32009 - COORDINATED (WHOLE-OF-GO

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Department of Defence

DEPARTMENTAL PROCUREMENT POLICY INSTRUCTION NO 3/2009
10 February 2009
Note: These instructions are of a permanent nature and remain in force until cancelled. They should be reviewed by the sponsor every three years and repromulgated only where a significant change of content is necessary. Publications can be accessed on the Defence Intranet at http://intranet.defence.gov.au/home/documents/departme.htm

COORDINATED (WHOLE–OF–GOVERNMENT) PROCUREMENT ARRANGEMENTS AND DEFENCE TENDERING AND CONTRACTING DOCUMENTATION
Purpose

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1. The purpose of this Departmental Procurement Policy Instruction (DPPI) is to advise all Defence and Defence Materiel Organisation (DMO) procurement areas about the implications of coordinated procurement arrangements for Defence tendering and contracting documentation, including when using the ASDEFCON suite of tendering and contracting templates. Background
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2. The Government, through the Department of Finance and Deregulation (Finance), is progressing a whole-of-Government approach to some common-use procurement activities; this initiative is known as Coordinated Procurement. Arrangements will be introduced progressively after consultation with agencies and further Government consideration. 3. A series of scoping studies will be undertaken to identify suitable areas of procurement for the implementation of coordinated procurement. Among the initial areas for consideration are: a. b. c. d. e. f. g. air travel; short-term vehicle hire; telecommunications; volume sourcing arrangements; major office machines (such as photocopiers, printers and multi-function devices); accounting services; and desktop computers.

Finance anticipates that additional potential areas for coordinated procurement will be identified, consistent with Government policy, over the next 12–18 months and may include printing and office supplies. 4. Prior to any decision being made regarding whether coordinated procurement arrangements should be pursued, Finance will conduct scoping studies, the results of which will be provided to Government for their consideration and decision. 5. Recognising that coordinated procurement will potentially be explored for the areas mentioned in paragraph 3., Defence Groups should consider the following in conducting procurements in these areas ahead of the Government determining how this policy will be implemented: a. b. exercising contract extension options where appropriate; keeping new contract term lengths short or include a shorter term with a greater number of similarly short extension option(s);

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c. d.

ensuring new contracts include an exit clause (termination for convenience); and advising tenderers of the Government’s intent regarding coordinated procurement if approaching the market. for

6. DPPI 5/2008—Coordinated (Whole-of-Government) Procurement Arrangements Telecommunication provides further information regarding contracts for telecommunications. Expiring contracts

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7. Defence procurement policy states (Defence Procurement Policy Manual (DPPM), chapter 6.7, paragraph 33) that where a contract does not contain a clause that entitles Defence to extend the contract period, that contract should not normally be extended. However, Finance have advised that where a contract exists for the provisions of goods and services that are the subject of a scoping study, and that contract does not have a valid extension option, limited scope now exists to extend that contract. This approach is limited to negotiating extensions to existing contracts of up to 12 months to ensure continuity of supply of goods and services. Delegates should first be satisfied that this approach represents value for money in accordance with the procurement policy framework. 8. Defence is required to provide certain information about these extensions to Finance. Consequently, Defence and DMO procurement staff must provide the following information to the Contracting Help Desk at contracting@defence.gov.au where they have extended a contract in the circumstances outlined in paragraph 7.: a. b. c. d. the nature of the goods and services procured; the supplier(s); the start and end date of the extension; and an estimate of the value of the goods or services likely to be supplied under the extension.

