Mitchell Shire Council

ATTACHMENT Mitchell Shire Council Ordinary Council Meeting CONTRACT MANAGEMENT POLICY AND TENDERING POLICY Contract Management Policy 25 March 2013 Attachment 1 Pages 12

CORPORATE SERVICES DOCUMENT NUMBER TBA DOCUMENT TITLE CONTRACT MANAGEMENT POLICY Draft Version V6 17 December 2012

C O N T E N T S 1. POLICY STATEMENT... 1 1.1 SCOPE... 1 1.2 PURPOSE... 1 1.3 OBJECTIVES... 1 1.4 PRINCIPLES... 1 1.5 BENEFITS... 2 2. ROLES AND RESPONSIBILITIES... 2 2.1 DEPARTMENT MANAGER... 2 2.2 CONTRACT SUPERINTENDENT... 2 2.3 PROCUREMENT & CONTRACTS COORDINATOR... 3 2.4 DETAILED ROLES AND RESPONSIBILITIES... 3 3. RISKS... 3 4. AWARDING OF CONTRACT... 4 4.1 LETTER OF ACCEPTANCE... 4 4.2 CONTRACTS REGISTER... 4 5. PRE-CONTRACT COMMENCEMENT... 4 6. PERFORMANCE ASSESSMENT... 5 6.1 INTRODUCTION... 5 6.2 CONTRACTOR REPORTS... 5 6.4 PERFORMANCE REVIEW MEETINGS WITH CONTRACTOR... 5 6.5 ANALYSIS OF CUSTOMER COMPLAINTS... 6 6.6 CUSTOMER SURVEYS... 6 6.7 UNSATISFACTORY PERFORMANCE... 6 6.8 PERFORMANCE MEASUREMENT FORM... 7 6.9 COUNCIL S RESPONSIBILITIES... 7 7. PERFORMANCE REPORTING... 7 7.1 CONTRACTOR PERFORMANCE EVALUATION REPORT... 7 7.2 REPORTS TO COUNCIL... 8 8. VARIATIONS... 8 8.1 DEPARTMENT MANAGER... 8 8.2 CONTRACT SUPERINTENDENT... 8 8.3 VALUE OF CHANGE... 8 8.4 DOCUMENTATION... 9 9. EXTENSIONS... 9 9.1 SHOULD THE CONTRACT BE EXTENDED?... 9 9.2 AUTHORITY TO EXTEND A CONTRACT... 10 9.3 FORMAL COMMUNICATION... 10 10. POLICY IMPLEMENTATION... 10 11. POLICY REVIEW... 10 12. POLICY CONTACT... 10

1. POLICY STATEMENT 1.1 Scope This Contract Management Policy applies to the management of all Council contracts, including, but not limited to contracts for the supply of products, works and services, but excluding employment contracts and non-binding memoranda of understanding. The Policy is subordinate to Council s Procurement Policy and is complemented by Council s Tendering Policy. The Policy does not provide advice regarding the management of contracts. Advice and instructions on contract management processes and practices can be found in the MAV Procurement document, Contract Management Guidelines. Advice and instructions on the management of major capital works projects will be found in the Project Managers Guide to Capital Works which is to be developed within 6 months of this policy being adopted. 1.2 Purpose The purpose of this Policy is: to confirm Council s standards and expectations for contract induction, monitoring, supervision, performance assessment, variations, extensions and customer satisfaction; to ensure that there is accountability in contract management; and to deliver high quality products, works and services by generating strong contractual relationships based on clear performance expectations. 1.3 Objectives The key objectives of the Policy are to ensure that: Council receives the benefits expected from contracts and contractual relationships. Council staff understand Council s obligations under contracts; and Council staff manage contracts in a manner which facilitates Council responsibilities and minimises risk. 1.4 Principles Council is committed to the following principles of effective contract management: contracts shall be proactively managed, including management of risk; the performance of contractors shall be monitored; Council shall honour its contractual obligations; Contracts will be documented and recorded; contract management shall be undertaken in an honest and transparent manner; good contractual relationships shall be aimed for, developed and maintained; contracts must deliver the specified outcomes; and proper communication channels shall be established and constructive feedback shall be encouraged. Page 1

Contract Management Policy Mitchell Shire Council 1.5 Benefits Council expects that effective contract management will deliver the following benefits: on-time delivery of products, works and services; reduced exposure to risks and the costs associated with risks; good quality and value for money products, works and services; innovation and continuous improvements; and goodwill and other intangible or value added benefits Therefore, each contract specification shall have clearly specified contract objectives and the Contract Superintendent shall manage the contract and monitor the performance of the contractor to ensure delivery of the contractual objectives and realisation of the contractual benefits. 1.6 Applicability This Policy shall be binding upon Councillors and Council staff. It is also binding upon contractors, consultants and agents while performing any work for Council. 1.7 Definitions Contract Superintendent means, in relation to a contract, the person (normally a member of Council staff) who has responsibility for supervising the contractor and monitoring the contract Procurement & Contracts Coordinator means the member of Council staff who has responsibility for coordinating the tendering processes, including contract documentation and the contract register. Department Manager means, in relation to a contract, the Manager of the Department that has budget responsibility for the contract. 2. ROLES AND RESPONSIBILITIES 2.1 Department Manager The appropriate Department Manager is responsible for policy, planning and development, setting service standards, specifications, customer satisfaction and budget responsibility for the contract. Therefore, the Department Manager has ultimate responsibility for the contract. In practice, however, responsibility for managing the contract and contractor is often delegated to the Contract Superintendent. Therefore, the role of the Department Manager is usually similar to that of the project sponsor and includes engagement with the relevant stakeholders such as councillors and government departments. 2.2 Contract Superintendent The Contract Superintendent is responsible for supervising the contractor and monitoring the contract on behalf of Council and the relevant Department Manager. The Contract Superintendent is the person nominated as such by the Department Manager. In some cases, the Contract Superintendent may be the Department Manager. Usually, the Contract Superintendent is a staff member of the relevant Department. Sometimes, in the case of major capital works projects, the Contract Page 2

