Expenditure Contracts ANU

1. Expenditure & Contracts @ ANU June 2008

2. EXPENDITURE & CONTRACTS @ ANU This course will cover: Authority to spend Delegations Commonwealth Authorities & Companies Act 1997 (CAC Act) Other Legal Considerations when purchasing or contracting on behalf of ANU Incurring expenditure Tendering strategies Payment methods NOTE: This course does not cover expenditure on travel

3. Authority to Spend The Australian National University was established by an Act of Parliament – The Australian National University Act 1991. The Act can be found at: http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/0/225A5A7231E0DF77CA2570DD001228B1?OpenDocument   The University is governed by a 15 member Council. The Council is to act in all matters concerning the University in the way it thinks will promote the interests of the University.   The Council has delegated day-to-day management responsibilities and other functions to the University’s executive and other senior staff in order to be able to focus on the broader policy and strategic issues.   Accordingly the person who has been delegated this responsibility must also comply with section 18A of the Act which states that ‘the Council must act solely in the interests of the University taken as a whole, having regard to its functions’.   As a senior member of staff you will have a delegation and be allowed to spend money and make decisions on behalf of the ANU, and will need to bear this section in mind.

4. Delegations What is a delegation? A delegation is a formal authority or power to do something – allocate budgets, admit students, appoint staff, and the like.   The “Delegations of Authority” policy sets out the principles and procedures of the University’s systems of delegations of authority. This can be found at: http://info.anu.edu.au/OVC/Delegations/index.asp

5. Delegations contd. Some important points to note from this policy are: Delegations are attached to positions rather than occupants of positions. Delegations can be academic or administrative. Delegations may not exercise delegations in respect of themselves – they may not approve any action or transaction that provides them with a direct personal benefit. Therefore delegates may not approve their own appointment, any form of remuneration or payment, promotion, transfer or secondment, termination through resignation, retirement or voluntary separation, or absence e.g. leave, travel, OSP etc.. If a delegate is found to have exercised a delegation improperly, he or she may be subject to disciplinary action and the delegation may be revoked.

6. Delegations contd. Delegations are administered by the Council & Boards Secretariat (CABS). The website above details how to add/change/delete delegations for your Budget Unit. It is the responsibility of the Budget Unit to keep the delegation details up to date.   For details of delegations relating to procurement please refer to: http://info.anu.edu.au/OVC/Delegations/By_Category/_delegations_files/financial.asp

7. Delegations contd. Related to delegations, Heads of Budget Units are required to provide annual assurance that the policies of the University have been adhered to and financial controls exercised over the resources of that budget unit. These assurances form part of the University’s obligations under the Commonwealth Authorities and Companies Act 1997 (CAC Act).

8. Commonwealth Authorities and Companies Act 1997 (CAC Act) What is the CAC Act and how does it affect you? The Commonwealth Authorities and Companies Act 1997 (CAC Act) puts in place measures to ensure the accountability of Commonwealth Authorities such as the University and those who govern or manage them.   The CAC Act sets out a number of obligations and duties in respect of accounting, reporting and audit, and some significant responsibilities in relation to conduct. These responsibilities for the most part relate to “directors” but also to “officers”. An “officer” is defined as any director or other person who is concerned in, or takes part in, the management of the University. Senior staff within a college would be considered to be taking part in the management of the University and be considered an officer for the purposes of this legislation.

9. Commonwealth Authorities and Companies Act 1997 (CAC Act) Contd. When making a decision that affects the operations of the University, an officer of the University must make that decision in good faith for what he/she believes is in the best interests of the University, whilst informing him/herself to the extent he /she reasonably believes is relevant. When making this decision, the officer must ensure they do not have a material personal interest that would affect their decision.