9. In accordance with DPPI 5/2008, where telecommunications contracts have been extended in the circumstances outlined in paragraph 7, the information required by paragraph 8 should also be forwarded to diipd@drn.mil.au. 10. Please note that the requirements of the Commonwealth Procurement Guidelines— December 2008 and AusTender reporting requirements continue to apply. Procurement officers and Delegates must also comply with Defence or DMO Chief Executive’s Instructions (as appropriate) and the DPPM. Ministerial approval process
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11. For procurements of goods or services subject to a coordinated procurement scoping study and valued at over $200 000, agencies are required to seek the agreement of their respective Minister and the Minister for Finance before entering into new contracts or contract extensions of more than 12 months. 12. For procurements of goods or services subject to a coordinated procurement scoping study and valued at $200 000 or less, the Finance Minister has authorised Finance officials to consider agency requests to enter into new contracts that may be for periods greater than 12 months. Exemptions can only be provided by Finance. In order to seek an exemption, procurement staff must: a. b. obtain the approval of Minister for Defence to seek an exemption; and forward to Finance at email address coordinatedcontracts@finance.gov.au supporting information about the proposed procurement and evidence of the Minister for Defence’s support.

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DEFENCE CONTRACTING TEMPLATES ASDEFCON templates

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13. The ASDEFCON suite of tendering and contracting templates provides a set of proforma documents for use by procurement officers when drafting Request for Tenders and contracts for the acquisition of goods and services by Defence. 14. A number of templates in the ASDEFCON suite currently provide Defence with the ability to terminate a procurement process in circumstances where this becomes necessary including the ability to facilitate coordinated procurement. See for example, clause 1.5 of the Conditions of Tender in ASDEFCON (Strategic Materiel) and ASDEFCON (Complex Materiel) volumes 1 and 2. 15. Where an appropriate clause does not exist in an ASDEFCON template (in either the Conditions of Tender or the Conditions of Contract, or both) the appropriate clause should be included in the appropriate template where there is a reasonable possibility that coordinated procurement arrangements could apply. 16. Annex A provides a table setting out each ASDEFCON template with recommendations for proposed clause amendments. Non-ASDEFCON templates
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17. For non-ASDEFCON templates used by Defence, the managers of these templates should consider the inclusion of information in tender documentation which relates to areas announced by Finance as being considered for coordinated procurement. This may require a right not to proceed to finalisation of a tender due to issues relating to coordinated procurement or a contractual right to terminate for convenience. Further queries
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18. Any questions regarding the introduction of coordinated procurement arrangements should be referred to the Contracting Help Desk: 1800 100 605.

ANNEBELLE DAVIS Director-General Legal and Procurement Services Defence Materiel Organisation Annex: A. Proposed ASDEFCON template amendments DISTRIBUTION: SDL 1, 2, 3, 4, 5, 6, 9A, 12, 14 CONTACT OFFICER: Contracting Help Desk Telephone: 1800 100 605 Email: contracting@defence.gov.au

EARLIER DEPARTMENTAL PROCUREMENT POLICY INSTRUCTION CANCELLED: 8/2008

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ANNEX A

PROPOSED ASDEFCON TEMPLATE AMENDMENTS

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1. Set out below is a table outlining the ASDEFCON template clauses that provide for tender or contract termination. The ability to terminate a tender process or a contract may be required to enable the introduction of coordinated procurement arrangements. 2. A comment is also provided on each ASDEFCON template Conditions of Tender and Conditions of Contract (COC). Where there is no existing suitable clause that could be utilised for the purposes of introducing coordinated procurement arrangements the recommended clause provided should be inserted. 3. The clause may then be utilised in a Request for Tender (RFT) process for any tender included within the range of goods and services in areas where Finance has announced scoping studies will be conducted. Advice on such areas will be available from Legal and Procurement Services as well as from the Department of Finance and Deregulation. Recommended conditions of tender clause
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Option A: For when the procurement is a non-covered procurement and is therefore not subject to the Mandatory Procurement Procedures in the Commonwealth Procurement Guidelines (CPG). 1. Without limiting its rights at law or otherwise, the Commonwealth may, at its discretion, suspend, defer or terminate this RFT process at any time prior to the execution of a formal written contract. The Commonwealth must notify tenderers to this effect.

