

Consistent Each requirement is consistent with all others and any external documents that are referenced.

Current Each requirement is current and can, in some cases, be future focused to meet planned or predicted future needs.

Feasible Each requirement can be implemented within the constraints of the project including the budget.

Traceable Each requirement can be tracked back to a stated public policy/business/stakeholder need and is authoritatively documented.

Verifiable The implementation of the requirement can be determined through one of four possible methods: inspection, demonstration, test or analysis.

4.6.1. Structure of a scope of requirement The success of the procurement activity relies on the scope of requirement being an accurate statement of the agency’s needs. Apart from being a means of identifying the supplies required.

A scope of requirement should:

• state the requirement clearly, concisely and logically in functional and performance terms

• state what the supplies will be used for

• include enough information for suppliers to understand what level of quality is expected

• include any mandatory requirements or qualifications required



• allow for innovation or market led solutions

• provide equal opportunity for all potential businesses and industry

• assist in forming the fundamental basis of the contract between buyer and seller.

Brand names should not be specified in the scope of requirement unless the agency is willing to accept equivalent products. The decision to specify a brand name in a scope of requirement must be defensible and demonstrate benefit to the government.

4.6.2. Scope of requirement types

4.6.2.1. Functional

Functional specifications define the task or desired result by focusing on what is to be achieved rather than how it is to be done. They do not describe the method of achieving the intended result. This enables suppliers to provide innovation and solutions to defined problems.

There is often great scope for variation in this approach, so it is necessary to think carefully about how to assess the offers received. There may be a wide variance, so a structured method of determining which is the most appropriate is needed.

4.6.2.2. Performance

Performance specifications define the purpose of the supplies in terms of how effectively it will be required to perform. Performance is a logical extension of function: performance specifications define the outcome or desired result by focussing on what is to be achieved, not the method of achieving it. Performance specifications are usually used in conjunction with functional specifications. This enables suppliers to provide solutions to defined problems.

There is great scope for variation in this approach, but it encourages innovation. As with functional specifications, it is necessary to think carefully about how offers are to be assessed.

4.6.2.3. Technical

Technical based scopes define the technical and physical characteristics and aspects of a product as well as design details, material properties, maintenance requirements and operational requirements. Technical based requirements are used when functional and performance characteristics are not sufficient to accurately define a requirement.

4.6.2.4. Outcome

Outcome based scopes are encouraged and have the advantage over technical based scopes by allowing suppliers to offer innovative and technologically advanced solutions that can offer improved value for Territory.

4.6.3. Performance standards and measures Performance standards are quantifiable units of measurement used to assess the extent to which the contractual outputs have been achieved. When applied to the supplies, they allow the buyer to set the parameters for success.

Outputs should be evaluated using the following performance measures:



• quantity: how much or how many?

• quality: how well?

• timeliness: the frequency and promptness - this might include turnaround times, waiting times or response times

• cost: unit cost, or total cost

• user satisfaction: the level of customer satisfaction regarding any of the above, as well as their specific requirements

• continuous improvement: rates of improvement in any of the above measures over time.

Agencies should select key performance indicators and performance measures that are relevant and which can be measured. Potential examples include:

• delivery or response times within agreed timeframe (e.g. 1 hour response time)

• timeframes or completion dates, e.g.

o percentage or proportion of milestones met on time

o completion of performance by the due date

• complaint resolution

• prompt advice about any problems and proposed resolutions

• acceptance of deliverables (e.g. recommendation report)

• customer satisfaction with the services delivered (e.g. satisfaction surveys)

• cost tracking (e.g. percentage or proportion of costs that have been invoiced benchmarked against the agreed contract costs)

• delivery accuracy (e.g. percentage of deliveries that match orders)

• service resolution (e.g. percentage or proportion of issues resolved first time without follow up/escalation).

The chosen measures need to be clearly outlined in the scope of requirement to enable reporting in the contract management stage of the procurement lifecycle.

4.6.4. Consultation on the scope It is important to include consultation into the development of the scope of requirement. Consulting with stakeholders can identify valuable information.

