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Victorian Government Purchasing Board Annual Report 2019-20

Achieving excellence in government procurement.

The Victorian Government Purchasing Board provides leadership in goods and services procurement to deliver value-for-money outcomes for Victoria.

The report provides an overview of the Board's activities throughout the financial year.

Key achievements this year include:

  • strengthening its policy framework around cybersecurity. This will drive greater cyber risk management, making it apart of everyday best practice procurement
  • overseeing the pilot for the procurement data centre. This will enhance visibility of government procurement data to improve decision making
  • publishing three new guides on innovative pathways to market. These complement the current range of guides that help buyers with the procurement process

The report also contains goods and services compliance information and contract approval data.

Glossary and acronyms

Note on accessibility

We've provided as much of this annual report in HTML as practicable. Complex data tables are provided in position in Word documents.


Author:
Department of Treasury and Finance
Date:
October 2020

About this report

Provides an overview of the report

The Victorian Government Purchasing Board (VGPB) sets the policies that govern procurement of non-construction goods and services across all Victorian Government departments and some public bodies.

Effective procurement saves time and money, reduces risk and supports a well-functioning government and a thriving Victorian community. Our vision is to provide leadership in government procurement of goods and services to deliver value-for-money outcomes for Victoria.

The VGPB Annual Report 2019–20 summarises the work we’ve done to meet our legislative obligations and achieve our vision over the past financial year from 1 July 2019 to 30 June 2020.

We report on the procurement activity, compliance and performance of the departments and organisations that operate under the VGPB policy framework.

This report is required under section 54M of the Financial Management Act 1994.


Message from the Chair

Message from Ms Antoinette Brandi, Chair, Victorian Government Purchasing Board

In 2019–20, the Victorian Government Purchasing Board (VGPB) continued to oversee the deliverables from the 2017–18 procurement reform, while also publishing buyer guidance to address and publicise cybersecurity and information security risks.

While some procurement teams were still dealing with the aftermath of the Victorian bushfires, we found ourselves in the midst of a global pandemic. Both events required immediate government response and created challenges for procurement.

Our goods and services supply policies include critical incident procurement protocols to enable government to quickly respond to any emergency, crisis or disaster by adopting streamlined and flexible procurement processes, while also maintaining high standards, specific recordkeeping processes and adhering to contract disclosure requirements. This annual report includes a summary of critical incident procurement contract approvals in 2019–20.

We are seeing considerable momentum in the use of procurement technology, which helps make procurement more efficient and provides the data to drive better value-for-money outcomes, connectivity and economies of scale. The rollout of the procurement data centre and the spend data analytics project will give us important insights into what government is purchasing.

Cybersecurity was a big focus during the year, and we have updated our goods and services policies to ensure that cyber risk management becomes part of everyday best practice procurement.

We recognise the work of our many stakeholders, and particularly chief procurement officers, in progressing this and many other pieces of work throughout 2019–20.

I would like to thank outgoing VGPB member, Craig Rooney. Craig contributed immensely over his eight-year tenure and we wish him well with his future endeavours.

Once again, the Procurement Policy and Reform team in the Department of Treasury and Finance worked hard to support the VGPB and deliver our procurement goals.

As our steering committee role for the procurement reform program draws to a close, I’m proud of our accomplishments over the last three years. We have set new priorities for 2020–23 which reflect our commitment to being at the forefront of improving procurement across government.

Antoinette Brandi

Chair, Victorian Government Purchasing Board


About the VGPB

The Victorian Government Purchasing Board’s role, responsibilities and vision for procurement.

The VGPB is a Victorian Government-owned body corporate established under the Financial Management Act 1994. We set the policies that govern procurement of non-construction goods and services across all Victorian Government departments and some public bodies.

Our role is to:

  • develop, implement and review supply policies and practices
  • monitor compliance with supply policies
  • help organisations build procurement capability
  • work with stakeholders to make procurement more efficient

Procurement as a core business function

The VGPB sees procurement as a core business function. Effective procurement ensures government uses public money responsibly, procuring the required goods and services to deliver value-for-money outcomes.

The VGPB’s procurement model is based on assessing complexity and risk. Each organisation adopts a procurement governance framework scaled to its procurement profile and must have enough capability to carry out its procurements.

Our five supply policies cover the whole procurement lifecycle.

Procurement lifecycle:

  • review procurement need
  • conduct market analysis
  • develop market approach plan and engage the market
  • evaluate, negotiate and select supplier
  • create and commit to contract
  • manage contract
  • review or close contract
  • dispose of assets

The policies are underpinned by probity, accountability and scalability, with a strong focus on value for money, more interactive engagement with the market and improving productivity.

Each policy is supported by good practice guides, tools and templates to ensure consistency across government.

The VGPB at a glance

Vision

Provide leadership in government procurement of goods and services to deliver value-for-money outcomes for Victoria.

Mission

Ensure government:

  • develops procurement capability
  • delivers value-for-money and fit-for-purpose outcomes
  • minimises risk
  • enables access to procurement opportunities for all businesses

Principles

All procurement activity must meet four principles:

  • value for money
  • accountability
  • probity
  • scalability

Policies

Five policies to cover end-to-end procurement activity:

  • Governance
  • Complexity and capability assessment
  • Market analysis and review
  • Market approach
  • Contract management and contract disclosure

Strategy

Five workstreams with multiple initiatives:

  • Victoria’s Social Procurement Framework and reporting
  • Governance, extending the reach
  • Policy and practice
  • Procurement technology
  • Capability, process streamline and change management

Network

The VGPB currently covers all Victorian Government departments, Cenitex, Victoria Police and some administrative bodies. We work closely with our stakeholders to ensure our policies are modern, relevant and easy to apply.

Scope of VGPB policies

VGPB policies apply to all Victorian Government departments and any entities specified by the Governor in Council, such as Cenitex.

VGPB policies also apply to the offices or bodies specified in section 16(1) of the Public Administration Act 2004. These offices report to the VGPB via their portfolio department, except for the Office of the Chief Commissioner of Police (Victoria Police), which reports directly to the VGPB.

The Victorian Public Sector Commission is also subject to VGPB policies but does not report directly to us.

For a list of organisations bound by VGPB policy, refer to Goods and services mandated agencies

Reporting structure

The VGPB reports to the Assistant Treasurer. We are supported by the Procurement Policy and Reform team in the Department of Treasury and Finance (DTF).

Departments and accredited or specified entities report to us directly on their procurement activities, as follows:

  • Assistant Treasurer
  • VGPB supported by DTF's Procurement Policy and Reform Team, reports to the Assistant Treasurer
  • Organisations (Departments and accredited / specified entities), reports to VGPB

Board members

The VGPB has a chairperson and a minimum of six other members. Board members are selected based on procurement experience and expertise. They can be internal or external to government.

In 2019–20, the VGPB had eight members.

Meetings

The VGPB meets once every two months. The Board held six meetings over the reporting period and three one-day planning sessions to set new priorities for 2020–23.

The following table describes meeting attendance:

Board member  Member since  Bimonthly meeting attended Planning days
Antoinette Brandi (Chair) 10 October 2015 6 of 6 3 of 3
Claire Thomas 1 July 2018 6 of 6 3 of 3
Craig Rooney 1 October 2012 5 of 6 3 of 3
Denise Dyer 1 July 2019 6 of 6 3 of 3
Peter Lane 1 July 2019 5 of 6 3 of 3
Russell Yardley 1 July 2014 5 of 6 3 of 3
Seona James 1 July 2019 6 of 6 3 of 3
Timothy Lyons 10 October 2015 5 of 6 3 of 3

Assessing the VGPB’s performance

Each year, VGPB members assess their individual performance and the performance of the VGPB as a whole over the past 12 months, and identify opportunities for improvement.

In 2019–20, VGPB members took a new approach to assessing their performance, conducting a critical analysis during the strategic planning sessions to identify areas where the VGPB is doing well and what they should focus their attention on.

Overall, members acknowledged that it had been a challenging time, with COVID-19, bushfires and cyberattacks leading to unemployment and supplier fragility. COVID-19 has highlighted the need to manage supply chain risk and address capability gaps.