Contract Management Policy Mitchell Shire Council Superintendent may be the Project Manager from the Engineering Services Department. 2.3 Procurement & Contracts Coordinator The Procurement & Contracts Coordinator is responsible for ensuring that Council s tendering and contract administration is undertaken in accordance with legislation, Australian Standards, Council policies and Council guidelines. The Procurement & Contracts Coordinator has responsibility to provide guidance, advice and assistance to Contract Superintendents, Department Managers and other Council staff in the management, supervision and monitoring of contracts and contractors. The Procurement & Contracts Coordinator has responsibility for ensuring that proper contract documentation is prepared and the contract register is kept up to date. 2.4 Detailed Roles and Responsibilities A detailed explanation of roles and responsibilities will be found in the Project Managers Guide to Capital Works which will be developed within 6 months of this policy being adopted. 2.5 Training Directors will ensure that all staff with procurement and contract management responsibilities receives appropriate training (and refresher training when required) and that these responsibilities are reflected in their position descriptions. 3. RISKS Management of risks is an inherent aspect of contract management. Risks may include: failure (of either party) to comply with the conditions of contract; inadequate monitoring and supervision; unauthorised changes to the contract, including failure to approve variations and extensions; loss of intellectual property and breach of confidential information; changes in scope, personnel and technology; fraud and unethical behaviour, including failure to disclose conflicts of interest; and lack of properly maintained documentation. Contract management requirements increase as the value, risk and complexity of a contract increases. The Contract Superintendent shall be responsible for managing risks and shall seek appropriate professional advice at an early stage where insurance, legal or governance issues arise. It is critical that Council itself complies with the contract. Otherwise, Council may not be able to enforce the contract against the contractor. The Contract Superintendent shall consult with the Procurement & Contracts Coordinator and Department Manager as required. Page 3

Contract Management Policy Mitchell Shire Council Further information can be found in the Contract Management Guidelines prepared by MAV Procurement. 4. AWARDING OF CONTRACT 4.1 Letter of Acceptance As soon as practicable after a decision has been made to award a contract, the Procurement & Contracts Coordinator shall communicate the decision in writing to the Contractor. The written advice shall cover, at least, the following points: amount of the contract (lump sum, schedule of rates or annualised amount); commencement date and duration; name of Council s nominated Contract Superintendent; name of Contractor s nominated representative; and requirement to provide insurance certificates and performance security deposit or bank guarantee (if required) within a specified timeframe. 4.2 Contracts Register The Contracts Coordinator shall enter the following information in the Contracts Register: the contract number and name; the contract commencement date, contract term and the date the contract is expected to conclude; the name of the Contractor; the date and place of the publication of public notice calling for tenders or expressions of interest; the names of all tenderers; the closing date for the submission of tenders; the tender evaluation criteria and any ranking accorded to the criteria; the names of persons who were on the tender evaluation panel; Council's reason for entering into the contract if the contract was not awarded to the lowest tenderer; the estimated value of the contract for the financial year, in which the contract was entered; in each subsequent financial year during the term of the contract, the estimated value of the contract; and details of approved variations and extensions (as they occur). The Contracts Register shall be made available by the Procurement & Contracts Coordinator for inspection upon the written request of any person. 5. PRE-CONTRACT COMMENCEMENT Prior to the commencement of works or services under the contract, the Procurement & Contracts Coordinator shall ensure that at least the following matters have been addressed (to the extent that they apply): a contract induction meeting has been held; a program or calendar/timetable of works has been submitted and approved by the Contract Superintendent; Page 4

Contract Management Policy Mitchell Shire Council a contract management plan has been submitted and approved by the Contract Superintendent; and the required proof of insurances has been provided. Bank guarantees or security deposits have been received and held in the Council safe or banked, as appropriate 6. PERFORMANCE ASSESSMENT 6.1 Introduction Performance assessment is a major component of contract management and performance assessment requirements shall be written into the contract specification. Ongoing performance assessment should be based on the mechanisms for performance assessment included in the contract. Where applicable, performance assessment shall be based on, but not limited to, contractor reports, inspections, performance review meetings, customer complaints and surveys. 6.2 Contractor Reports Contractor reports are the method by which a contractor certifies that the products, works or services comply with the specification. If required, the type and frequency of Contractor reports shall be clearly described in the specification. The Contract Superintendent shall ensure that the contractor submits the reports on time and shall review the reports carefully. The Contract Superintendent shall discuss matters of serious concern with the Contracts Coordinator and/or Department Manager. 6.3 Inspections Inspections should incorporate an assessment that compares actual performance to the performance requirements specified in the contract. Inspections shall be the responsibility of the Contract Superintendent. If required, an inspection regime shall be clearly described in the specification and shall stipulate: who will inspect; when inspections will occur; and what will be inspected. 6.4 Performance Review Meetings with Contractor Performance review meetings provide a forum to discuss and assess the contractor s performance. Generally, a performance review meeting shall be based on the most recent contractor report (refer clause 6.2). If required, the type and frequency of performance review meetings shall be clearly described in the specification. Generally, they shall be held every three months, however, meetings may be required more frequently, at the commencement of a contract. Page 5