Other helpful sources of information and advice include:

• other agencies or governments

• industry associations or particular companies

• other users of the supply or similar supplies

• the work unit that manages the contract.

4.6.5. Endorsement and approval of the scope of requirement It is critical to ensure that all relevant endorsements and approvals for the scope of requirement are obtained in line with the agency’s policies, procedures and delegations.



4.7. Future tender opportunities A future tender opportunity is the advance publication of a proposed procurement activity. It is the process through which government will bring industry attention to specific procurement activity that will take place.

The procurement rules state that agencies:

• must advertise a future tender opportunity at least 40 calendar days to 12 months prior to the release of the request to offer, and

• may seek delegate approval for exemption from this requirement when the request for offer is being issued to a single sole supplier.

Agencies may consider advertising future tender opportunities in line with their agency procurement management plan.



5. Stage 3: Plan the procurement approach The focus of this stage is on identifying the most appropriate way to approach the market to facilitate the achievement of value for Territory. The market approach needs to consider how industry will respond and allow opportunities for market led solutions or innovation.

The importance of this stage is outlined in the following table:

Importance of planning the procurement approach

Why is planning the procurement approach important?

• elicits offers from suppliers that meet agency needs

• to encourage innovative solutions that meet the procurement objectives

• enables the most appropriate procurement approach is undertaken based on findings from market engagement and analysis

• facilitates the achievement of value for territory outcomes.

What are the risks if planning the procurement approach is not performed effectively?

• an inappropriate approach to the market may result in poor or ineffective responses from the market, resulting in additional time, effort and cost

• confusion from suppliers as to the requirements of the agency, resulting in supplies being offered that do not meet agency needs

• responses from the market that do not provide value to Territory.

As outlined in the table below, the preferred market approach differs according to the tier:

Tier (GST inclusive) Preferred approach Other approaches*

Tier 1 Less than $15 000

Quotation (via select invitation)

• requires minimum of one written quotation, including inviting an offer from a Territory enterprise

• direct purchasing available for freely available supplies that are low risk and can be purchased locally.

• direct contracting

Tier 2 $15 000 to less than $100 000

Quotation (via select invitation)

• requires minimum of three written quotations, including offers from two Territory enterprises

• quotation (fewer than 3)

• direct purchasing available for freely available supplies that are low risk and can be purchased locally.


Tier 3 $100 000 to less than $500 000

Public offer • select tendering


Tier 4 $500 000 to less than $5 000 000





Tier (GST inclusive) Preferred approach Other approaches*

Tier 5 $5 000 000 or more


• direct contracting * Please note: use of other procurement methods must be defensible and approved in accordance with the agency procurement delegations.

Agencies may use processes established at the higher tier where it is defensible. When this occurs, the agency should follow the full process of the higher tier.

5.1. Consider the procurement approach

5.1.1. Open and competitive approach Open and competitive procurement processes ensure that all potential businesses can competitively bid for government contracts. Key benefits of this approach are that all potential suppliers have equal opportunity to submit an offer under the same conditions and requirements.

Open approaches are the preferred method under the procurement rules and avoids bias towards suppliers or industry.

5.1.2. Alternative or restricted procurement methods Agencies must only use an alternative or restricted procurement method with delegate approval. The method should be used where it will improve value for Territory or is in the best interest of government and industry. Section 6 of the Procurement Rules outlines when alternative or restricted procurement methods can be used.

5.1.2.1. Direct purchasing

Direct purchasing is a purchase from a local supplier for supplies available off the shelf without a written quote. Agencies may only use direct purchasing for freely available supplies that are low risk and can be purchased locally.

Agencies must adhere to the procurement rules when undertaking direct purchasing.

5.1.2.2. Direct contracting

Direct contracting involves directly approaching and negotiating with one supplier in the absence of a competitive sourcing process. Direct contracting must only be used with the approval of the delegate where there is a single supplier capable of meeting the requirements and:

• there is evidence that it is the most effective manner to deliver value for Territory, or

• it is impractical or impossible to use an open procurement process, and

the contract awarded will be:

• in the form of a lease, licence agreement or substantially non-standard contract, or

• an extension or renewal of an existing contract, or

• for the support or maintenance of existing software, systems, or



• for goods or services to be delivered in a remote area from a legal entity which has a minimum of 30% of its full time personnel who are Aboriginal (see exemption 6.3.4 E9 O. Remote Procurements).