Option B: For when the procurement is a covered procurement and is therefore subject to the Mandatory Procurement Procedures in the CPGs. 1. Without limiting its rights at law or otherwise, the Commonwealth may, at its discretion, suspend, defer or terminate this RFT process where: a. b. c. d. e. it is in the public interest to do so; no tenderer represents value for money; no tenderer meets the Conditions of Participation, if any, at clause ‘X’; no tenderer meets the Essential Requirements, if any, at clause ‘Y’; or no tenderer is fully capable of undertaking the Conditions of Contract, and the Commonwealth must notify tenderers to this effect.
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Recommended conditions of contract clause—extracted from ASDEFCON (Strategic Materiel) 12.3 Termination for Convenience (Core) 12.3.1. In addition to any other rights it has under the Contract, the Commonwealth may at any time terminate the Contract or reduce the scope of the Contract by notifying the Contractor in writing. 12.3.2 If the Commonwealth Representative issues a notice under clause 12.3.1, the Contractor shall: (a) (b) (c) stop work in accordance with the notice; comply with any directions given to the Contractor by the Commonwealth; and mitigate all loss, costs (including the costs of its compliance with any directions) and expenses in connection with the termination, including those arising from affected Subcontracts.

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A–2 12.3.3 The Commonwealth shall only be liable for: (a) (b) payments under the payment conditions of the Contract for work conducted before the effective date of termination, and any reasonable costs incurred by the Contractor that are directly attributable to the termination,

when the Contractor substantiates these amounts to the satisfaction of the Commonwealth Representative. 12.3.4 12.3.5 The Contractor shall not be entitled to profit anticipated on any part of the Contract terminated. The Contractor, in each Approved Subcontract, shall secure the right of termination and provisions for compensation functionally equivalent to that of the Commonwealth under clause 12.3.

Please note: this clause may need to be tailored as appropriate to the particular template being used. For example, the use of defined terms in this clause will need to be reviewed. ASDECON Template 1. 2. ASDEFCON (Strategic Materiel) ASDEFCON (Complex Materiel) volume 2 COT Clause 1.5 No changes required. Clause 1.5 provides for Termination for Convenience and includes an option for non-covered and covered procurements. No changes required. Clause 1.5 provides for Termination for Convenience and includes an option for non-covered and covered procurements. Clause 1.5 is in the same terms as ASDEFCON (Complex Materiel) volume 1. COC Clause 12.3 Clause 12.3 is identical to that included in ASDEFCON (Strategic Materiel) clause 12.3 of the COC. No current clause. Recommendation No changes required. No changes required.

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ASDEFCON (Complex Materiel) volume 1

Need to insert recommended COC clause.

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ASDEFCON (Support)

Clause 12.3 is in the same terms as that included in ASDEFCON (Strategic Materiel) at clause 12.3 of the COC.

No changes required.

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ASDEFCON (Services)

Clauses 1.3.3 and No current clause. 1.3.4 include an option for non-covered and non-covered procurements. Clause1.5 is similar to that included in ASDEFCON (Complex Materiel) volume 1. Clause 10.3 is similar to that included in ASDEFCON (Strategic Materiel) at clause 12.3 of the COC.

Need to insert recommended COC clause.

6.

ASDEFCON (Standing Offer for Services)

No changes required.

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A–3 7. ASDEFCON (Standing Offers for Goods) Clause1.5 is similar to that included in ASDEFCON (Complex Materiel) volume 1. Clause 11.3 is similar to that included in ASDEFCON (Strategic Materiel) at clause 12.3 of the COC. No changes required.

8.

ASDEFCON (Request for Proposal)

The termination Not applicable. clause in the Conditions of Proposal (clause 1.5) includes an option for non-covered procurements and an option for covered procurements. The termination clause in the Conditions of Registration (clause 1.5) includes an option for non-covered procurements and an option for covered procurements. NA Not applicable.

No changes required.

9.

ASDEFCON (Invitation to Register)

No changes required.

10. ASDEFCON (Sole Source)

Clause 7.1.1 of the Draft Contract Development Agreement allows either party at any time to terminate the agreement upon giving written notice.

No changes required.

11. Form SP020— Purchase Order and Contract

NA

There is a termination No requirement for a clause relating to clause for the contractual breach. purposes of coordinated procurement.

Table A–1: Proposed ASDEFCON Template Clauses for ‘Termination for Convenience’


				
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