10. Commonwealth Authorities and Companies Act 1997 (CAC Act) Contd. To summarise, the main duties of an officer are: Care and Diligence Good Faith Use of Position Use of Information There may be both criminal and civil penalties for non-compliance with the above duties. Criminal penalties mainly relate to behaviour that is reckless or intentionally dishonest and carry a penalty of up to five years’ imprisonment. For more detail of the CAC Act please refer to: http://www.comlaw.gov.au/comlaw/management.nsf/lookupindexpagesbyid/IP200401758?OpenDocument Care and Diligence – an officer must exercise his or her powers and discharge his or her duties with the degree of care and diligence that a reasonable person would exercise in the circumstances. Good Faith – an officer must use his or her powers to discharge his or her duties in good faith and for a proper purpose. Use of Position – an officer must not improperly use his position to gain an advantage for him or her or someone else or cause detriment to the University. Use of Information – an officer must not use information gained in his or her position to gain an advantage for him or herself or someone else or cause detriment to the University or to another person. Care and Diligence – an officer must exercise his or her powers and discharge his or her duties with the degree of care and diligence that a reasonable person would exercise in the circumstances. Good Faith – an officer must use his or her powers to discharge his or her duties in good faith and for a proper purpose. Use of Position – an officer must not improperly use his position to gain an advantage for him or her or someone else or cause detriment to the University. Use of Information – an officer must not use information gained in his or her position to gain an advantage for him or herself or someone else or cause detriment to the University or to another person.

11. Other Legal Considerations when purchasing or contracting on behalf of the ANU The University is required to comply with relevant Taxation Legislation such as: - A New Tax System (Goods and Services Tax) Act 1999 - Fringe Benefits Tax Assessment Act 1986 The University is not exempt from these taxes. The implications of these taxes should be considered when you are purchasing or contracting on behalf of the University.

12. Other Legal Considerations when purchasing or contracting on behalf of the ANU Contd. The GST (Goods & Services Tax) is a broad based indirect tax levied on all forms of consumption in Australia (including imported goods). Whilst the University pays GST on most purchases, if tax invoice documentation is obtained the University should be able to claim GST back.   The FBT (Fringe Benefits Tax) is a tax paid by employers not employees. It is payable on benefits provided by employers (or third parties on behalf of employers) to employees and their associates (relatives). The FBT is approximately equal to the value of the benefit provided – as such it effectively doubles the cost to the employer of providing a benefit.   For more information on both GST and FBT please refer to the F&BS Business Tax Web page: http://info.anu.edu.au/fbs/Finance_Functions/Business_Tax/Index.asp 

13. Other Legal Considerations when purchasing or contracting on behalf of the ANU Contd. The University is also required to comply with relevant visa and immigration legislation, which impact on how some payments can be made to individuals that may be visiting the University or providing a service. Some payments to University Visitors may contravene a particular visitor’s visa conditions and expose the University to severe penalties. 

14. Other Legal Considerations when purchasing or contracting on behalf of the ANU Contd. The University has a Policy and Procedures for Payments to University Visitors that can be found at: http://info.anu.edu.au/policies/browse.asp?view=topic&parent=517&node=518   These policies and procedures reinforce the relevant legislation and guidelines of the Department of Immigration and Citizenship. More information about visa types and associated conditions can be found at: http://www.immi.gov.au/skilled/business/business-visit-visa-options.htm

15. Incurring Expenditure When you need to incur expenditure … The University has a Procurement Policy the purpose of which is to ensure that goods and services procured for the University are provided in the most cost effective and timely manner and that the customer is satisfied. The methods adopted for procurement at the University should be, and should be seen to be, beyond reproach.   This policy can be found at: http://info.anu.edu.au/Policies/_CFO_DFBS/Policies/Procurement_Policy.asp?tab=1

16. Incurring Expenditure Contd. The policy applies to the procurement of goods and services, and associated contracts of all kinds across the University, including: General or specialised goods, services and equipment required by individual Colleges, Schools, Centres, administration and service areas; Consultancies and professional services; Construction and related services; Services from public utilities; and Real property sale or purchase.

17. Incurring Expenditure Contd. The core principles that underpin the University’s procurement policy are outlined as follows: Value for money Procurement Ethics Procurement Conduct (Fair Dealing, the opportunity for anyone to do business with the University who wishes to etc.) Compliance with Government Legislation Environment Strategy Occupational Health and Safety Considerations Risk Management Procurement Thresholds

18. Incurring Expenditure Contd. Arms Length Trading When dealing in the open market, purchasing officers or the ANU Staff Member/delegate should ensure that any supplier is genuinely trading in the market. Purchasing Officers and University Staff should not purchase goods and services from: Suppliers who are, first and foremost, University employees. This is to be avoided whenever possible. If there is no alternative supplier then the purchase must be explained fully when seeking approval from the authorised University delegate and be within the bounds stated in University policy (e.g. Conflict of interest) and issues such as warranty, support etc., and how these will be managed separately from the employment role fully documented. Individuals or business with whom, or with whose employees, they have a personal relationship (I.e. family members, friends or close associates) unless it can be shown that a full and transparent procurement process has been undertaken, in accordance with all University policies and that the University delegate has been fully informed of the relationship.