Direct contracting does not follow a conventional tender process (i.e. development and release of a tender document) but still requires appropriate approvals and an assessment to ensure value for Territory will be achieved.

5.1.2.3. Select processes

A select process may be used where the delegate issues a certificate of exemption from the preferred procurement method. Select processes may be used where it can be demonstrated to achieve value for Territory or is in the best interest of government and industry.

Undertaking a select process involves inviting a sole or limited number of suppliers to respond to an offer. In some instances, it may be that only a sole supplier is invited to submit an offer.

Justification for a select process may include:

• the supplies are required urgently (e.g. where life, property or equipment are at immediate risk or standards of public health, welfare, security or safety must be re-established without delay)

• the nature of the supplies necessitates confidentiality

• the required supplies are available from a limited or single source (e.g. standardised supplies, compatibility with existing supplies, availability restrictions, warranty stipulation or restricted access, patent or copyright restrictions or specific accreditation, certification or qualifications are required to undertake the supply)

• standardisation of supplies, where it can be demonstrated that a similar product will not operate within the current system or that standardisation will lead to significant cost benefits and efficiencies in operation

• where a public procurement process has resulted in no admissible offers being received

• there are warranty, patent or copyright considerations that limit the number of businesses or industries

• supplies are required within a regional council area and it has been established that the regional council is capable of undertaking the work with a minimum of thirty percent (30%) aboriginal employment.

To ensure procurement activities are competitive agencies should consider inviting more than one business to participate in select processes (where appropriate).

Agencies may consider contacting the Industry Capability Network NT or other market research organisations to ensure that potential businesses are not overlooked.

Agencies must document their justification for using a select process and their delegate approved certificate of exemption.

5.1.2.4. Two stage procurement processes

Two stage procurement processes are generally an expression of interest processes followed by a request for offer.

The first stage notifies suppliers of a procurement opportunity and invites offers. The request for offer paperwork must include any criteria and the method that will be used to shortlist potential suppliers.



The second stage typically invites a number of potential suppliers to take part in the next stage of the procurement process (e.g. request for tender or negotiations, presentations, etc).

The decision to hold a two-stage process will depend on the nature, scope, value, level of risk and complexity of the procurement. A two-stage process is appropriate where government requirements are complex and responding to detailed assessment criteria may be costly and resource intensive. Although generally a longer process, this procurement approach can be more efficient as suppliers do not need to expend significant resources preparing a stage one submission.

In a two stage procurement process, all respondents are notified in writing of the outcome of each stage. This provides some certainty to suppliers in terms of planning their workflow and staffing requirements. The stage one documents should state when debriefs will occur and this is generally at the end of stage two.

5.2. Consideration of local content It is during the planning stage when agencies must consider how local content benefits will be maximised throughout the procurement lifecycle. This may include:

• conducting rigorous market research to identify Territory enterprises with relevant capability and capacity, particularly for tier 1 and 2 procurement activities and select tenders

• addressing the risks of excluding Territory enterprises by avoiding procurement activities that:

o are overly-complex

o are of a scale that exceeds the capacity of Territory enterprises

o contain unnecessary mandatory requirements

o contain incomplete or ambiguous information

• structuring procurement activities that align to local workforce skills identified in market research, making it easier for suppliers to plan for local content in their offers

o considering the potential for breaking large procurements into smaller contracts to provide smaller Territory enterprises with the opportunity to win contracts

o this would require an examination of the benefits vs the loss of economies of scale to ensure that value for Territory will still be achieved.

• When selecting local content assessment questions, agencies may seek responses in relation to:

o enhancement of industry and business capability in the Northern Territory (i.e. the extent to which the offer will improve the Northern Territory business environment and subsequent benefits to Northern Territory consumers)

o improved capacity and quality in supply and service response (e.g. improved practices and training or a local presence)

o accredited training programs supported by the business

o proposed level of usage of apprentices and trainees

o proposed number of jobs for Territorians

o regional development opportunities

o Northern Territory research and development being undertaken or proposed.