Contract Management Policy Mitchell Shire Council The conduct of performance review meetings shall be the responsibility of the Contract Superintendent. The contract should authorise the Contract Superintendent to nominate the time, date and place of performance review meetings. The contract should require the contractor or an appropriate representative and any other person nominated by the Contract Superintendent to attend performance review meetings. The Contracts Coordinator may also attend performance review meetings at their own choosing or when requested to do so by the Contract Superintendent. 6.5 Analysis of Customer Complaints Receipt and analysis of customer complaints shall be the responsibility of the Contract Superintendent. 6.6 Customer Surveys In the case of long term service contracts, customer surveys may be undertaken to assess customer satisfaction with the performance of the contractor and the contractor s compliance with the specification. Customer surveys shall be the responsibility of the Contract Superintendent. If Council intends that the contractor be obliged to achieve a particular customer satisfaction level, then this and the methodology for measuring the customer satisfaction level must be specified in the contract. 6.7 Unsatisfactory Performance When contractor performance does not meet the contract requirements, the Contract Superintendent shall contact the Contractor and: define the problem; specify the unsatisfactory performance in terms of a comparison with the requirements of the contract; and specify the implications of the problem. If the Contract Superintendent considers that the problem can be rectified without resort to formal breach of contract procedures, the Contract Superintendent and Contractor shall: identify the cause of the problem; and decide upon corrective action. If required, the Department Manager and the Procurement & Contracts Coordinator shall participate in the meeting. The contractor shall implement the corrective action as agreed upon and the Contract Superintendent shall monitor and assess the outcome to ensure that the unsatisfactory performance is rectified on a permanent basis. The Contract Superintendent shall ensure that any informal problem resolution process does not prejudice Council s rights under the contract with respect to any breach of the contract. Page 6

Contract Management Policy Mitchell Shire Council 6.8 Performance Measurement Form If required, a performance measurement form, based on Council s template, shall be developed for the contract by the Contract Superintendent. The performance measurement form shall identify the performance requirements of the specification. The Contract Superintendent shall complete the performance measurement form on a regular basis. For example, after the receipt of the contractors report (refer clause 6.2) or after the performance review meeting with the contractor (refer clause 6.4). 6.9 Council s Responsibilities If Council is to be able to enforce the contract, it must ensure that Council itself complies with the contract. The Contract Superintendent should ensure that Council complies with all contract timelines, gives all required notices and otherwise meets its obligations under the contract. Even if the Contract Superintendent employs informal processes to address particular problems, the formal requirements of the contract should still be followed. 6.10 Termination for Failure to Achieve Performance Standards Any formal process for termination of the contract must be conducted strictly in accordance with the requirements of the contract. Generally, this will require a show cause notice to first be issued to the contractor. Legal advice should be obtained before such a process is instigated. If a contractor has breached a contract with Council, then (whether or not the contract has been terminated), Council may take into account the breach in considering subsequent tenders from the contractor. 7. PERFORMANCE REPORTING 7.1 Contractor Performance Evaluation Report The performance evaluation report shall focus upon the contractor s compliance with its obligations under the contract. A contract performance evaluation report will generally be an "internal" document used to monitor and improve operational performance. However, some information will be relevant to, or parallel, the information to be included in the report to Council (refer clause 7.3). If required, the Contract Superintendent shall be responsible for preparing the contractor performance evaluation report. It shall be based on Council s template and the Department Manager shall determine how frequently the Contract Superintendent is required to prepare a contractor performance evaluation report. Once complete, the Contract Superintendent shall provide the Department Manager with the contractor performance evaluation report for approval. Upon approval of the Department Manager, the Contract Superintendent shall provide the Contractor with the contractor performance evaluation report and also advise the Contractor of the date of the next review meeting. Page 7

