What is a disposable asset?

For Queensland Government purposes a disposable asset is a non-consumable item in the nature of furniture, office equipment, machinery and plant which is no longer required.

Reasons for disposal

Items can be available for disposal because they are:

  • no longer required due to changed procedures, functions or usage patterns;
  • no longer complying with occupational health and safety standards;
  • occupying storage space and will not be needed in the foreseeable future;
  • reaching their optimum selling time to maximise returns;
  • found to contain hazardous materials; and/or
  • beyond repair but able to be sold for scrap.

Options for disposal

The Accountable Officer may approve the disposal of surplus assets by:

  • sale by auction;
  • sale by tender;
  • private Treaty - sale to another government department or agency; or an approved
  • non Government Organisation

If, in the Accountable Officer's opinion, the value, location or nature of the asset does not justify the expense of the above options, the item may be disposed of by such manner as the Accountable Officer determines having due regard for "value for money" and "probity and accountability". For example, advice from a valuer has confirmed that the item has no commercial value and can be dumped.


The "Accountable Officer" of the department/agency as defined in the Financial Administration and Audit Act (Qld) 1977 is generally the Chief Executive Officer or an officer delegated by the CEO to carry out this function.

To achieve the best value when disposing of assets, consideration should be given to:

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 consequence of holding, operating, maintaining and disposing of the item. Revenue received in the disposal process is off-set against the costs incurred.

2. The serviceable life of an asset

Factors that may impact on an asset's serviceable life include:

  • the nature of the item which has a bearing on the asset's length of service;
  • maintenance costs of the item - 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  • new technology - resale value drops rapidly when items are superseded; and
  • compatibility of the item with new or changed working environment.

3. The optimum selling time

Once a decision has been made that an asset has achieved the end of its serviceable life, it is important to arrange for its disposal as soon as possible in order to maximise returns and avoid unnecessary storage costs. For example, photocopiers and computers rapidly lose market value due to continuing advances in technology.

4. The most cost effective disposal method

Choosing the most cost effective disposal method will be determined by conducting an analysis of net disposal return. Issues which need to be considered include:

  • 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

Sale by tender is normally conducted for items of high value or of an unusual nature. This option should also be considered for items located in remote areas, with a geographically dispersed potential market. Where there is a restricted market for an item either because of the item's nature or location, quotations may be considered having given due regard for "value for money" and "probity and accountability".

  • Private Treaty

A Private Treaty sale is a sale negotiated directly between the vendor (agency), or its agent, and the buyer outside a publicly competitive process.

Private Treaty sales are appropriate in circumstances where:

  • the market is limited and a single buyer who is willing to pay the 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.

NOTE: Goods may be transferred between agencies at no cost if it is uneconomical to charge for them. The transfer of assets must be approved by an officer with the appropriate authority.
  Officers need to ensure that disposal of Government plant and equipment is undertaken with probity, that is, ethically, honestly and with fairness to all participants and that there is no conflict of interest.
 

Queensland Purchasing Government Disposals team can help you to choose the most suitable and best value for money disposals method for your agency's needs. Contact Paul Thomasson on telephone (07) 3235 4333 or email paul.thomasson@qp.qld.gov.au.

Most of the above information had been extracted from the Better Purchasing Guide "Disposal of Government Plant and Equipment". The series of Better Purchsing Guides support the Queensland Government's State Purchasing Policy.

Click here to download an electronic copy of the Guide.
Click here to link to the State Purchasing Policy and Better Purchasing Guides.