Agencies must ensure that the local content assessment criteria questions are designed to elicit local benefit commitments from suppliers for all tier 3 to 5 activities. These commitments will form part of the successful respondent’s contract and be subject to audit as part of the contract management stage of the procurement lifecycle.

A minimum 30% weighting must be allocated to local content for all tiers.

Further information on how to consider local content, including example questions, are provided at P19: Local content factsheet.

5.3. Consideration of Aboriginal opportunities All agencies must consider opportunities to maximise Aboriginal participation and employment throughout the entire procurement lifecycle for all procurement activities. In addition to the considerations outlined in 6.1, this may also include:

• consulting with Aboriginal stakeholders on procurement activities undertaken in their communities to obtain their buy-in

• utilising the public procurement exemption where the supplies are to be delivered in a remote area from a legal entity which has a minimum of 30% of its full-time staff who are Aboriginal.

Assessment questions relating to Aboriginal participation and employment are generally a sub-set of local content but can also be used as a standalone category. When selecting assessment questions, agencies should seek responses that elicit a contractual commitment in relation to:

• number of jobs for Aboriginal Territorians, including apprentices and trainees

• proposed level of usage of local Aboriginal enterprises

• training programs or other initiatives to be delivered that are aimed at increasing Aboriginal skills and participation.

5.4. Procurement rules exceptions and exemptions The Procurement Rules contain a number of standing exemptions and exceptions to provide flexibility to agencies where it is impractical to comply with an aspect of the procurement framework.

5.4.1. Using a procurement exception A procurement exception provides agencies with an alternative option to complying with a specific procurement rule. When using an exception, the agency must comply with all other mandatory requirements of the procurement rules.

5.4.1.1. Example: Territory enterprise exception

Procurement rule 13 states that agencies must invite a minimum number of Territory enterprises for tier 1 and 2 procurements. The Territory enterprise exception (6.1.1E1) allows the delegate to exclude inviting the minimum number of Territory enterprises from the procurement activity where:

• there is no Territory enterprises capable of providing the supplies, or

• only a single Territory enterprise capable of providing the supplies (tier 2).



To ensure the use of the exception is defensible, the agency needs to have investigated all options for involving a Territory enterprise in the offer process (e.g. google searches, consultation with industry bodies, etc).

When using the exception the delegate must approve:

• the use of the exception

• inviting offer/s

• an alternative procurement method (if applicable).

The agency is still responsible for complying with all other mandatory procurement rules, including (but not limited to):

• delegate approval to exclude the minimum number of Territory enterprises

• consultation with the Industry Capability Network NT,

• assessment panel size

• advertising period.

5.4.2. Using a procurement exemption A procurement exemption provides agencies with an alternative option to complying with a specific requirement of the Procurement Act or Procurement Regulations.

The Minister responsible for procurement has issued a number of standing exemptions which are listed in the procurement rules.

The procurement rules outlines what part of the procurement framework that the exemption applies (e.g. use of the preferred procurement process or using Contract and Procurement Services tendering services).

When using an exception the agency must comply with all other mandatory requirements of the procurement rules.

5.4.2.1. Example: public procurement exemption

The procurement rules contain a list of supplies which may be procured under the public procurement exemption.

One of the categories of supplies listed in this exemption is copyright and licensed supplies. Agencies may use this exemption when purchasing software that is only available from a sole supplier or sole licensor. Using the exemption the software purchase is exempt from:

• using the preferred procurement process for the tier

• inviting an offer from Territory enterprises (tiers 1 and 2)

• consulting with Industry Capability Network NT (tiers 1 and 2)

• publishing a future tender opportunity (tiers 4 and 5).

The agency is still required to comply with all other mandatory procurement rules. The use of the exemption must still be defensible and documented.