Contract Management Policy Mitchell Shire Council 7.2 Reports to Council The report to Council shall primarily be concerned with "outcomes", that is, the effect or benefit of the service and the degree to which the service is meeting community, customer and citizen needs and expectations. If required, the Contract Superintendent shall be responsible for preparing the report to Council. It shall be based on Council s template and the relevant Director shall determine how frequently the Contract Superintendent is required to prepare the report to Council. 8. VARIATIONS 8.1 Department Manager The appropriate Department Manager is responsible for policy, planning and development, setting service standards and writing specifications. Therefore, any major change which is a significant departure from the contract specification is the responsibility of the Department Manager to consider. The decision to approve a major change shall be made by the appropriate Council staff member with delegated authority to do so, as defined in Council s Instrument of Delegation. 8.2 Contract Superintendent The role of the Contract Superintendent is to supervise and monitor the contract in accordance with the specification. When supervising the contract, minor changes or changes of an operational nature may be made by the Contract Superintendent providing the decision does not alter the objectives, scope, purpose or overall value of the contract. 8.3 Value of Change The importance of discussion between the Contract Superintendent and Department Manager cannot be overstated when there is any doubt about variations. As a guide, the value of the change may determine whether it is the Contract Superintendent or Department Manager who has the responsibility and authority to approve the change. For example, providing there are no exceptional circumstances, the Contract Superintendent shall be responsible for and have authority to approve minor changes providing that, during the life of the contract or project, they do not exceed a maximum cumulative value of 10% or $100,000 (whichever is the lowest amount) of the estimated value of the contract. Before any variation is approved, the Contract Superintendent or Department Manager must ensure that the value of the change does not exceed the limits of their delegation as shown in Council s Instrument of Delegation. In the event that the change exceeds a maximum cumulative value of 10% or $100,000 (whichever is the lowest amount) of the estimated value of the contract, a Council report will be required to approve the variation. Page 8

Contract Management Policy Mitchell Shire Council 8.4 Documentation All changes must be documented. Superintendent to: It is the responsibility of the Contract if the change to the contract has been agreed by the parties, write to the contractor providing a description of the change and the agreed value of the change; if the change is being directed by the Contract Superintendent pursuant to a contractual entitlement to do so, ensure that the change is directed in writing in accordance with the requirements of the contract; provide a copy of the change to the Procurement & Contracts Coordinator to be attached to the official signed and sealed contract; place a copy of the change on the contract file; report the change in the monthly and quarterly reports; and advise the Finance Manager in writing if the value of the change will create a significant budget variation. It is the Contractor Superintendent s role to ensure that all contract documentation is retained for a period of seven years following contract closeout, defect liability periods or resolution of pending action (e.g., legal, audit, etc.), whichever is later. If required, the Procurement & Contracts Coordinator shall assist the Contract Superintendent to ensure that all documentation is satisfactorily completed. 8.5 Exceptions All of the commentary in clause 8 must be read subject to Council s specific obligations under the contract. For example, under standard form general conditions for construction and civil works, such as AS 4000-1997, the Superintendent s obligation to direct variations in certain circumstances is not subject to approval from a delegated Council staff member or Council itself. Council may breach the contract if the Superintendent does not promptly direct a variation in certain circumstances (ie without waiting for Council approval). Council may also breach the contract if the Superintendent acts at the direction of another Council staff member with respect to a variation. This is a complex area of law and legal advice should be sought where necessary. 9. EXTENSIONS 9.1 Should the Contract be extended? It is the Contract Superintendent responsibility to anticipate and plan for the expiry of a contract. This is part of normal contract supervision and monitoring. The Contract Superintendent shall review the contract and consult with the appropriate Department Manager to determine the action required for: arrangements with the contractor for expiry and termination of the contract (including actual end date), and arrangements for service delivery beyond the expiry date, for example, the extension of the contract or the commencement of a new contract. Page 9

Contract Management Policy Mitchell Shire Council In deciding whether or not a contract should be extended or allowed to expire at the end of the initial contract term, the Department Manager and Contract Superintendent must ensure that Council complies with any notice periods and procedures for extending the contract. If the contract is for a fixed period, such as a contract for managing a swimming pool, and it does not contain provision for an extension, it may not be possible for Council to extend the contract, as any extension will constitute a new contract and hence may be subject to the public tendering requirements. 9.2 Authority to extend a Contract If delegated authority to award the initial contract existed, then delegated authority to extend the contract should generally also exist. If the contract was not made under delegated authority, then any decision to extend the contract must be made by Council. However, if a contract is for a task, such as construction of a building, rather than a fixed period of time, and the contractor needs more time to complete the contract due to unforeseen circumstances/delays or unseasonable weather conditions, then such an extension shall be deemed to be an operational matter and therefore authority to extend the contract rests with the Contract Superintendent. The Contract Superintendent must comply with all requirements of the contract with respect to granting extensions of time. 9.3 Formal communication After the decision to extend the contract has been made, it is the responsibility of the Contracts Coordinator to write to the Contractor confirming the extension to the contract. The Contracts Coordinator shall refer to clause 4 of this Policy to the extent that it applies to the extension and shall also update the Contracts Register. 10. POLICY IMPLEMENTATION This Policy is effective from the date it is approved by Council. 11. POLICY REVIEW This Policy shall be reviewed within two years of the date on which it was approved by Council. 12. POLICY CONTACT The Contracts Coordinator is Council s designated contact and has primary operational responsibility for this Policy. 13. REFERENCES AND RELATED POLICIES Legislation: Section 186 of the Local Government Act 1986 Codes of practice: N/A Australian Standards: AS4120 Code of Tendering Related Council Policies: (1) Procurement Policy (2) Tendering Policy Guidance Notes: (1) MAV Procurement Contract Management Guidelines, (2) MAV Procurement Model Procurement Policy (Updated), August 2011 Page 10

ATTACHMENT Mitchell Shire Council Ordinary Council Meeting CONTRACT MANAGEMENT POLICY AND TENDERING POLICY Tendering Policy 25 March 2013 Attachment 2 Pages 13

CORPORATE SERVICES DOCUMENT NUMBER TBA DOCUMENT TITLE TENDERING POLICY Draft Version V3 17 December 2012