Members assessed the VGPB as operating effectively in its capacity as the steering committee for the procurement reform during this time. Members also acknowledged that VGPB membership covered a wide range of procurement skills and a shared commitment to achieving value-for-money outcomes and streamlining processes for buyers.

In 2020–21, the VGPB will carry out a detailed review of its policy framework with a view to providing more focus on identifying and delivering strategic outcomes including risk reduction.


VGPB activities in 2019-20

Find out what the Board has been upto in 2019-20

In 2019–20, we continued to work with the Department of Treasury and Finance’s Procurement Policy and Reform team on the five workstreams established in 2017–18 under the procurement reform program.

With most recommendations from the procurement review now complete and the remaining implementation activities to be carried out by the Strategic Sourcing Group in the Department of Treasury and Finance, the procurement review program has mostly wrapped up. The VGPB will continue to be updated on the progress of these remaining activities.

The key outcomes completed under the five workstreams in 2019–20 are described here:

Workstream 1: Victoria’s Social Procurement Framework and reporting

In 2019–20, we continued to support implementation of the Social Procurement Framework. The Procurement Policy and Reform team reviewed and gave feedback on more than 200 agency strategies. The strategies set out how agencies plan to embed social procurement into their procurement process. This has been a critical step to support implementation across government.

The Procurement Policy and Reform team continued to build and maintain partnerships with social benefit suppliers, Social Traders, Kinaway and Supply Nation. They also continued to promote the framework through newsletters, seminars and workshops, including presenting at the Social Traders Conference 2019, the 14th Procurement Australasia Annual Conference and the Social Enterprise World Forum 2019.

In 2020–21, the Procurement Policy and Reform team will continue to work with the Department of Jobs, Precincts and Regions to strengthen buyer and supplier engagement.

Social procurement reporting

The Procurement Policy and Reform and Local Jobs First teams started work on a joint reporting system to streamline social procurement reporting requirements for agencies. The system will be rolled out in 2020 and further supports the move to simplify procurement through better use of technology.

The first social procurement annual report was published in November 2019. The report highlights the progress made by agencies to date with case studies of the people benefiting from social procurement. This report has set a baseline to measure social procurement achievements in the future.

The report is available from Social procurement annual reports.

Key highlights:

  • published first social procurement annual report
  • three conferences as keynote speaker
  • 200+ agency social procurement strategies reviewed
  • five social procurement newsletters

Case study: The hunt for hand sanitiser is a win for social procurement

Hand sanitiser has become a much sought-after essential during COVID-19. When supplies ran low and became difficult to source, the procurement team at the Department of Transport found a solution that supported an Aboriginal business.

The department chose to buy hand sanitiser supplies from Panku, a Supply Nation Certified Supplier in south-east Melbourne, to keep all its sites across Victoria well equipped over the following few months.

Panku, which means 'united, together' in Nyiyaparli language, offers a range of goods and services, from safety equipment and personal hygiene products to first-aid training.

“The contract provides security and continuity for our business, especially in these uncertain times,” said Panku’s Chief Executive Officer Jadah Pleiter. “It is rewarding for us as a business to support the community in making a difference, especially as an Aboriginal business.”

This win-win is a prime example of how social procurement can deliver for stakeholders and communities.

Workstream 2: Governance, extending the reach

We continued to work towards bringing 150 extra organisations under the VGPB umbrella, creating a scalable framework that aligns compliance requirements with an organisation’s procurement risk and complexity profile.

Implementation has been deferred to 1 July 2021, due to the impacts of COVID-19 on agencies and to allow procurement teams to focus on their pandemic response first and foremost. Over the coming year, we will finalise and implement supporting materials to help new organisations transition to our goods and services policy framework and continue to monitor overall delivery of this workstream.

Workstream 3: Policy and practice

Aligning and harmonising goods and services and construction procurement

We worked with stakeholders to investigate the risks, costs and benefits of aligning goods and services and construction procurement policies.

We found that buyers are adept at applying the two different policy frameworks, and there is little appetite for legislative or policy change at this time.

The VGPB has developed a draft integrated procurement framework to encourage agencies to harmonise their internal procurement arrangements for goods and services and construction, wherever the two frameworks overlap.

Alternate procurement paths

Towards the end of 2019–20, we published three new guides on innovative pathways to market. These complement our current range of guides that help buyers with the principle aspects of the procurement process.

Pre-commercial procurement

Pre-commercial procurement helps buyers purchase goods or services when the market does not have an existing or fully developed solution.

Early market engagement

Early market engagement is the strategic exchange of information with the market prior to procurement. This guide helps buyers understand how to drive early participation, innovation and collaboration with the market for upcoming procurement activities.

Procurement auctions

Procurement auctions and reverse auctions are when several sellers compete with one another to win the business of a buyer. Auctions can achieve greater value for money by bringing down prices. 

Uniforms and personal protective equipment

We continued to support the Government’s commitment to buying locally made uniforms and personal protective equipment (PPE).

On the buyer side, the Uniforms and PPE Monitor ran regular working groups for the major buying agencies, worked closely with Local Jobs First and the Local Jobs First Commissioner, and engaged the Australian Advanced Manufacturing Council on industry support initiatives.

On the industry side, the Monitor worked with the Textile, Clothing and Footwear Union (part of the Construction, Forestry, Maritime, Mining, and Energy Union), Ethical Clothing Australia, the Industry Capability Network Victoria, and numerous suppliers.

The Monitor set up a strategic partnership with the Australian Fashion Council – the national peak body for the textiles, clothing and footwear sector – to develop the sector’s capability to supply local manufacturers, and to build buyer capability.

Last year, an ethical supplier register was set up to connect buyers with accredited suppliers and support job creation. The register has been very successful with 24 suppliers registered at the end of the financial year and applications still coming in.

Key highlights:

  • three guides on innovative pathways to market
  • strategic partnership with Australian Fashion Council – the national peak body for the textiles, clothing and footwear sector
  • 24 suppliers signed up to the ethical supplier register
  • a draft integrated procurement framework to integrate goods and services and construction procurement

Workstream 4: Procurement technology

Procurement technology provides an opportunity to support better procurement decisions and simplify the procurement process for both buyers and suppliers. We are seeing considerable momentum in this space.

Buying for Victoria website

In early 2020, the Department of Premier and Cabinet delivered the second stage of the Buying for Victoria website, converting all PDF guidance to HTML to make content more accessible. The website brings together information for government suppliers and buyers on procuring goods and services, and construction works and services.

The content is being continually improved through a joint effort between the VGPB, the Department of Premier and Cabinet and the construction team in the Department of Treasury and Finance.

E-procurement strategy

The Department of Treasury and Finance ran a successful pilot for the proposed procurement data centre. After the pilot, the department started working with departments and major agencies to implement the rollout across government. This will provide visibility of consolidated procurement data, giving important insights into what government is purchasing.

A key part of the project is spend data analytics to collect and consolidate accounts payable data from across departments and Victoria Police, and classify the data against a common procurement taxonomy (the United Nations Standard Products and Services Code).

This project will also match spend categories to state purchase contracts to check that the benefits of these contracts are being maximised. Much of the work has been completed and we will implement this project at the end of August 2020.

Over the next year, the department will roll out two key data projects:

Master supplier database pilot

A master supplier database will provide a single point for suppliers to register and update their details and provide common required data. It will also give buyers visibility of the whole supplier base and enhance verification activities. The database will be piloted in 2020–21. The outcomes of the pilot will be evaluated prior to broader implementation.

Build data analytics capability

We will analyse categorised procurement data and establish plans and processes as to how this data will be used, analysed and published, so that we can start identifying the activities that will lead to savings and benefits.

Key highlights:

  • migrated all guidance on Buying for Victoria to HTML for better accessibility
  • procurement data centre pilot project successfully completed
  • Victorian Procurement Data Centre operations began
  • government spend data collected, consolidated and analysed
  • master Supplier Database Pilot began

Case study: Software solutions help take the legwork out of procurement

Many organisations are introducing software solutions to help run their procurement processes more efficiently. Victoria Police piloted two software solutions in 2019–20:

A cloud-based source-to-contract tool pilot is giving Victoria Police significantly more oversight of all procurements and at various stages of the procurement process thanks to online decisions being captured at multiple points and dashboard reporting. It has also been shown to reduce end-to-end processing timeframes.