5.5. Develop a project specific procurement plan Project specific procurement plans are mandated for tier 3 to 5 procurement activities and may also be used for lower tier procurements. The plan outlines the procurement approach and is used to obtain relevant approvals for the procurement activity.

The plan must include:

• the capability and capacity of local industry and businesses to meet supply requirements

• consideration of opportunities to maximise local content

• consideration of opportunities to maximise Aboriginal participation

• the procurement method to be used in consideration of the value and risk

• assessment criteria and associated weightings

• negotiation protocol or plan where negotiations are anticipated or planned.

Other considerations include:

• a background and a definition of the procurement objective

• the problem that the procurement aims to resolve

• relevant government policy such as social and sustainability

• clear definition of the supplies required

• what is known about the market and the demand for the supplies

• the strategy for stakeholder engagement

• timeframe for the procurement activity

• budget considerations

• insurance requirements

• the roles and responsibilities across the project team

• due diligence requirements

• risks and relevant strategies

• probity management.

The following templates are available:

• P20: Project specific procurement plan – tiers 1 and 2

• P21: Project specific procurement plan – tiers 3 to 5.

It is important to note that your agency may have different templates in place. You should always consult with your procurement team early in the planning stage to ensure that the correct templates are used.

Remember: all relevant approvals must receive delegate approval before progressing to the sourcing stage.



5.5.1. Determine process plan and timetable The process plan involves identifying each step in the process, assigning responsibilities, and ensuring approvals are received. Determining an efficient process, following a timetable and schedule of progression will assist in progressing the procurement, and:

• defining outputs and identifying inputs needed

• defining goals and specific measures

• identifying agendas and time constraints

• ensuring the compliance of the procurement activity, record keeping and stakeholder consultation.

The process plan needs to include a proposed timetable for the procurement that considers recommended timeframes outlined in the project specific procurement plan.

5.5.2. Determine budget considerations The agency needs to consider its budget constraints when undertaking procurement. Budget constraints can limit, restrict or otherwise impact on the procurement objectives.

It is important to outline projected financial implications to ensure an accurate determination of the required budget. The budget should be for a specific period and show the expected costs and benefits.

When undertaking a procurement activity the project officer needs to consult with the delegate or chief financial officer to confirm if budget is available.

Determining budget considerations will assist in:

• accurate forecasting

• identifying goals

• identifying limitations

• timely and accurate information

• identifying required delegate approvals.

5.5.3. Determine the period of contract Period contracts are contracts spanning a period of time which have been arranged for convenience and economic considerations of the agency. These contracts give contractors reasonable assurance or guaranteed business during the contract period.

Period contracts are appropriate for supplies which are regularly required and conform closely to commercial standards. When establishing a period contract the request for offer must set out the term of the contract and any extension options available to the agency.

Period contracts may be established as a:

• Standing offer: these are continuing offers to provide supplies as needed (e.g. stationery). Although estimated quantities are generally provided, government does not bind itself to any specific quantity. The period contract establishes the prices/rates and conditions under which supplies will be provided, if required, over the contract period.



• Fixed scheduled service: these are where government binds the contractor to provide set requirements (e.g. daily cleaning services). The period contract establishes the prices/rates and conditions under which supplies will be provided, over the period of the contract.

5.5.4. Determine insurance requirements It is important to factor in any relevant insurance requirements during the planning stage. The types of insurance required will depend on the procurement activity. The table below outlines four standard types:

Insurance type Description

Workers compensation insurance

Contractors that will be employing workers (as defined in the Act) the amount of cover shall comply with the Return to Work Act 2015 (NT) and policies shall be purchased from Northern Territory approved insurers. There is no requirement to have workers compensation insurance where the contractor will not be employing workers nor intending to employ workers on the contract.

Public liability Public liability insurance covers the contractor’s liabilities to third parties arising out the contract. Public liability insurance protects the government against the financial risk of being found liable to a third party for death or injury, loss or damage of property or “pure economic” loss resulting from the contractor’s negligence.

Product liability Product liability covers the contractor’s liabilities arising out of the goods supplied under the contract. Product liability insurance protects the government in the event that a contractor sells, supplies or delivers goods in the form of repair or service that causes injury, death or damage.