TABLE OF CONTENTS 1. POLICY STATEMENT... 3 1.1 SCOPE... 3 1.2 PURPOSE... 3 1.3 OBJECTIVES... 3 1.4 APPLICABILITY... 4 1.5 DEFINITIONS... 4 2. PROCESS... 4 3. TENDER PROCESS (ALSO REFER ANNEXURE ONE)... 5 3.1 INTRODUCTION... 5 3.2 PROCUREMENT PLANNING... 5 3.3 CONTRACT INITIATION... 5 3.4 PREPARATION OF TENDER DOCUMENTS... 5 3.5 CALLING FOR TENDERS... 6 3.6 CALLING FOR EXPRESSIONS OF INTEREST... 6 4. PRE-TENDER COMMUNICATION... 7 4.1 DISTRIBUTION OF TENDER DOCUMENTS... 7 4.2 ENQUIRIES... 7 4.3 ISSUE OF ADDENDA... 7 4.4 PRE-TENDER MEETINGS... 7 5. TENDERS RECEIVED... 7 6. RECEIPT OF TENDERERS... 7 7. ACCESS TO INFORMATION... 8 8. POST-TENDER COMMUNICATION WITH TENDERERS... 8 9. TENDER EVALUATION... 8 9.1 TENDER EVALUATION PANEL CHAIR... 8 9.2 TENDER EVALUATION PANEL (TEP)... 8 9.3 EVALUATION PACKAGE... 9 9.4 EVALUATION PROCESS... 9 10. NON-CONFORMING TENDERS... 10 11. TENDER EVALUATION REPORT... 10 12. NEGOTIATIONS... 10 13. DELEGATED AUTHORITY TO AWARD CONTRACTS... 11 14. CONTRACTS AWARDED UNDER DELEGATED AUTHORITY... 11 15. REPORTING TO COUNCIL IF DELEGATED AUTHORITY DOES NOT EXIST... 11 15.1 PUBLIC REPORT... 11 15.2 CONFIDENTIAL REPORT... 11 16. ACCEPTANCE OF TENDERS... 11 17. POLICY IMPLEMENTATION... 12 18. POLICY REVIEW... 12 19. POLICY CONTACT... 12

1. POLICY STATEMENT 1.1 Scope This Tendering Policy is made with reference to section 186 of the Local Government Act 1989 ( LG Act ) which requires any Victorian council to give public notice and conduct a public tender before entering into a contract to the value of: $150,000 for purchase of goods and services, or $200,000 for carrying out of works Section 186 of the LG Act does not define what is meant by works, but it is commonly understood to refer to civil and construction works. Section 186 of the LG Act also permits a council to seek expressions of interest by public notice and subsequently call for tenders from some or all of the parties which submit expressions of interest. The Policy applies to: tendering as required by section 186 of the LG Act or as required by clause 2.3 of Council s Procurement Policy; expressions of interest; evaluating tenders; and awarding contracts. This Policy is subordinate to Council s Procurement Policy and is complemented by Council s Contract Management Policy. Detailed tendering information, conditions of tendering, tender evaluation processes and contract management advice, including templates and checklists, can be found on Council s intranet page. 1.2 Purpose The purpose of this Policy is: to provide fair competition among tenderers; to provide probity, transparency and accountability in tendering and evaluation; to ensure that the roles and responsibilities of Council staff are clearly defined; to ensure that Council Staff manage the procurement of goods, works and services, in particular, the tendering and evaluation process, in a manner that assists Council to meet its legal obligations and obtain value for money. 1.3 Objectives The key objectives of the Policy are to ensure that: Council receives the benefits normally expected by seeking prices in a competitive market; and Council may be confident that it is providing its community with the best value for money products, works or services available in the open market at that time. Page 3 of 13

1.4 Applicability This Policy is binding upon Councillors and Council staff. It is also binding upon contractors, consultants and agents while performing any work for Council. 1.5 Definitions Department Manager or DM means, in relation to a contract, that Manager of the Department that has budget responsibility for the contract. Procurement & Contracts Coordinator or PCC means the Council staff member coordinating tendering processes. Contract Manager/Superintendent or CM/S means, in relation to a contract, the person (normally a Council staff member) who has responsibility for supervising the contractor and monitoring the contract. Tender Evaluation Panel or TEP means a panel comprising the CM/S, a finance representative, a risk management representative and a Contract Services Unit representative who come together to evaluate public tenders. A TEP may also include independent specialist representation at the discretion of the CM/S. RFT means a request for tenders. TEPC means the tender evaluation panel chair 2. PROCESS Tendering and contracting is a structured process that is designed to utilize competitive market testing to obtain a response that will satisfy an organisational objective in the most cost effective manner. The following model illustrates the various activities that are performed throughout the process. The Tendering Policy takes into consideration the items listed under Planning and Execution. Page 4 of 13