Victoria Police's Procurement Department is also piloting DocuSign, a software that enables binding electronic signatures and signoffs, reducing the need to run hardcopy files around the organisation for approvals.

Workstream 5: Capability, process streamline and change management

We released a goods and services buyer capability framework in June 2020, setting out standardised skill sets for buying goods and services based on the complexity of the procurement. Organisations and individuals can use the framework to assess the skills and behaviours that procurement practitioners need to carry out procurement. In 2020–21, we will release:

  • a modified web version of the framework
  • a revised capability guide and tools that align with the new framework
  • a skills matrix

The online module to support professional procurement development was tested during the year and was very well received. The model was a collaboration with the Department of Premier and Cabinet, the Public Sector Innovation Fund and RMIT. The project rollout date is currently being considered.

We started working with the Australasian Procurement and Construction Council to develop training and education pathways for procurement.

To help buyers implement the procurement reform, we set up a procurement practitioners’ network to discuss procurement-related matters.

We also have a Government Buyers Community of Practice on the government intranet. This is a great resource and has grown to include more than 600 members.

Key highlights:

  • released a new goods and services buyer capability framework
  • two community of practice forums with 200+ attendees
  • developed and tested an introductory online procurement training module
  • set up a procurement practitioners’ network
  • Online Buyers Community of Practice grew to 600+ members

Other VGPB activities in 2019–20

Policy changes

Cybersecurity is a growing issue for both public and private sectors. In June 2020, we added new procurement requirements for cyber and information security to the relevant VGPB supply policies to ensure organisations apply best practice cyber risk management in their procurement of goods and services.

These new policy requirements apply to all goods and services procured by mandated agencies. For more on how goods and services policies have changed to manage information security, visit Procurement policy changes - goods and services.

Key highlights:

  • three policies updated to strengthen cybersecurity
  • one information security guide and three tools collaborated with the Department of Premier and Cabinet

VGPB accreditation

On 1 January 2019, the Department of Transport and the Department of Jobs, Precincts and Regions were formed from a machinery of government change in the former Department of Economic Development, Jobs, Transport and Resources.

All transport-related procurement now sits under the Department of Transport, including VicRoads and Public Transport Victoria from 1 July 2019.

Both new departments needed to apply for VGPB accreditation, given the substantial changes to their procurement profiles. We are currently reviewing the Department of Transport’s application and are working with the Department of Jobs, Precincts and Regions. Both are expected to gain accreditation during the next financial year.

Supplier Code of Conduct

Following last year’s review of the Supplier Code of Conduct to address the issue of modern slavery, we started another review in 2019–20 to strengthen ethical procurement practices and develop options for enhancing the application and operation of the Code. The outcomes of this review will be considered in late 2020.

Supplier satisfaction survey

Every year, the VGPB surveys suppliers to gauge their satisfaction with each organisation’s market approach. Up until 2019–20, the survey was sent out by the market research company contracted to conduct the survey.

To improve response rates, we moved to an event-based survey which is distributed directly by departments after completion of the procurement process. This resulted in our highest response rate to date (15 per cent). Given the success of this new approach, we will continue to send the event-based survey for the next two years.

Strategic priorities for 2020–23

Now that the VGPB has finished overseeing the 2017–18 procurement reform, it will begin working on four new strategic priorities developed at a series of planning workshops during the first half of 2020. The VGPB will also continue to oversee the ongoing work to develop and implement a procurement data centre and expand the VGPB supply policy framework to an additional 150 agencies.

Strategic priorities:

Drive savings and manage risks via data reporting and analysis

  • Support Strategic Sourcing to implement the data reporting and analytics project. This project will give us detailed analytics on government spend, which will help us look for new ways to deliver value for money.

Deliver a more outcome‐oriented procurement policy framework

  • review departments’ procurement models to understand pain points to inform future goods and services policy reform
  • review and update policies to emphasise benefit realisation and risk management
  • review VGPB guides to ensure they are relevant and scalable, particularly as more organisations come under the VGPB umbrella
  • continue to refine and streamline the Buying for Victoria website to make it easy for suppliers and buyers to find information

Deliver value creation across the procurement lifecycle

  • research opportunities to pilot alternative procurement models to show how different procurement approaches can drive value-for-money outcomes; and
  • work with lead agencies to strengthen tracking of saving and benefits reporting to ensure contracts continue to deliver benefits throughout their contract life

Uplift procurement capability

  • elevate procurement capability through stronger engagement, concentrating on contract management, alternative paths to market, supplier performance management and category management including supply chain risk assessments; and
  • continue to engage broadly across government and hold workshops and forums to increase procurement capability

Compliance

Monitoring compliance with VGPB policies

Monitoring compliance with VGPB policies

Under the Financial Management Act 1994, mandated organisations must comply with VGPB supply policies when procuring goods and services.

The VGPB monitors compliance of mandated and accredited organisations through six mechanisms. These organisations include the eight Victorian Government departments, Cenitex and Victoria Police.

Compliance mechanisms include:

  • annual supply reports
  • performance measures
  • audits
  • engagement
  • complaints
  • procurement activity plans 

Annual supply report

Organisations submit an annual supply report to the VGPB at the end of each financial year summarising their procurement activity, performance measure results and compliance with the VGPB supply policy framework. 

Audit program    

Organisations audit compliance with VGPB policies and submit an audit report to the VGPB every three years.

Performance measures    

Organisations monitor performance against five performance measures and report results in their ASR.

Engagement     

The VGPB’s engagement model has replaced the former oversight process. Chief procurement officers are encouraged to meet with the VGPB every year to discuss their procurement strategy, individual strategic procurements or any other procurement matters.

Complaints management    

Organisations maintain a complaints management system for supplier complaints related to the process and probity applied during a procurement activity. Organisations list complaints in their ASR.

Review of procurement activity plans    

Organisations submit procurement activity plans every year for review by the VGPB.

Compliance reported in annual supply reports

Organisations complete an annual supply report (ASR) at the end of each financial year.

In the ASR, organisations self-assess whether they complied with all required components of the VGPB supply policy framework. Unlike the VGPB audit process, it does not assess how well organisations comply with the components, but gives the VGPB a high-level overview of how organisations view their own compliance.

Compliance and machinery of government changes

If machinery of government changes result in significant changes to an organisation’s procurement function, they may need to be re-accredited by the VGPB. Both the Department of Transport and the Department of Jobs, Precincts and Regions are currently going through the accreditation process, after being established on 1 January 2019 from machinery of government changes.

Both departments have been setting up their procurement functions and developing all the necessary components to be accredited by the VGPB. The Department of Transport submitted its accreditation to the VGPB in May 2020. This is being reviewed and the department is expected to be accredited early in 2020–21.

In July 2020, the Department of Jobs, Precincts and Regions requested an extension and is now expected to finalise its accreditation by December 2020. The department indicated to the VGPB that it is currently operating under the procurement framework of the former Department of Economic Development, Jobs, Transport and Regions.

Overall compliance

In 2019–20, organisations reported a high level of compliance with the VGPB supply policy framework.

Areas of non-compliance related to:

  • the time needed to set up new procurement functions after machinery of government changes
  • lack of system functionality to measure compliance
  • contract management practices
  • oversights in publishing contracts valued over $100,000 within 60 days on the Buying for Victoria Supplier Portal website

Download this document for compliance with VGPB policies in 2019-20, including:

  • compliance against the 5 goods and services supply policies
  • other mandatory requirements
  • overall compliance

Compliance by policy area

Policy 1: Governance

Eight out of ten organisations reported full compliance with the requirements of this policy in 2019–20.

Non-compliance related to the time needed to establish new governance frameworks after machinery of government changes.

The Department of Jobs, Precincts and Regions has set up most components of its governance framework but has not transitioned to its new internal procurement unit. The terms of reference and proposed structure have been developed and it will be implemented in 2020–21.

VicRoads and Public Transport Victoria (PTV) transitioned to sit under the Department of Transport on 1 July 2019. The department needed to merge the three procurement areas, including their forward procurement planning. The three organisations each had a forward procurement activity plan for 2019, but not a merged plan incorporating procurement from all three organisations. This combined plan will be published in 2020–21.

