Disposals of plant and equipment
For Queensland government purposes, a 'disposable asset' is a non-consumable item such as furniture, office equipment, machinery and plant that is no longer needed.
Reasons for disposal
- no longer needed due to changed procedures, functions or usage patterns
- no longer comply with occupational health and safety standards
- in storage and won’t be used in foreseeable future
- reaching optimum selling time to maximise returns
- contain hazardous materials
- beyond repair but able to be sold for scrap.
Options for disposal
Disposal of assets is determined by an agency’s 'Accountable Officer' -- usually the Chief Executive Officer, under the Financial Administration and Audit Act (Qld) 1977.
There are three main options for disposing of surplus assets:
Goods may be transferred between agencies at no cost if it is uneconomical to charge for them.
An asset can only be thrown away if the CEO is sure that its value, location or nature doesn’t justify the expense of the sales options.
Disposal of government plant and equipment must be undertaken ethically, honestly and fairly. There can be no conflict of interest.
What to consider when seeking best value from disposals
1. Whole-of-life costing
Whole-of-life costing refers to the net costs associated with the initial purchase of an item as well as all costs incurred as a result of holding, operating, maintaining and disposing of the item. Revenue received in the disposal process is offset against the costs incurred.
2. Serviceable life of an asset
Factors that may impact on an asset's serviceable life include:
- the nature of the item (has a bearing on the asset's length of service)
- maintenance costs (increase with age and use)
- compliance with legislation (specific disposal requirements for various 'dangerous goods')
- new technology (resale value drops rapidly when items are superseded)
- compatibility of the item with new or changed working environment.
3. Optimum selling time
Information and Communications Technology (ICT), such as computers and photocopiers, has only a small window of opportunity for resale once superseded. Disposal should be arranged as soon as possible to maximise return and avoid unnecessary storage costs.
4. The most cost-effective disposal method
An analysis of the return of sale proceeds will determine the most cost-effective disposal method:
- Sale by auction
How far away is the auction centre? Will transport costs outweigh the return from selling the goods at auction? Are enough items available to make an on-site auction viable? Can items from another agency be included to improve net disposal return?
- Sale by tender
Could be considered for items that are of:
- high value
- of an unusual nature
- located in remote areas with a geographically dispersed potential market, or
- when the market is restricted because of the item’s nature or location.
- Private treaty
A private treaty sale – a sale negotiated directly between the vendor (agency), or its agent, and the buyer outside a publicly competitive process – may be appropriate when:
- the market is limited and a single buyer who is willing to pay an appropriate agreed price has been identified
- the item is located on a supplier's premises and the cost of removal would be uneconomical or impracticable (for example, a fixed item of plant or equipment)
- the sale of the item was specified as a condition in the original purchase contract
- the broader interests of the State are served by selling to a particular company, group or individual
- a direct sale to a government agency or approved non-government organisation is a possibility.
Further information on disposal of government plant and equipment is available in the Better Purchasing Guides (PDF, 134kb).
Contact Paul Thomasson on telephone +61 7 3235 4333 or email disposals@qgcpo.qld.gov.au to help you choose the most appropriate and best value-for-money disposals method for your agency’s needs.
Last updated April 2008