3. TENDER PROCESS (ALSO REFER ANNEXURE ONE) 3.1 Introduction When a Department identifies a specific need and a decision is made to obtain the services, works or goods through a tender process, correct contract administration practices must be employed. The DM or representative will assume the role of CM/S and will follow the tender process from inception to awarding of a contract. The DM is responsible for the preparation of the specification document and the evaluation of tenders. The primary role of the CM/S is to ensure that both parties meet their obligations and that Council obtains value for money through satisfactory performance of the contract. It is also the responsibility of the CM/S to ensure that he or she fully understands both this Policy and Council s Procurement Policy to achieve the contract objectives. The PCC is responsible for co-ordinating the tender process, providing advice to Council staff, liaising with tenderers and tendering administration, including co-ordinating the tender process and maintaining the Contract Register Management System. The following stages are required to be undertaken as part of the normal tendering practices of this Council. 3.2 Procurement Planning When it is proposed to call for tenders for a contract, the CM/S shall: ensure that funds have been allocated in the Council budget; identify and confirm project objectives, scope and timetable, prepare and agree on the specification, conduct a risk analysis and develop a risk management strategy for the procurement, determine the evaluation criteria and weightings, and develop a tender evaluation and probity plan. The specification should be based upon the relevant model specification and, in the preparation of the specification the CM/S shall, when necessary, seek technical expertise and legal advice, as well as input from other affected Department Managers and Coordinators. 3.3 Contract Initiation When the preparation of the specification is complete, the CM/S shall initiate the tendering process by completing the "Tender/Contract Initiation Form" and submitting it to the PCC. The PCC shall allocate the Contract Number and enter the details onto the Contract Register/Management System and arrange for the creation of an electronic Contract File. 3.4 Preparation of Tender Documents The PCC, in consultation with the CM/S, shall prepare the RFT by inserting the approved specification into the appropriate tendering template on Council s intranet. When preparing the RFT, the CM/S must list the tender evaluation criteria and the weightings to be applied to those criteria. Page 5 of 13

Council tendering templates contain the following: Conditions of Tendering Tender Response Forms Evaluation Criteria General Conditions of Contract All tender documents must be submitted to the PCC for review at least 7 days prior to the advertised date. Any changes made to the tendering templates by the PCC must be sent to the CM/S for approval and legal advice sought when appropriate. 3.5 Calling for Tenders The PCC shall be responsible for placing public notices calling for tenders. The CM/S shall complete the advertising template and submit it to the PCC who will arrange the placement of the public notice in the Local Government Tendering section of The Age classifieds and the 3 local newspapers as well as uploading the tender to Council s website. Tenders should, unless exceptional circumstances apply, be advertised for a minimum period of twenty one days prior to the tender close date. 3.6 Calling for Expressions of Interest The aim of an EOI is not to elicit tenders, but rather to permit shortlisting of potential tenders and/or assist Council to obtain useful information, and to refine the specification - if necessary. Council does not generally conduct EOIs, but may do so if the DM considers it appropriate in particular circumstances. If the DM decides to call for EOIs before inviting tenders, then the same standards of probity, openness and transparency, and the same policies and procedures, will apply to the EOI stage. Following the EOI stage, tenders may be invited from some or all of the respondents. Respondents who are not invited to tender shall be advised in writing By its very nature, the specifications for the goods/services/works used for to call for EOIs may be brief and less detailed than those that might be used for a RFT. EOIs may be used when Council does not have a solid idea on the type of product or service required. Council may have a high level understanding of its business problem or requirement, or the type of product that it requires, but it may be unsure of the market s ability or desire to meet that need. Council may need to collect some additional information before it is able to make some procurement decisions. Examples of useful information which may be gained from an EOI include information on: available technologies, products or service available in the market place; names of potential tenderers; whether any of these potential tenderers will accept the terms and conditions of the proposed contract; and the maturity and experience of the potential tenderers. Page 6 of 13

4. PRE-TENDER COMMUNICATION 4.1 Distribution of Tender Documents An RFT shall be uploaded to the Council s e-tendering web site by the PCC. Potential tenderers may obtain the RFT by downloading it from Council s e-tender website. Council shall not charge any fee for an RFT obtained this way. In order to maintain integrity in the tendering process, information as to whom the RFT has been issued shall not be made public. 4.2 Enquiries The PCC shall deal with all enquiries from potential tenderers and shall nominate an appropriate and experienced staff member to deal with enquiries in the absence of the PCC. Potential tenderers must put questions in writing and submit them via the e-tender portal question forum or email to www.mitchellshire.vic.gov.au. The question period will close 7 days prior to the closing date and time of the tender. 4.3 Issue of Addenda In the event that additional information or clarification is required or errors or omissions are identified, an addendum shall be prepared by the PCC and distributed through the e-tender web site to those potential tenderers that have previously downloaded the RFT. In the event that the content of a particular addendum, or the number of addenda, is so significant that the PCC considers that the accuracy and quality of tenders might be compromised, the PCC shall determine an appropriate extension of time for the lodgement of tenders. 4.4 Pre-Tender Meetings A pre-tender meeting provides the CM/S with a forum to promote a clear understanding of Council s needs and to ensure that all potential tenderers receive the same information. The CM/S shall decide whether or not a pre-tender meeting needs to be held. Generally, the CM/S shall only convene a meeting when the contract is for a complex project. A pre-tender meeting shall be chaired by the PCC. The PCC must ensure that accurate minutes are made and retained. 5. TENDERS RECEIVED Tenders must be submitted electronically, via the Council s e-tender box. 6. RECEIPT OF TENDERERS All tenders submitted electronically via the e-tender box will receive an automatically generated receipt number from the system. Page 7 of 13