The following table describes compliance with governance requirements in 2019-20:

Policy requirement Organisations complying
Did the organisation have a CPO throughout the year? 10 out of 10
Does the CPO have appropriate procurement qualifications and/or experience? 10 out of 10
Does the organisation have an internal procurement unit?  9 out of 10
Is the procurement strategy in place? This includes a:
  • procurement activity plan covering the next 12–24 months of planned procurements
  • contract management planning strategy
  • supplier engagement plan
  • capability development plan
9 out of 10
Did the organisation review its procurement activity plan in 2019–20? 9 out of 10
Is a high-level version of your procurement activity plan published on your website? 9 out of 10
Is your complaints management system in place? 10 out of 10

Policy 2: Complexity and capability assessment

All organisations reported compliance with the requirements of this policy.

The following table describes compliance with complexity and capability assessment requirements in 2019–20:

Policy requirement Organisations complying
Does the organisation have a complexity assessment methodology? Is the complexity assessment methodology being applied to all procurement activity?  10 out of 10
Is the complexity assessment methodology being applied to all procurement activity?  10 out of 10
Does the organisation have a procurement capability assessment methodology? 10 out of 10
Does the organisation have an appropriate level of procurement expertise, resources, systems and processes that enable procurement activities to be completed successfully? 10 out of 10

Policy 3: Market analysis and review

All organisations reported compliance with the requirements of this policy.

The following table describes compliance with market analysis and review requirements in 2019–20:

Policy requirements Organisations complying
Does the organisation have a market analysis methodology? 10 out of 10
Does the organisation have a process to identify aggregated purchasing opportunities (state purchase contracts and/or sole entity purchase contracts) 10 out of 10
Does the organisation have an asset disposal process? 10 out of 10

Policy 4: Market approach

Nine out of ten organisations reported compliance with the requirements of this policy.

The Department of Jobs, Precincts and Regions identified instances of non-compliance related to contracts and variations being entered into without obtaining appropriate approvals. The department is working on improving compliance and procurement capability through activities such as an external review of its procurement operating model, introducing Oracle Cloud contract module with mandatory training, and rolling out online procurement training sessions.

The following table describes compliance with market approach requirements in 2019–20:

Policy requirements Organisations complying
Does the organisation have a market approach strategy? 10 out of 10
Does the organisation have critical incidents protocols and processes? 10 out of 10
Were all critical incidents managed in accordance with the market approach policy? 10 out of 10
Does the organisation have an evaluation plan, supplier negotiation and selection process? 10 out of 10
Were all market submissions managed in compliance with the market approach policy?  9 out of 10

Policy 5: Contract management and contract disclosure

Three organisations did not fully comply with the requirements of this policy.

The Department of Environment, Land, Water and Planning had several instances of non-compliance breaches related to contract management. As a result, contract management training is now mandatory for contract managers in some business units.

The department is planning to roll out a new sourcing and contract management tool (Zycus) in late 2020, which will provide greater visibility and structure over contract management. Zycus is being implemented as part of a fully integrated solution which includes SAP, Oracle and a number of other technologies. Implementation was originally planned for 2019–20, but took longer to test than anticipated due to the complexity of the system.

The department also published a few contracts after 60 days on the Buying for Victoria Supplier Portal website. The department regularly reconciles its contracts database with the contracts publishing system and follows up any instances of non-disclosure with the appropriate contract managers to arrange publishing as soon as possible. However, this occasionally results in publishing after the 60-day period. The Zycus procurement system implementation will improve this process.

After machinery of government changes, the Department of Transport needed to merge three procurement systems and could not confirm that all contracts were managed in compliance with the contract management policy, due to a lack of visibility in these systems. This is being addressed by implementing Zycus.

The department also failed to disclose all contracts within 60 days. It is working through a backlog of contracts and will ensure all contracts are published by 31 July 2020.

The Department of Education and Training identified active contracts that did not have valid insurance certificates of currency on file. The department has mandated contract management training for contract managers of high-value/complexity engagements and updated procurement document templates to highlight the need for valid insurance certificates to be held on file by contract managers.

The Department of Jobs, Precincts and Regions disclosed all contracts as required, but some contracts were published outside the 60-day period due to resourcing changes and operational constraints.

The following table described compliance with contract management and disclosure requirements in 2019–20:

Policy requirement Organisations complying
Does the organisation have a contract management framework? 10 out of 10
Were all contracts managed in compliance with the contract management policy? 7 out of 10
Does the organisation have a contract disclosure process? 10 out of 10
Did the organisation disclose all contracts valued over $100 000 (incl. GST) within 60 days on the Buying for Victoria Supplier Portal website? 7 out of 10

Other mandatory requirements – Supplier Code of Conduct

All organisations included a requirement to sign a supplier code of conduct commitment letter in their market approaches.

Two organisations were not able to report compliance with the requirement to exclude suppliers that failed to return a signed letter for the following reasons:

  • The Department of Transport could not confirm compliance due to a lack of system functionality to measure this requirement. The implementation of Zycus will rectify this shortfall.
  • The Department of Justice and Community Safety noted one instance where a supplier was engaged despite them not having returned a signed letter.

The following table described compliance with other mandatory requirements in 2019–20:

Policy requirement Organisations complying
Did you include a requirement to sign a supplier code of conduct commitment letter in all your market approaches? 10 out of 10
Did you exclude suppliers that failed to return a signed letter? 8 out of 10

Audits

Our audit program:

  • verifies compliance with VGPB supply policies
  • minimises risks
  • improves processes to drive better procurement outcomes

The audit measures how well organisations are delivering benefits, efficiencies and better service delivery as a result of improved supplier engagement, increased market engagement and greater rigour in driving value from contracts.

Download this document for the audit program schedule and results at 30 June 2020:

Audit findings in 2019–20

Department of Premier and Cabinet

The VGPB identified several areas for improvement for the Department of Premier and Cabinet. The department has completed 90 per cent of the audit recommendations, making the following improvements:

  • creating new recordkeeping rules for the business and storing all procurement documents in a shared, central depository
  • developing contract management plans for all contracts
  • updating the contract management policy and guide to include document retention requirements
  • communicating contract management requirements to all relevant staff
  • setting up the internal procurement unit (the procurement governance committee) and updating the department’s procurement policy
  • checking the complaints management process
  • publishing a procurement activity plan with all required details
  • aligning the department’s procurement guide with the VGPB’s market approach policy
  • checking contract disclosure processes are in place and correctly implemented

The department still needs to train contract managers. This is due to be completed in early 2020–21.

Department of Education and Training

The Department of Education and Training had a positive audit result with only two recommendations. In response to recommendations, the department:

  • mandated contract management training for contract managers of high-value/complexity engagements
  • updated procurement document templates to highlight that contract managers must keep valid insurance certificates on file

Performance measures

Organisations track their procurement performance each year using the following performance measures and methodology.

Organisations applied new measures in 2019–20, after measures were revised in consultation with chief procurement officers in 2018–19.

Value created as a consequence of department procurement activity

Value of direct expenditure savings (and potential expenditure avoided) of the organisation’s procurements conducted during the financial year, as a percentage of total value of the organisation’s contracted spend during the financial year.

Managed spend

The proportion of goods and services procurement spend reviewed or undertaken by an organisation’s central procurement governance unit.

Increase in procurement capability

Annual assessment of change in organisational procurement capability year-on-year, measured by the VGPB capability assessment tool.

Supplier satisfaction assessment

Satisfaction with the procurement process and service provided by the organisation’s procurement function, based on a survey of supplier experience of individual procurement activities. The survey is conducted with successful and unsuccessful suppliers.

Planned procurement activity as a percentage of actual procurement activity

Number of planned procurements documented in the organisation’s internal forward activity plan against the number of market approaches actually undertaken during the financial year.

The supplier satisfaction survey moved from an annual data collection to an event-based survey sent out by organisations at the end of each procurement process. This has resulted in a higher response rate (15 per cent) and has given organisations more meaningful results to guide their supplier engagement.

More information on organisational performance, including a comparison with the previous two years, can be found under each organisation’s profile in the Procurement profiles.