Professional indemnity Professional indemnity covers the contractor’s liabilities arising out of the services provided under the contract. Professional indemnity insurance protects the government from legal action taken for losses incurred as a result of the contractor’s professional advice. It provides indemnity cover if someone suffers a loss – material, financial or physical – directly attributed to negligent acts of the contractor.

All Northern Territory Government contracts require the contractor to carry public liability and workers compensation insurance. Agencies should also consider if other types of insurance may apply to the supplies (e.g. carrier’s liability insurance, works insurance etc.). Please note: insurances not supported by the conditions of contract will require special conditions of contract (see section 5.5.7).

A request for offer should include the mandatory insurance requirements. If a respondent seeks to exclude the mandatory insurance, the agency will need to consider the risks of granting such a request as part of the assessment. The agency will need to consider if it would be providing the respondent with an indemnity, which would need to be approved in accordance with the Treasurer’s Directions6. Agencies should consider seeking legal advice in these circumstances.

Refer to the P22: Insurance provisions for further information on minimum monetary values for each insurance category, and supplies that allow for reduced public liability insurance.

6 https://treasury.nt.gov.au/dtf/financial-management-group/treasurers-directions

https://treasury.nt.gov.au/dtf/financial-management-group/treasurers-directions

https://treasury.nt.gov.au/dtf/financial-management-group/treasurers-directions



5.5.5. Determine limitation of liability A liability is a legal obligation to pay or otherwise compensate another party. Each party’s liabilities exist at law or under legislation and may be documented under the contractual agreement between the parties.

A liability cap limits the liability of the contractor to the maximum amount specified in the cap. If a liability event occurs and the loss or damages exceed the value of the cap, the Northern Territory Government bears the responsibility for the amounts above the capped value.

Although capping contractor liability exposes the Northern Territory Government to the risk of a loss or damage above the capped amount which may not be recovered from the contractor, there are key benefits to capping liability.

These include:

• encouraging competitive pricing and reduced supply prices in exchange for capping the contractor’s liability

• encouraging the parties to manage the risks within their control

• facilitating small business involvement in government procurement.

While an uncapped liability allows the agency to claim their entire costs from the contractor, contractors may not have the financial resources to meet the unlimited liability and the existence of such liabilities may impact on the validity of their insurance policies. Accordingly, an unlimited liability may not result in an agency receiving all monies claimed.

In the alternative, an agency may decide to cap a contractor’s liability to reflect the actual value of the loss the agency expects to claim under the contract. This will reduce a contractor’s cost of tendering which can then be passed on to the agency through reduced pricing and may increase the level of competition for the procurement activity.

It is for these reasons that liability capping should be a consideration during the planning stage for all tier 4 and 5 procurement activities. In determining whether the contractor’s liability should be capped, agencies should undertake a risk assessment and identify all sources of liability and the likely costs of potential liability. If a cap is deemed appropriate, it is included in the official tender documents released to market.

Further information on liability capping is provided at P23: Limiting liability in procurement contracts.

5.5.6. Determine intellectual property Intellectual property includes creations of the mind or something original. Intellectual property rights must be considered before requesting offers as it is:

• protected by law, by patents, copyright and trademarks and covered in the conditions of contract

• ownership of intellectual property can be sold or licenced.

Intellectual property ownership may rest with either the principal or the contractor, as follows:

• with the principal where the contractor grants the principal license to use the intellectual property in providing supplies under the contract, or

• with the contractor where the contractor grants the principal licence to use the intellectual property.



Vesting intellectual property ownership in the contractor may encourage innovation in the procurement process.

5.5.7. Identify the conditions of offer and contract Generally, agencies will establish a contract for supplies based on the tier level and conditions of contract. Standard conditions of offer and conditions of contract are available in the following categories:

• construction

• consultant services

• goods

• services

There may be instances where procurement activities require alternative contractual terms and conditions. In these instances it is important to seek legal advice on how to proceed.

Where an agency seeks to change the standard conditions of offer or contract approval must be obtained from Procurement NT to use alternative or additional clauses in the request for offer.