7. ACCESS TO INFORMATION During the tender evaluation process, access to tenders shall be restricted to members of the TEP, with all information remaining on site. All information provided by a tenderer shall be treated as confidential information. All members of the tender evaluation panel must complete and sign a confidentiality and declaration of interest form, prior to viewing any submitted tenders. 8. POST-TENDER COMMUNICATION WITH TENDERERS In response to direct enquiries from tenderers, the following information may be provided by the PCC: an explanation of the evaluation process to be followed including the anticipated date for a final decision; and confirmation of their tender price. No other details of tenders shall be provided. If the TEP requires further information on, or clarification of, a tender, the TEP can request the PCC to communicate directly with the tenderer. Any request for information shall be in writing and a written response shall be required. There shall not be any post-tender negotiations except in accordance with this Policy. 9. TENDER EVALUATION 9.1 Tender Evaluation Panel Chair Coordination of the tender evaluation process shall be the responsibility of the DM, but the DM may delegate this responsibility to a staff member within the DM s Department. The PCC will act as the TEPC for all high risk, high value tender evaluations. 9.2 Tender Evaluation Panel (TEP) The membership of the TEP must be determined prior to advertising the tender. The role of the TEPC is: lead the TEP discussions; prepare the tender evaluation report; conduct negotiations if authorised to do so (refer clause 15); and monitor the evaluation process to ensure that it is conducted in a fair, objective and ethical fashion. The role of the TEP is: if an EOI stage is used to assess and shortlist respondents for selective tendering; to understand the purpose and requirements of the contract; to ensure the major components of the specification are given importance in the tender evaluation; to ensure consistency of approach; to demonstrate accountability and integrity in the evaluation process; Page 8 of 13

to identify the preferred tenderer and recommend the tender to be accepted; and to ensure that tenders are evaluated according to the evaluation criteria. 9.3 Evaluation Package The PCC will prepare the tender evaluation package in electronic format and will send a hyperlink to the TEP. The tender evaluation package will include the following: copies of all tenders; tender evaluation spreadsheet; scoring recommendation; a copy of the RFT; confidentiality and declaration of interest form (which must be completed and submitted by each TEP member prior to viewing the tenders); tender evaluation report proforma; and awarding the contract under delegated authority memorandum. 9.4 Evaluation Process The aim of the evaluation process is to select a tender which offers the best value for money, the most benefit to the community and the greatest advantage to Council, while ensuring that tenderers are treated on an equitable basis. The evaluation process shall be undertaken in a manner, which demonstrates a high level of integrity, accountability, probity and transparency. The evaluation process shall be undertaken as soon as possible after the close of tenders. The evaluation process, including the formation of a TEP, shall be coordinated by the TEPC. Typical stages to the evaluation process are as follows. The PCC reads each tender and ensures the tender is in compliance with the RFT and meets any mandatory requirement as listed in the RFT. The TEP holds a meeting and reaches agreement on the score to be applied for each criteria to each tender. This score is then multiplied by the weighting to determine an adjusted (or weighted) score for each criterion. The scores for each of the criteria are then added together to give an aggregate or total score. The TEP determines which of the tenderers will be shortlisted for interview. Interviews are carried out by the TEP. The objectives of interviewing a tenderer are: to clarify areas of doubt in the tender; to remove qualifications; to obtain further information; and to further establish the tenderer s capacity to perform the work. The TEP reviews the evaluation score and adjusts the score, if required, based on information/clarification provided during the interview. The TEPC undertakes referee checks. The TEP reviews the evaluation score and adjusts the score, if required, based on information provided by referees. The PCC prepares the draft tender evaluation report and recommendation. The draft tender evaluation report is provided to all TEP members. The draft tender evaluation report is approved by all TEP members. In some circumstances, the tender evaluation criteria may include mandatory criteria. Generally, the RFT will state that a tender will not be further evaluated if it does not meet the mandatory criteria. The RFT needs to make clear, however, whether the mandatory criteria are disregarded after it is established that the tender satisfies the mandatory criteria Page 9 of 13

or whether the mandatory criteria are included in the further evaluation of tenders and scored in the ordinary way. 10. NON-CONFORMING TENDERS Non-conforming tenders are those which do not fully comply with the tender documents. Tenders may be non-conforming on a number of bases, including: a failure by a tenderer to comply with the RFT on a technical basis (eg by failing to submit required information); the inclusion of a statement by a tenderer that it will not comply with a term of the general conditions or specification (eg a tenderer may reject an obligation to indemnify Council); or a tenderer proposes an alternative method of performing the contract. The consideration of tenders which do not conform to the contract making a true comparison with conforming tenders difficult (unsure what this is meant to say). Tenders which do not conform to the contract shall only be considered if they demonstrate innovative proposals that increase quality and/or reduce price. The TEP shall determine whether or not to consider a non-conforming tender. The TEP must take into account Council s obligations under section 186 of the LG Act and other relevant legal matters (such as procedural fairness) in determining whether to consider a non-conforming tender). 11. TENDER EVALUATION REPORT At the conclusion of the tender evaluation, the PCC prepares the tender evaluation report. The purpose of the tender evaluation report is to supply a summary of the contract and an assessment of the tenderers ability to complete the contract. Readership of this report is limited to those specifically involved in the decision making process or who would normally be exposed to such information because much of the information contained in the report will be confidential, for example, prices. The tender evaluation report must be factual and evidence based. 12. NEGOTIATIONS Negotiations may be undertaken with the preferred tenderer. Negotiations should be undertaken by the person (or on behalf of the person) who has delegated authority to award the contract. Negotiations are outside the scope of the TEP, except if the TEP has been authorised to enter into negotiations with the preferred tenderer. In undertaking negotiations, Council staff need to be aware of Council s legal obligations, in particular, Council s obligations under section 186 of the LG Act and with respect to procedural fairness. When undertaking negotiations, the following guidelines should be taken into consideration. No negotiations should be entered into over the phone. When negotiations or discussions do take place there are to be at least two Council staff members present and minutes are to be taken and placed on file to record the matters discussed. All negotiations must be confirmed in writing. Page 10 of 13