Download this document for the summary of performance measures results in 2019-20, including:

  • value created through procurement
  • managed spend
  • increase in procurement capability
  • successful and unsuccessful suppliers
  • planned procurement activity

Engagement

In 2018–19, the VGPB moved from an organisational oversight model focused on risk and complexity to an engagement model. Under the new model, organisations engage with the VGPB on a broader range of procurement activities, providing the opportunity for the VGPB to monitor compliance more widely, engage and interact with procurement personnel across government and give strategic advice.

Under this new engagement model, the VGPB received eight submissions from organisations in 2019–20. The VGPB gave strategic advice to chief procurement officers, procurement practitioners and stakeholders on a range of procurement matters. VGPB members also attended and presented at meetings with several departments’ internal procurement units and procurement boards to discuss a range of procurement-related matters and priorities during the year.

VGPB members supported and attended procurement reform subcommittee meetings, providing strategic procurement advice.. Relevant VGPB members also provided oversight and advice on developing business cases and market engagement strategies for the renewal of four state purchase contracts (SPCs) and the establishment of two new SPCs during 2019–20.

Three board members reviewed the VGPB’s audit compliance program and engaged with chief procurement officers and audit practitioners to develop options for establishing a more comprehensive audit program. These options will be reviewed by the VGPB in August 2020 in anticipation of transitioning to the new audit program in 2020–21. Two VGPB members are also helping the Department of Premier and Cabinet with a program of work to lift procurement capability across government in regard to cybersecurity and information technology procurement.

Complaints

A complaint is defined as an issue or concern expressed by a supplier in relation to the process and probity applied by an organisation when carrying out a procurement activity.

Organisations must have a complaints management system which sets out the process for addressing complaints by suppliers. Chief procurement officers (CPOs) are responsible for the complaints management process. In 2019–20, all organisations had a complaints management system in place.
Organisations reported four complaints related to procurement activity, as shown in Table 13. This compares to 10 complaints in 2018–19, nine in 2017–18 and five in 2016–17.

Organisations reported four complaints related to procurement activity. This compares to 10 complaints in 2018–19, nine in 2017–18 and five in 2016–17.

Department of Treasury and Finance

Number of complaints: 1

Nature of complaint:

Late submission to an SPC tender, and an assertion that the process for informing stakeholders was deficient.

Action taken:

The CPO investigated and found that the integrity of the tender process had not been compromised. The CPO noted that the independent probity adviser engaged by the department had also found that the late submission should not be accepted. The matter was referred to the VGPB when the complainant was dissatisfied with the outcome of the investigation by the CPO.

Status:

Referred to VGPB.

Environment, Land, Water and Planning

Number of complaints: 2

Nature of complaint:

Poor administration of procurement process.

Action taken:

CPO investigated and found the process to be fair and reasonable. The complainant wanted to escalate the matter and was advised how to do so (in November 2019). To date, the VGPB has not received a complaint, so this is considered as resolved.

Status:

Resolved.

Nature of complaint:

Conduct of the risk evaluation process and awarding the contract to a ‘non-conforming’ bid.

Action taken:

The CPO reviewed the tender process and the report compiled by the independent probity advisor. The CPO was satisfied that the process was fair and reasonable and informed the complainant in writing.

Status:

Resolved.

Victoria Police

Number of complaints: 1

Nature of complaint:

Tenderers were not treated in a fair and equitable manner, the evaluation process was flawed, and feedback given to unsuccessful suppliers was not timely or transparent

Action taken:

Victoria Police investigated the complaint and found no adverse findings. It did identify some improvement opportunities. The complainant escalated the complaint to the VGPB. The VGPB investigated and based on their response, Victoria Police committed to make several improvements, including reviewing and consolidating procurement practitioner skills, focusing on education and capability and improving sourcing and contract management systems.

Status:

Resolved.

Resolution of complaints from 2018–19

Victoria Police had one complaint in 2018–19 that was still under investigation at the end of that financial year. The complaint related to the wording of a response to a clarification question which allegedly implied a preconceived outcome. Victoria Police met with the supplier to respond to the complaint and the matter was resolved in September 2019.

Towards the end of 2018–19, a complainant to the Department of Health and Human Services escalated their complaint to the VGPB. The complaint related to two procurement processes. One was found to be outside the jurisdiction of the VGPB. The second was investigated and no non-compliance found. The VGPB did recommend the department make two minor improvements to its complaints management process. The complainant was advised of the outcome in July 2019.


Procuring goods and services

Data on procurement of goods and services 2019-20.

Capturing data on procurement of goods and services

In 2019–20, the VGPB collected procurement data from 10 organisations – the eight Victorian Government departments, Cenitex and Victoria Police.
VicRoads and Public Transport Victoria transitioned into the Department of Transport on 1 July 2019 and now report their procurement data through this department.

Contract approvals

The VGPB collects data on contract approvals of all (non-construction) goods and services contracts valued at $100,000 or more (including GST).

Organisations report on three types of contracts:

  • one-off supply contract - A single purchase of a specific quantity of goods or services
  • sole entity purchase contract (SEPC) - A standing offer agreement for goods and services commonly used within an organisation. SEPCs are mandatory for the organisation establishing the arrangement
  • state purchase contract (SPC) - A standing offer agreement for goods and services commonly used across the Victorian Government, such as stationery, print management and ICT services

SEPCs and SPCs can run over multiple years and may include options to extend the contract.

The values reported in the annual report reflect the total estimated contract value at contract approval, including any options to extend (regardless of whether options are exercised). They do not reflect actual spend under the contract.

One-off supply contract approval data does not include purchases from SPCs and SEPCs.

Some contracts may include a mix of goods and services. Organisations generally categorise these depending on whether they are predominantly goods or services.

All figures in the tables and text in the annual report have been rounded. Discrepancies in tables between totals and sums of components reflect this rounding.

Contracts approved in 2019–20

In 2019–20, the 10 organisations reported 1,657 procurement contract approvals valued at $1,951.7 million.

VGPB goods and services supply policies include critical incident procurement protocols to enable government to quickly respond to any emergency, crisis or disaster by adopting streamlined and flexible procurement processes. Organisations procured significantly more goods and services under the VGPB’s critical incident procurement protocol than in previous years due to the need to respond quickly to the Victorian bushfires and COVID-19. To read more about the critical incident procurement protocol and contracts approved under this policy in 2019–20, refer to One-off supply approvals (critical incidents) later in this section.

About one-third of all one-off supply contract approvals were procured under the critical incident procurement protocol.

Download this document for the number and value of contract approvals in 2019–20 by goods and services:

The majority of contract approvals were for one-off supplies (97.0 per cent), followed by SEPCs (2.7 per cent) and SPCs (0.4 per cent). In terms of value, one-off supplies were equivalent to 79.8  per cent of the total value of approved contracts, followed by SPCs at 15.1 per cent and SEPCs at 5.1 per cent.

The difference in proportions between numbers and values is because SPCs and SEPCs generally have higher estimated contract values and span multiple years.

The number of contracts increased in 2019–20, but the total value decreased. This can be attributed to the increase in one-off supply contracts for critical incident procurements and the decrease in value in standing offer agreements.

SPCs and SEPCs typically have higher contract values and span multiple years. For some organisations, the need to prioritise response and recovery efforts will have delayed planned procurements, including setting up and renewing these contracts.

The number and value of SEPC and SPC approvals usually varies from year to year based on the specific procurement projects that need to be carried out in any given year, and/or the expiry and need for renewal of SEPCs and SPCs.

Download this document for the number and value of contracts approved over the last three years:

One-off supply contract approvals (non-critical)

In 2019–20, organisations reported 1,036 one-off supply contract approvals valued at $1,272 million, excluding critical incident procurement contract approvals.

This compares to 1,239 one-off supply contract approvals in 2018–19 valued at $1,250 million.

Download this document for the number and value of one-off supply contract approvals by organisation and by goods and services in 2019–20:

One-off supply approvals (critical incidents)

The VGPB’s market approach policy allows organisations to adopt streamlined and flexible procurement processes to facilitate an immediate response to an emergency, crisis or disaster (referred to in the policy as a critical incident). This policy applies to all Victorian Government departments and any public bodies that are subject to VGPB supply policies (hereby referred to as organisations).

