Procurement Guidelines for Victorian Public Hospitals and Health Services

Openness and Probity in Victorian Government Contracts

The Victorian Government's policy statement October 2000 (Word file 35kb) on openness and probity in Victorian Government contracts states that “all major public sector agencies and government business enterprises will be required to produce a statement on the processes they have adopted to deliver standards of probity and contracting at least as high as those required under VGPB guidelines”.

The key principles of probity are:

• Fairness and impartiality;
• Use of open, competitive processes;
• Consistency and transparency of process;
• Security and confidentiality;
• Identification and resolution of conflicts of interest; and
• Compliance with legislative obligations and government policies.

Adherence to these principles will ensure that the actions and decisions undertaken when funding or purchasing are defensible in a logical way.

Conditions of Funding

It is a requirement under the Victoria - Public Hospitals & Mental Health Services Policy & Funding Guidelines 2008 - 2009 - Conditions of Funding (Clause 5.9) that all public hospitals are required to have regard to the government's overall disclosure policy and to document their own procurement and disclosure policies accordingly. A central contract register should be maintained in all hospitals, and to manage risk effectively and efficiently it is recommended that all contracts are checked by a qualified legal practitioner prior to finalisation. All public hospitals must at a minimum adopt and deliver standards of probity at least as high as those required under Victorian Government Purchasing Board (VGPB) guidelines.

Victorian Government Purchasing Board Guidelines

Quotations and Public Tender Policies
The VGPB sets minimum standards in the conduct of procurement, to ensure a level of probity.

Purchase of Goods or Services less than $25,000
A minimum of one written quote is to be obtained.

Purchase of Goods or Services valued between $25,000 and $150,000
A minimum of three written quotes are to be sought with one quote to be obtained from a small business if appropriate. (For the purpose of applying this requirement a small business is defined as an organisation with 20 or less full time employees)
Seeking a minimum of three quotes ensures a value for money outcome by providing a comparison of supplier bids. Consideration could be given to seeking more that the minimum number of quotes to cover any eventuality of one or more suppliers not submitting a bid.

Procurement valued in excess of $150,000 is subject to an approach to the open market through a public tender. In approaching the open market, health services are responsible for conducting a process that is fair and equitable to facilitate opportunities for businesses in contracting with the public sector.

Please refer to VGPB Guidelines for more detailed information on procurement policies.

Purchasing Policy

A public hospital must comply with each purchasing policy issued pursuant to Section 134 of the Health Services Act 1988 to the extent that it applies to the public hospital.

Risk management

“Organisations that manage risk effectively and efficiently are more likely to achieve their objectives and do so at lower overall cost” (AS/NZS 4360).

As very few risks remain static, risks need to be monitored and assessed regularly to effectively manage, review any changes to risk priorities and to identify new risks. All Victorian Public hospitals should at the minimum annually review probity controls and risk management strategies in the procurement of clinical and non-clinical goods and services.

All public hospitals are required to maintain a risk register which should also separately identify and include financial risks. The risk register is central to the risk management strategy and should at a minimum document and identify each risk, the probability and level of seriousness, consequences, strategies to address the risk, and who is responsible for managing the risk. Risk priorities on the risk register should also be assessed regularly, with high risk priorities reviewed at least quarterly (or more frequently and progressively dependant on the risk category and consequences).

The Victorian Government Risk Management Framework (pdf file 373kb) provides for a minimum risk management standard across public sector entities and should be used as a guide.

Code of Conduct for the Victorian Public Sector (pdf file, 418kb)

Under Section 65S(2)(d)(l) of the Health Services Act public hospitals boards of management are required to adopt a code of conduct for staff of the public health service.

The State Services Authority (SSA) has developed Codes of Conduct for the Victorian Public Sector and the Victorian Public Sector Employees of Special Bodies. Public hospitals and health services are advised to adopt a code of conduct for staff of the public health service consistent with, and at a minimum equivalent to, that prescribed in the Code of Conduct for Victorian Public Sector Employees of Special Bodies.

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