19. Incurring Expenditure Contd. Arms Length Trading contd. Additionally, where such a conflict of interest exists, University staff should be excluded or should exclude themselves from the procurement process, and other University staff should undertake the purchase.

20. Incurring Expenditure Contd. Procurement Thresholds The University has a series of thresholds detailing when quotations, purchase orders and tender processes must be undertaken. Full details can be found at: http://info.anu.edu.au/fbs/Business_Functions/Purchasing_and_Contracts_Office/Policies_and_Processes/_purchasing_thresholds_for_publication.pdf Purchases from preferred supplier/panel arrangements do not require the tender process. However, it is recommended that comparative quotes be obtained from all panel members.

21. Incurring Expenditure Contd. Procurement Thresholds contd. Procurement Level Amount Action Required Minor Up to $5,000 One quote if appropriate Intermediate $5,000-$50,000 Minimum of two written quotes (Copies to be filed with AP documentation) $50,000-$150,000 Minimum of three written quotes ANU Purchase Order required Major Greater than Tender process required: $150,000 -Expression of Interest (EOI) -Request for Proposal (RFP) or -Request for Tender (RFT) ANU Purchase Order required

22. Incurring Expenditure Contd. Procurement Thresholds contd. The value threshold is calculated to be the whole of the order/contract, not item or line based. Splitting of orders to avoid tender thresholds is not permitted. More information about the Procurement Thresholds can be found at: http://info.anu.edu.au/fbs/Business_Functions/Purchasing_and_Contracts_Office/Policies_and_Processes/_purchasing_thresholds_for_publication.pdf  

23. Incurring Expenditure Contd. Preferred Suppliers The University has a range of preferred supplier arrangements. Purchases can be made from suppliers on those panels, without the need for further quotations/tender processes as outlined above:   For details of contracts that have been formally entered into by the University with the relevant suppliers please refer to: http://info.anu.edu.au/fbs/Business_Functions/Purchasing_and_Contracts_Office/Contract_Status_List.asp   All University cost centers are requested to use these contracts/standing offers wherever possible.  

24. Incurring Expenditure Contd. Exemption from Tender Process It is possible for a purchase or contract to be exempted from the Tender Process.   The University’s policy is to seek public offers for all goods and services valued above $150,000 unless there is an approved business case to change this approach.   Where the market is highly specialised and limited to a few suppliers, or if there are special circumstances, there may be sound reasons for not calling for tenders. In such cases, the sponsoring area should raise a business case that is endorsed by the appropriate College/Division delegate and then sent to the Director of Planning and Policy, or the Vice Chancellor for approval. Request documentation should be developed in consultation with University Procurement & Contracts Office (UP&CO) before submission to the delegate to ensure that the documentation is satisfactory and the University is not exposed to any procurement risk.  

25. Incurring Expenditure Contd. Probity All stages of any purchase should be carried out in an open and transparent manner. It is important that the tendering process be planned and managed carefully to ensure that it is implemented fairly.   Public bodies such as the ANU must: give all tenderers the same opportunity to make an offer on the same terms; -         ensure that no information provided is misleading; and -         adhere to the published conditions of the published request documentation, particularly in regard to the evaluation process.   The University has a Probity Plan Policy and checklist. This can be found at: http://info.anu.edu.au/Policies/_Documents/PDF/Finance/Purchasing/Updated%20probity%20checklist%2014%20April%202008.pdf    

26. Incurring Expenditure Contd. Probity contd.  An area running a tender should complete the Probity Checklist. It should be completed by the Secretary to the tender process, reviewed by the Chair and included in the documentation reviewed by the delegate that is responsible for the tender process.   If the checklist identifies any potential issues, consideration should be given to undertaking a full risk assessment, or if necessary appointing an independent probity adviser.  

27. Incurring Expenditure Contd. Tendering Strategies Generally, either a Request for Proposal (RFP) or a Request for Tender (RFT) will be needed for purchasing goods and services over $150,000. RFPs are used to seek solutions or to resolve problems where there may be a range of viable options. RFTs are used to seek clearly defined and firm offers from suppliers.   For complex and high-cost purchasing projects, a staged approach involving a structured series of selection processes can be used. A staged approach helps keep costs down for both buyers and suppliers as it provides an opportunity to obtain information about potential suppliers and their capability at an early stage. Uncompetitive suppliers will not be put to the cost and effort of preparing a full offer, and the University need only evaluate full offers from a competitive shortlist.  