Critical incident protocols and processes are invoked when a relevant minister, accountable officer or chief procurement officer (CPO) declares a critical incident to exist in relation to the operation of procurement processes by reason of:

  • an emergency within the meaning of the Emergency Management Act 1986
  • an incident that causes an organisation's business continuity plan to be activated
  • an incident that represents a serious and urgent threat to the health, safety or security of a person or property
  • a situation that represents a serious or urgent disruption to services provided by an organisation

During a critical incident, all other supply policies do not apply to the extent that the critical incident makes it impractical to apply them. Regardless, an organisation must:

  • take into account value for money, accountability, information asset security and probity to the extent that they can be applied given the severity and urgency of the incident
  • adopt minimum recordkeeping processes
  • adhere to contract disclosure requirements

Organisations must develop a plan or adopt a format that allows for minimum recording of certain information in relation to procurement decisions during a critical incident.

The accountable officer or CPO is to define a date at which procedures under critical incidents cease, after which organisations resume operating under standard VGPB procurement policies and processes.

Nine organisations reported 571 critical incident procurements valued at $285.4 million in 2019–20. Sixteen incidents were reported in 2018–19, valued at $4.6 million.

Most of these contract approvals (91 per cent) were for COVID-19 related goods and services. The remaining contract approvals were for bushfire-related goods and services, apart from one critical incident procurement in the Department of Health and Human Services to ensure business continuity related to a cyberattack.

Download this document for the number and value of critical incident procurement by organisation in 2019–20:

Bushfire contract approvals related to procurements for goods and services such as:

  • equipment and machinery hire and lease
  • clean-up
  • accommodation
  • admin staff to run the Personal Hardship Assistance Program Emergency Line
  • recovery services

COVID-19 related contract approvals related to procurements for goods and services such as:

  • supporting remote working arrangements
  • personal protective equipment and deep cleaning
  • testing and contract tracing services
  • supporting frontline and other COVID-19 workers
  • managing quarantine arrangements

Responding to COVID-19

For many organisations, it was the first time they had procured goods and services under the critical incident procurement protocol. Here are two examples of how organisations were able to respond during COVID-19.

Case study: Keeping passengers and probity safe during a pandemic

To help keep passengers safe during COVID-19, the Department of Transport installed hand sanitiser stations at train stations and tram stops in preparation for a full return to passenger services of public transport.

The department wanted to find a supplier that could provide both ‘touchless’ hand sanitiser dispensers and regular top ups of the hand sanitiser liquid for at least six months at 370 locations.

Transport’s procurement team led the market approach and ran a full quotation process within 12 business days, including negotiations, best and final offer, internal approvals and contract execution.

The team liaised with various departments to identify the best commercial outcome throughout the process, driving a value-for-money solution while upholding probity principles.

Case study: Supporting staff to work remotely during COVID-19

Cenitex provides ICT support and services for Victorian Government departments and agencies. When the public service transitioned to remote working in response to COVID-19, Cenitex was inundated with service desk requests. They needed to find quick solutions to meet their customer’s needs during this challenging time.

First, they engaged a third-party provider to set up a customer self-service request portal. This gave customers an alternative quick-access communication channel for chat, self-help articles and updates on critical activities to support working from home.

Second, they engaged third-party resources to provide extra technical support, helping with remote access configuration queries and related desktop and service desk style support services.

Cenitex’s procurement team helped get these two support services up and running quickly under the critical incident procurement policy.

Variations

Most variations reported in 2019–20 related to one-off supply contracts.

The following table lists the number of contract variations by value range in 2019–20:

Variations (value range) One-off supply contracts Sole entity purchase contracts State Purchase Contracts
$0 – $9 999 18 0 0
$10 000 – $99 999 109 4 0
$100 000 – $999 999 129 8 0
> $1 million 39 4 4
Total 295 16 4

An organisation may vary a contract for numerous reasons:

  • the project scope or timeframe may change during the contract lifespan, requiring a variation to the original contract
  • a lack of suitable suppliers may make it more economical to vary a contract than launch a full tender process
  • organisations may need to extend contracts to provide service continuity after machinery of government changes or while they prioritise their response to emergency events such as bushfires or COVID-19
  • a variation can cover a transition period while an organisation prepares for a full tender process

The following table shows the number of variations reported by organisations in 2019–20:

Organisation Number of variations
Education and Training n/a *
Environment, Land, Water and Planning 33
Health and Human Services 43
Jobs, Precincts and Regions 63
Justice and Community Safety 15
Premier and Cabinet 56
Transport 76
Treasury and Finance 2
Cenitex 0
Victoria Police 27
Total 315

* The Department of Education and Training keeps full records of all variations but cannot extract number and value from its current procurement system. A new system will be implemented in 2021 to enable this data capture.

Procurement complexity

Procurement complexity refers to the level of difficulty involved in procuring a good or service. An assessment of complexity considers factors such as risk, total cost of ownership and market dynamics.

When buying goods and services, organisations complete a complexity assessment and categorise procurements into one of four complexity quadrants. The quadrant guides the sourcing strategy and how to manage risks and contractual arrangements.

The four complexity quadrants are:

  • Transactional - Low-value and low-risk transactions where approved suppliers (e.g. SPCs) are not available.
  • Leveraged - Frequently used goods and services in a competitive marketplace that are procured by an individual organisation or whole of government, where the organisation has the ability to drive value.
  • Focused - Goods and services where a limited number of suppliers are available or where novel commercial arrangements are in place. May include whole-of-government contracts.
  • Strategic - Goods and services in a competitive market that are high value, where business criticality is high, and/or where the good or service is of state significance. May include whole-of-government contracts.

Overview of complexity

VGPB policies require upfront planning, category management and detailed market analysis. Organisations identify the best approach to market for any given category, while also identifying opportunities to aggregate demand for frequently used goods and services procured from a competitive marketplace, giving them more buying power to drive value for money.

For critical incident procurements, organisations will usually complete a complexity assessment as part of their market approach, but it is not mandatory. For this reason, critical incident procurements are not included in the breakdown of complexity in this section.

The following table shows the number and value of contract approvals by complexity quadrant in 2019–20:

Complexity quadrant Number Value ($m) Average value per contract ($m)
Transactional 632 $471.8 $0.7
Leveraged 148 $251.0 $1.7
Focused 199 $321.5 $1.6
Strategic 107 $622.1 $5.8
Totals 1,086 $1,666.3 $1.5

Most procurement approvals were transactional (58.2 per cent).

The strategic quadrant had the lowest number (9.9 per cent) but the highest value (37.3 per cent).

Download the following document to compare the number and value of contract approvals by complexity quadrant in 2019–20 with the two previous years.

The number and value in each complexity quadrant varies from year to year based on the specific procurement projects that need to be carried out in any given year. Complexity data for 2019–20 excludes 571 one-off supply contracts valued at $285.4 approved under the critical incident protocol. This should be taken into account when comparing complexity data with previous years.


Harnessing the buying power of government

Understand how combining demand harnesses greater economies of scale for Government when negotiating with suppliers.

Harnessing the buying power of government

By combining demand for commonly used goods and services, government can harness greater economies of scale when negotiating with suppliers.

Aggregated purchasing is grouping together demand for commonly purchased goods and services to make the most of greater economies of scale when procuring from the marketplace.

Aggregating purchasing power allows organisations to negotiate lower prices and better terms and conditions and reduces risk and the administrative burden on buyers and suppliers.

The Victorian Government has a number of state purchase contracts (SPCs) and registers for commonly purchased goods and services.

More than 200 organisations benefit from the time and cost savings offered by SPCs. Total annual spend under SPCs is estimated to be about $1.7 billion (not including spend under the Legal Services Panel).

Who can access SPCs?

All government organisations and agencies can access SPCs provided they commit to the rules of use. For organisations bound by VGPB policies, the individual rules of use for the SPC apply.

SPCs can be sole or multiple (panel) supplier arrangements or register arrangements. Panels can be open or closed. Open panels can accept new suppliers at set or other times during the contract period. Closed panels are restricted to the suppliers engaged at the start of the contract.
Registers consist of prequalified suppliers, compliant where required with the eligibility criteria to provide goods and services to Victorian Government.

Other organisations that can access SPCs, on application to the relevant lead agency, include local and federal government organisations and not-for-profit organisations.

Who manages SPCs?