When changes to the requirements or conditions as set out in the RFT are agreed to by both parties, those changes are to be documented and included in the contract documentation. 13. DELEGATED AUTHORITY TO AWARD CONTRACTS Delegations define the limitations within which Council Staff are permitted to make decisions binding on Council. Some Council staff have delegated authority to accept tenders and award contracts on behalf of Council. This enables Council to conduct tendering activities in an efficient and timely manner, while maintaining transparency and integrity. Any decision to accept a tender under delegated authority shall be made only by a member of Council staff with delegated authority to do so, as defined in Council s Instrument of Delegation. In the event that any of the following conditions prevail, then delegated authority should not be exercised by the relevant staff member and, instead, the award of the contract should become Council responsibility and an evaluation report should be submitted to the first available Council meeting: if the preferred tenderer is from outside the Council s municipal district and other tenderers are from within the municipal district; if the preferred tenderer is a not for profit organisation; or if the preferred tenderer is another council. 14. CONTRACTS AWARDED UNDER DELEGATED AUTHORITY If a decision can be made to award the contract under delegated authority, the TEP s report, including recommendation, shall be submitted to the Council staff member who has the delegated authority. 15. REPORTING TO COUNCIL IF DELEGATED AUTHORITY DOES NOT EXIST If the contract cannot be awarded under delegated authority, the TEP s report, including recommendation, shall be submitted to Council for a decision. A report must be in two parts, as discussed below. 15.1 Public Report The purpose of this part of the report is to supply general information to the public and other interested parties concerning the tenders received, as well as giving a general overview of the contract under consideration. 15.2 Confidential Report The confidential report is the tender evaluation report (refer clause 14), together with a synopsis page and the recommendation that the contract documentation be prepared, signed and sealed. 16. ACCEPTANCE OF TENDERS When the contract has been awarded, either under delegated authority or by Council, the TEPC sends a memo confirming this to the PCC. The PCC shall: prepare and send a letter of acceptance to the successful tenderer; Page 11 of 13

prepare contract documentation for execution; update the Contract Register Management System; and write to the unsuccessful tenderers. In respect to the first and fourth points above, the PCC shall refer to clause 4 of Council s Contract Management Policy. 17. POLICY IMPLEMENTATION This Policy is effective from the date it is approved by Council. 18. POLICY REVIEW This Policy shall be reviewed within two years of the date on which it was approved by Council. 19. POLICY CONTACT The PCC is Council s designated contact and has primary operational responsibility for this Policy. Page 12 of 13

ANNEXURE 1 TENDER PROCESS FLOW CHART WHO WHAT WHEN CMS/DM CMS/DM CMS/DM PCC PCC PCC PCC PCC PCC TEP Develop Specification, Develop the Tender Evaluation and Probity Plan which incorporates the members of the TEP, the TE Criteria and weightings. SUBMIT FORM1A Tender/Contract Initiation Form to PCC Insert the Specification into the relevant Template for Calling Quotes/Tenders and submit the completed document to the PCC Provide Contract Number Review the Tender Documentation for Advertising Enter details in the Contract Management System Publicly Advertise in The Age and Local Papers Pre-Tender Communication/Enquiries/Addenda/ Chair Pre Tender Meetings(if required) Download Electronic Tender submissions from the etender Box. Prepare Electronic Confidential Tender Evaluation packages Chair High Risk, High Value, Tender Evaluations Stage 1 Evaluation Desktop Evaluation of Tenders PRIOR TO ADVERTISING TENDER OPEN TENDER CLOSED TEPC PCC RISK TEP TEPC Prepare Clarification Questions and submit to the PCC Send Clarification letters to tenderers and coordinate responses to be submitted to the TEP. OH&S Preliminary Evaluation Stage 2 Evaluation Interview Short Listed Tenderers - Review Scoring (Interviews may not be required) Referee checks completed - Review Scoring EVALUATION STAGE TEPC PCC Confidential Evaluation Report Prepared and submitted as per the Delegation Authority or Report to Council Send Letter of Acceptance to the Successful Contractor. Send Unsuccessful letters. Prepare Contract Documentation for Signing and Sealing. Award Tender on the etender Portal. Update the CMS. Forward a sealed copy of the Contract to the Contracts Manager Issue a Purchase Order AWARD LEGEND Contract Manager/Superintendent Procurement & Contracts Coordinator Tender Evaluation Panel Coordinator Risk & OH&S Management Unit Tender Evaluation Panel CMS PCC TEPC RISK TEP Page 13 of 13