28. Incurring Expenditure Contd. Tendering Strategies contd. Staged approaches are usually implemented by issuing an Expression of Interest (EOI) and then short-listing suppliers based on the initial information provided about their capability to undertake the project. The short-listed suppliers are then invited to respond to an RFT or RFP.   Staged approaches should be used where: -         the requirement is unclear and cannot be adequately defined; -         the requirement may be met in different ways; or -         the requirement is generally known, but needs considerable analysis, evaluation and clarification;   For more details about tendering and proposals please refer to: http://www.anu.edu.au/finance/manual/500/501_3.html#3.2_Tendering_or_Proposal_Strategies  

29. Payment MethodsFor acquisition of goods & services, but not business travel Tax Invoice When making a payment, a Tax Invoice is required to enable the ANU to claim back the GST on purchases. A Tax Invoice is a legally prescribed document and must contain certain information. Details can be found at: http://info.anu.edu.au/fbs/Finance_Functions/Business_Tax/__ANU_Only/Checklists/Tax_Invoice_Checklist.pdf Purchase Order Purchase orders are required for all purchases greater than $50,000. Sometimes you may be asked for a purchase order by a potential supplier as confirmation of acceptance of a quote. Purchase orders can be generated using ESP Peoplesoft Financials.  

30. Payment MethodsFor acquisition of goods & services, but not business travel Purchase Card   The Purchase Card is the preferred method of payment for small dollar purchases. It is also highly recommended for use with other transactions providing the appropriate quotations or processes outlined have been followed.   More information about the purchase card can be found at: http://info.anu.edu.au/fbs/Finance_Functions/Operations/Purchase_Card/index.asp  

31. Payment MethodsFor acquisition of goods & services, but not business travel Purchasing over the Internet   The University has a number of preferred supplier contracts in place where internet ordering systems are integral to the ordering of supplies (e.g. office supplies). The security of these systems has been evaluated as part of the selection and appointment process.   Where possible the University seeks to build into these contracts University-wide electronic and billing processes that reduce procurement risk and minimise workload and maximise savings e.g. through a University-wide electronic billing and payment process.   The University’s Purchase Card can be a useful tool when purchasing via the internet, however staff should be aware that purchases on the web are subject to the University’s Procurement policies and procedures.   Before purchasing over the internet you should consider the following: Are you dealing with a reputable vendor? Does the vendor’s website have adequate security? You should also be cautious about providing personal information.  

32. Payment MethodsFor acquisition of goods & services, but not business travel Electronic Invoice Some preferred supplier arrangements – such as Corporate Express, LeasePlan and utility charges – default to electronic invoices and payment centrally with charges disbursed.    Electronic Funds Transfer   Most suppliers/vendors prefer to be paid by way of Electronic Funds Transfer (EFT). This is also the University’s preferred method of payment for suppliers/vendors. If you have any questions about obtaining supplier/vendor banking details, please contact Accounts.Payable@anu.edu.au.     Payment in Advance   Some purchasing transactions require payment in advance or prior to the build/delivery of goods or equipment. All advance payments, greater than $10,000 must be subject to an ANU purchase order raised through ESP Financials.    

33. More information .. ANU Procurement web page: http://info.anu.edu.au/fbs/Business_Functions/Purchasing_and_Contracts_Office/_ANU_Procurement.asp University Procurement and Contracts Office Web Page: http://info.anu.edu.au/fbs/Business_Functions/Purchasing_and_Contracts_Office/Index.asp   Or contact: Brian Burke Procurement Manager 55423 James Livingston Contract Administrator 50094 Ron Robertson Contract Administrator 55153 Des Collings Office Administrator 55959 Or email: mgr.contracts.office@anu.edu.au

34. Further Training Finance & Business Services also run the following courses: Budgeting @ ANU Reporting @ ANU These are run for specific groups of staff in colleges or schools –please contact Mardi Savill (Mardi.Savill@anu.edu.au or x55587) for more information and to make a booking.     Finance & Business Services Business Solutions Office can also provide training on ESP Financials. Further information can be found at: http://info.anu.edu.au/fbs/Training_and_Support/__Courses_and_Seminars/index.asp