The Department of Treasury and Finance manages almost all non-ICT goods and services SPCs. The only exception is the Legal Services Panel, which is managed by the Department of Justice and Community Safety.

The Department of Premier and Cabinet is responsible for ICT SPCs, apart from Rosetta, which is managed by Cenitex.

Looking for new opportunities

Throughout 2019–20, the VGPB continued to review organisations’ forward-looking procurement activity plans. This helps the VGPB to continue to support the departments of Treasury and Finance and Premier and Cabinet in identifying additional opportunities for aggregation to drive greater value-for-money outcomes.

The Department of Treasury and Finance has:

  • been leading a program of data analytics designed to deliver improvements to existing SPCs and identify opportunities for new SPCs
  • developed a strategy and market approach document to lay the foundation for a modern and flexible banking and financial services SPC

Victoria is also joining with New South Wales, Queensland and the Australian Capital Territory in a joint Fuel and Associated Products procurement to drive better value for money.

The Department of Premier and Cabinet is exploring options for:

  • Amazon Web Services agreement
  • ServiceNow agreement
  • Google agreement

The Department of Premier and Cabinet is also looking at introducing virtualised buying for all ICT SPCs through the eServices program.

About the data in this section

The contract values in the tables are estimates. Expenditure occurs as organisations order and consume goods and services under the SPC. This takes place over the contract term. Total estimated value includes the initial contract term, and any options to extend the contract (although these may or may not be exercised).

State purchase contracts approved in 2019–20

In 2019–20, six SPCs were approved with an estimated total value of $295.5 million. This compares to nine SPCs approved in 2018–19, with an estimated total value of $885.8 million.

Four SPCs were extended under a contract variation in 2019–20: 

  • The Department of Premier and Cabinet varied three SPCs during the year – Telecommunication (TPAMS 2025) Services, Intra-Government Secured Network and Victorian Office Telephony Services – to ensure these contracts end when the new Victorian Telecommunications Service contract starts.
  • The Department of Treasury and Finance varied one SPC during the year after market analysis showed no competitors in the market offering the same or similar service.

Download this document for the list of state purchase contracts approved in 2019–20:

The benefits of ICT SPCs

ICT is an obvious contender for combining purchasing power, given the prevalence of technology in our working lives. In 2019–20, ICT SPCs continued to offer benefits and value-for-money outcomes across government:

The End User Computing Agreement played an important role during COVID-19 as new devices were ordered to support work-from-home arrangements. Through this agreement, Victorian Government device orders were prioritised with suppliers, with any backlog carefully managed and customers kept informed throughout.

The Microsoft Enterprise Agreement was renegotiated for a further three years in March 2020. This SPC is used by all inner budget departments (except the Department of Education and Training), as well as 29 outer budget sector agencies. Consolidating government spend has led to significant savings benefits for Office 365 (both cloud and perpetual licences), Dynamics 365 (cloud licences) and Azure cloud services.

The Multifunctional Printing Device SPC was refreshed this year. Negotiations resulted in better value for the state with simplified purchasing processes, streamlined reporting, social procurement provisions and enhanced service level agreements. For many of the devices available under the contract, higher discounts were achieved and more flexibility for customers with a range of devices to better meet their business requirements.

The SPC team developed a strategic sourcing operations manual for ICT procurement to be used when sourcing all ICT SPCs. It includes detailed RASCI guidelines (Responsible, Accountable, Supporting, Consulted and Informed).

Sole entity purchase contracts approved in 2019–20

In 2019–20, 44 SEPCs were approved with an estimated total value of $98.8 million.

This compares to 32 SEPCs approved in 2018–19, with an estimated total value of $441.9 million.

The following table lists the sole entity purchase contracts approved in 2019-20:

Organisation Number Value ($m)
Environment, Land, Water and Planning 15 $15.1
Health and Human Services 1 $3.5
Justice and Community Safety 1 $0.2
CenITex 3 $3.7
Victoria Police 24 $76.3
Total 44 $98.8

Appendix - Sole entity purchase contract data

Download this document for a breakdown of SEPCs approved in 2019–20.


Procurement profiles

Read procurement profiles of VGPB accredited organisations.

This section summarises the procurement profile and performance of the 10 organisations that reported directly to the VGPB at the end of this financial year.

Organisations generally operate a centralised or decentralised procurement model, or somewhere in between. In a centre-led model, procurement is typically managed by a single dedicated part of the business. In a decentralised model, procurement is carried out across the business. For some organisations, high-value procurements may be carried out centrally, while lower value transactional procurements are carried out by the relevant business unit.

In 2019–20, some organisations needed to re-prioritise their procurement activities to respond to COVID-19 and bushfires. This led to delays in planned procurements and affected saving opportunities. This is reflected in their performance measure results.

Note that:

  • The accountable officer (AO), chief procurement officer (CPO) and internal procurement unit chair (IPU Chair) listed under each organisation is the person in that role at 30 June 2020.
  • Managed spend was introduced this year as a new performance measure, so comparisons with previous years are unavailable.
  • The complexity profile graphic is based on number of contract approvals, not value.

Department of Education and Training

The Department of Education and Training’s (DET) vision is that together we give every Victorian the best learning and development experience, making our state a smarter, fairer and more prosperous place. To achieve this vision, DET delivers and regulates statewide learning and development services to more than one-third of all Victorians, across the early childhood education, school education and training and skills sectors.

Procurement profile in 2019–20

163 one-off supply contract approvals valued at $189.4 million (contracts valued at $100 000 or more).

276 critical incident contract approvals valued at $30.1 million (contracts valued at $100 000 or more).

Highlights:

  • rolled out a government election commitment to provide free pads and tampons in all Victorian public schools and negotiated major savings through direct negotiation with suppliers
  • developed and rolled out online training modules covering the five stages of the procurement process, to align with face-to-face training offerings
  • completed actions from an internal audit of contract management
  • continued to build negotiation capabilities in corporate procurement staff

Top categories of spend:

  • professional services
  • contract recruitment
  • IT services
  • education and training services 

Centre-led procurement function.

Focused and leveraged complexity profile:

  • transactional - 22%
  • leveraged - 35%
  • focused - 40%
  • strategic - 2%

Accountable Officer: Jenny Atta, Secretary, Office of Secretary

Chief Procurement Officer: Tarkan Koman, CPO, Procurement Division

Internal Procurement Unit Chair: Kate Rattigan, Deputy Secretary, People and Executive Services 

Performance

DET's Procurement Division has continued to make incremental improvements to well-established processes. This is particularly visible in the increased value created from overseen procurement activities.

Download this document for DET’s performance in 2019–20, compared with the two previous years:

Department of Environment, Land, Water and Planning

The Department of Environment, Land, Water and Planning (DELWP) employs more than 4 000 staff in 82 locations across Victoria. DELWP brings together planning, local government and infrastructure, environment, climate change, energy and water functions, to ensure an integrated approach to the development of long-term state and regional strategies that build on social, environmental and economic opportunities to provide for future population growth and change.

A significant portion of DELWP’s procurement activity focuses on emergency management related to fire and flood recovery, including a contracted fleet of around 50 aircraft.

Solar Victoria was set up as a portfolio agency under DELWP on 1 July 2019 to deliver the Solar Homes program.

Procurement profile in 2019–20

211 one-off supply contract approvals valued at $250.6 million (contracts valued at $100 000 or more).

15 SEPC approvals valued at $15.1 million (contracts valued at $100 000 or more).

7 critical incident contract approvals valued at $3.9 million (contracts valued at $100 000 or more).

Highlights:

  • completed the design for a new procurement operating model
  • DELWP’s Vendor Management System was adopted as the recommended whole-of-government approach
  • enhanced negotiation capability and improved milestones and metrics in contracts
  • achieved procurement savings of $22 million (including direct and indirect savings)

Top categories of contract approval:

  • professional services
  • aviation services
  • ICT services
  • fire fleet services

Centre-led procurement model.

Mostly transactional complexity profile:

  • transactional - 81%
  • focused - 11%
  • strategic - 8%

Accountable Officer: John Bradley, Secretary, Office of the Secretary

Chief Procurement Officer: A.J. Karliner, CPO, Finance, Corporate Services

Internal Procurement Unit Chair: Helen Vaughan, Deputy Secretary, Water and Catchments

Performance

Overall, DELWP performed well in 2019–20 with procurement increasingly being seen as a core function of the department. The Central Procurement Team was expanded to cater for increased procurement requirements.