Further information on this process is provided at P24: Non-standard conditions process.

5.6. Develop an assessment plan As part of the planning process, agencies should develop an assessment plan which outlines the assessment and any shortlisting criteria, weightings and scoring methodology and assessment panel membership. The assessment plan should be included as part of the procurement plan for approval by the delegate and finalised before the request for offer closes.

The assessment plan developed needs to be tailored to suit the requirements of the procurement. For example, if an agency is accepting alternative offers the assessment plan should identify the process to evaluate these offers. A template is provided at P25: Assessment plan.

5.6.1. Assessment criteria Offers are assessed based on the assessment criteria contained in the request for offer. Weightings are given to selected assessment criteria and to form a basis on which calculations will determine the offer that represents best value for territory.

The types of assessment criteria which may be applied to offers include the following:

• Past performance: includes consideration of the previous standard of work and product quality, performance history, previous disputes and claims, references, safe and fair workplace records, past performance in delivering local benefits.

• Local content: includes consideration of local presence, proposed number of jobs for Territorians or Aboriginal Territorians, enhancement of local business capability, training programs supported by the supplier, regional development opportunities, research and development being undertaken in the Northern Territory.

• Timeliness: includes consideration of the completion/delivery time offered, length or vulnerability of the supply chain, compliance with timeframes set by the agency.



• Capacity: includes consideration of the supplier’s ability to carry out the works, perform services or supply products, knowledge and expertise of staff, number of contracts currently in progress, financial capacity, risk management and quality assurance.

• Innovation: includes consideration of market led solutions including new technology and alternative solutions.

• Scope specific: includes consideration of technical requirements, environmental requirements and specific expertise and experience.

• Price: includes consideration of upfront costs, whole-of-life costs and any other facts that may impact the monetary cost to government.

Assessment criteria cannot be changed once a request for offer has closed. It is vital to select the right criteria for the procurement activity. Many sourcing templates include generic questions that may be adapted for the procurement to ensure that respondents provide the information required to assess the offer.

5.6.2. Assessment weightings The assessment weightings must be approved in the planning stage and differ between procurement activities depending on the agency’s specific requirements (for example importance, complexity or risk).

The following rules apply to assessment weightings:

• Local content must be weighted at a minimum of 30%.

• Price cannot be weighted higher than 30%.

Percentage weightings are included in the request for offer for tier 3 to 5 procurements. Agencies may disclose weightings for tiers 1 and 2 at their discretion.

The assessment weightings cannot be changed after a request for offer has closed.

5.6.2.1. Paired criteria analysis

Paired criteria analysis can be used to establish the assessment criteria weightings. In this approach, all criteria are compared, two at a time, against each other. The total number of times a single criterion ranks over its competitors determines its relative weighting.

Further information on how to undertake a paired criteria analysis is provided at P26: Paired criteria analysis.

5.6.3. Assessment panel membership The chairperson of the assessment panel is the person responsible for managing and coordinating the assessment process. The chairperson nominates assessment panel members in consultation with senior agency managers. Ideally, the chairperson should have experience in conducting procurement assessments and either bring a technical or general understanding of the supply requirements.

Panel members assess offers and recommend the offer that is the best value for Territory. The members should have the required level of technical and business knowledge to evaluate the offers received.

All members of the assessment panel must be capable of maintaining probity, assessing offers by following the assessment plan, and make defensible decisions.



The assessment panel should be established during the planning stage and be involved in reviewing the scope of requirement and assessment criteria questions.

The procurement rules specify the minimum number of assessment members in section 5.5.

5.6.4. Scoring methodology The agency should identify in the assessment plan the scoring scale to be used. The recommended scoring scale is available in the sourcing guide.

5.6.5. Shortlisting At times, it may be appropriate to use a shortlisting process and criteria to assist with assessing offers. Shortlisting may be based on offers that are non-conforming, non-compliant or non-competitive in comparison to other offers that demonstrate higher levels of potential value for Territory. Shortlisting occurs after the initial scoring has been completed and must not be based on price.

The request for offer and assessment plan must clearly specify the shortlisting methodology that will be used in assessment of the offers. The assessment plan needs to outline for the assessment panel:

• how shortlisting will be managed (ie what will be assessed for shortlisting?)

• the cut-off for shortlisting (ie what score must a respondent achieve to be shortlisted or is there a limit to how many respondents will be shortlisted?).

5.7. Consider advertising period The procurement rules outline the minimum advertising periods for each tier. An appropriate advertising period helps make the procurement activity is fair for all potential respondents.

Agencies must allow sufficient time for respondents to prepare an offer. Extended advertising periods should be used where:

• the procurement activity is complicated or high risk

• the respondent is required to undertake tasks at market (e.g. attend a site inspection).

5.8. Develop the request for offer documents Using the project specific procurement plan and scope of requirements it is time to pull together the request for offer documents. These are the external documents that will be provided to prospective suppliers.

5.8.1. Request for quotation (tiers 1 to 2) A request for quotation is a formal request to obtain offers from one or more potential suppliers for specified supplies. It is generally used for tiers 1 and 2 procurements.

The request for quotation outlines the specific requirements of the procurement activity and includes:

• the scope of requirement

• the timeframes in which the quotation is to be submitted

• the assessment criteria applicable to the request for quotation



• the conditions of contract which apply to the specific procurement activity.

Response schedules need to request the information required to assess the offer.

Tender Documents Online (TDO) may be used to generate the request for quotation template, or an alternative form may be available from your procurement area.

5.8.2. Develop the request for tender (tiers 3 to 5) A request for tender is the process of obtaining offers for tier 3 to 5 procurement activities or lower tiers where:

• there is a broad competitive market and a public process is preferred

• the risk of the contract is high and more stringent contractual conditions are required

• establishment of period contract.

The request for tender outlines the specific requirements of the procurement activity and includes:

• the scope of requirement

• the timeframes in which the offer is to be submitted

• the assessment criteria and percentage weightings

• the conditions of offer and conditions of contract which apply to the specific procurement activity.

Tender Documents Online (TDO) needs to be used to generate request for tender templates.

5.9. Next steps Following your agency approving the procurement plan, assessment plan, scope of requirement and other associated documentation, you can proceed to the second stage of the procurement lifecycle, sourcing. Your procurement area or finance team may need a copy of your approved documents.

Refer to the sourcing guide for information on this stage.



6. Appendix A Prefix and template name Location of reference in guide

P1: Defensible decision making 2.5 Defensible decision making

P2: APMP guide and template 3.1 Agency procurement management plan

P3: Tier 1 flowchart (non-direct purchasing) 3.2 Procurement process by tier

P4: Tier 1 flowchart (direct purchasing) 3.2 Procurement process by tier

P5: Tier 1 checklist 3.2 Procurement process by tier

P6: Tier 2 flowchart 3.2 Procurement process by tier








P14: Period contract register 3.3 Monitoring expiring contracts

P15: Declaration of interest and confidentiality (NTG staff) 2.4 Conflict of interest and declaration of confidentiality

P16: Declaration of interest and confidentiality (non-NTG) 2.4 Conflict of interest and declaration of confidentiality



Prefix and template name Location of reference in guide

P17: Procurement risk register 4.4 Risk management (project specific)

P18: Value risk segmentation tool 4.4.1 Value and risk segmentation

P19: Local content factsheet 5.2 Consideration of local content

P20: Project specific procurement plan – tiers 1 and 2 5.5 Develop a project specific procurement plan

P21: Project specific procurement plan – tiers 3 to 5 5.5 Develop a project specific procurement plan

P22: Insurance provisions 5.5.4 Determine insurance requirements

P23: Limiting liability in procurement contracts 5.5.5 Determine limitation of liability

P24: Non-standard conditions process 5.5.6 Identify the conditions of offer and contract

P25: Assessment plan 5.6 Develop an assessment plan

P26: Paired criteria analysis 5.6.2.1 Paired criteria analysis

P27: Procurement Complaint Management Factsheet 2.6 Procurement complaints

P28: Using existing panel contracts 4.2.1 Using existing panel contracts