Download this document for DELWP’s performance in 2019–20, compared with the two previous years.

Department of Health and Human Services

The Department of Health and Human Services (DHHS) is responsible for developing and delivering policies, programs and services that support the health, wellbeing and safety of all Victorians.

Procurement profile in 2019–20

75 one-off supply contract approvals valued at $54.4 million (contracts valued at $100 000 or more).

71 critical incident contract approvals valued at $50.4 million (contracts valued at $100 000 or more).

1 SEPC approval valued at $3.5 million (contracts valued at $100 000 or more).

Highlights:

  • procurement officers took on substantial work to help deliver the Government’s response to COVID-19
  • procurement was involved in establishing 447 contracts and received no complaints during the year
  • the Procurement Branch used the new Office 365 tools to improve many functions and process, including automating procurement support for low-value procurements, online forms and workflows systems
  • procurement officers completed Procurement Fundamentals Skillset training
  • DHHS continued to implement social procurement and completed the department’s Aboriginal Procurement Target Implementation Plan

Top categories of contract approvals:

  • specialist providers
  • IT systems, software and support
  • training
  • medical supplies 

Centre-led procurement function.

Predominantly strategic complexity profile:

  • transactional - 12%
  • leveraged 34%
  • strategic - 54%

Accountable Officer: Kym Peake, Secretary

Chief Procurement Officer: Genine Wallinga, Director and Chief Procurement Officer, Procurement, Contract and Business Services

Internal Procurement Unit Chair: Greg Stenton, Deputy Secretary, Corporate Services

Performance

Most performance measure results increased in 2019–20 due to embedding DHHS’ centre-led approach within department operations. The Procurement Branch has a strong commitment to continuous improvement which drives greater performance on all procurement functions, including the performance measures.

Download this document for DHHS’ performance in 2019–20, compared with the previous two years.

Department of Jobs, Precincts and Regions

The Department of Jobs, Precincts and Regions (DJPR) is firmly focused on growing Victoria’s economy and ensuring it benefits all Victorians – by creating more jobs for more people, building thriving places and regions, and supporting inclusive communities.

DJPR was established on 1 January 2019 and is expected to achieve VGPB accreditation by December 2020.

Procurement profile in 2019–20

158 one-off supply contract approvals valued at $84.8 million (contracts valued at $100 000 or more).

33 critical incident contract approvals valued at $116.8 million (contract value excludes contracts where value is still to be finalised).

Highlights:

  • conducted a procurement model review to ensure the recommended model maximises return on investment from procurement activities and aligns with organisational priorities such as Social Procurement and Local Jobs First
  • delivered face-to-face knowledge sharing sessions to internal procurement stakeholders
  • created a dedicated procurement intranet portal
  • updated online procurement evaluation training to reflect current policies and best practice
  • launched DJPR’s social procurement strategy

Top categories of contract approval:

  • professional services
  • IT and telecoms
  • staffing services
  • utilities, property and land
  • agriculture and marine

Centre-led procurement function.

Mostly transactional procurement profile:

  • transactional - 72%
  • leveraged - 4%
  • focused - 13%
  • strategic - 10%

Accountable Officer: Simon Phemister, Secretary

Chief Procurement Officer: Jessica Lambous, Executive Director, Investment and Procurement, Corporate Services Group

Internal Procurement Unit Chair: To be confirmed

Performance

DJPR has improved its procurement capability and is continuing to work towards VGPB accreditation. Procurement in 2019–20 was largely influenced by the procurement activities relating to response and recovery efforts for critical incidents.

Download this document for DJPR’s performance in 2019–20. DJPR was established on 1 January 2019 so no previous performance data is available.

Department of Justice and Community Safety

The Department of Justice and Community Safety (DJCS) leads the delivery of justice and community safety services in Victoria by providing policy and organisational management. Its extensive service delivery responsibilities range from managing the state’s prison system to providing consumer protection and enforcing court warrants.

Procurement profile in 2019–20

82 one-off supply contract valued at $403.3 million (contracts valued at $100 000 or more).

1 SEPC approval valued at $181,600 (contracts valued at $100 000 or more).

95 critical incident contract approvals valued at $38.6 million (contracts valued at $100 000 or more).

Highlights:

  • set up a pilot for category management of IT services
  • implemented a data analysis tool to support the new category management structure
  • started a procure-to-pay project to make it easier to make simple purchases for procurement activities under $250,000
  • upgraded Zycus and completed a simplification project, including DocuSign for electronic signing of contracts
  • exceeded 1 per cent target for Aboriginal procurement

Top categories of contract approvals:

  • outsourced services
  • prisoner services
  • food services
  • forensic services

Centralised procurement model.

Focused and transactional complexity profile:

  • transactional - 33%
  • leveraged - 13%
  • focused - 35%
  • strategic - 19%

Accountable Officer: Rebecca Falkingham, Secretary

Chief Procurement Officer: Thomai Veginis, CPO, Procurement Services

Internal Procurement Unit Chair: Andrew Minack, Deputy Secretary, Corporate Governance and Support 

Performance

DJCS underwent more restructuring in 2019–20, appointing a new CPO and bringing more staff from other business areas into Procurement Services. DJCS is moving towards a category-based procurement model, with more contracts now being managed by the Central Procurement Team.

Download this document for DJCS’s performance in 2019–20, compared with the two previous years.

Department of Premier and Cabinet

The Department of Premier and Cabinet (DPC) leads the public service in delivering the government’s agenda and works across the public service to promote the public interest and create public value. DPC does this by delivering on the public service mandate to uphold integrity, act with purpose and remain uncompromising in the provision of robust, high-quality advice and service delivery.

DPC leads the information and communications technology (ICT) state purchase contract (SPC) arrangements for ICT goods and services used across government. Contracts include software applications and licensing, hardware, telecommunications, and eServices and IT infrastructure registers.

A new agency, Bushfire Recovery Victoria, was set up under DPC during the year.

Procurement profile in 2019–20

64 one-off supply contract approvals valued at $35.1 million (contracts valued at $100 000 or more).

5 SPC approvals valued at $230.5 million (contracts valued at $100 000 or more).

47 critical incident contract approvals valued at $24.9 million (contracts valued at $100 000 or more).

Highlights:

  • updated procurement policies and guides and implemented a process for a central depository for storing procurement documents
  • implemented data capture tools to report on spending with social enterprises, all procurement activity and customer relationship management
  • increased focus on compliance and quality assurance reviews with market invitations, leading to DPC’s best supplier satisfaction scores to date
  • increased capability through group and individual training, partnering with business areas on complex procurements, simplifying forms and templates and updating procurement information on the DPC intranet

Top categories of contract approval:

  • professional advisory services
  • labour contractor services
  • software licensing
  • IT hardware

Decentralised procurement function.

Mostly transactional complexity profile:

  • transactional - 79%
  • leveraged - 4%
  • focused - 4%
  • strategic - 13%

Accountable Officer: Chris Eccles, Secretary

Chief Procurement Officer: Kylie Callander, CPO, Corporate Services

Internal Procurement Unit Chair: Andrew Campbell, Executive Director, Corporate Services; Governance, Policy and Coordination

Performance

In 2019–20, DPC procurement improved across all performance measures after a strong focus on improving governance by addressing VGPB audit recommendations and updating policies and guidelines. DPC worked on improving procurement processes and making it easier for staff to follow them.

The procurement team committed to providing the department with consistent, quality procurement advice and partnering with business areas on complex procurements, all of which contributed to improved capability across DPC.

Download this document for DPC’s performance in 2019–20, compared with the two previous years.

Department of Transport

The Department of Transport (DoT) plans, builds and operates an integrated, sustainable and safe transport system for Australia’s fastest-growing state.
VicRoads and Public Transport Victoria (PTV) transitioned into DoT from 1 July 2019.

One of DoT’s key programs of work is the Major Transport Infrastructure Agency (MTIA), delivered through the Office of the Director-General. MTIA is responsible for the Government’s ‘big build’ transport construction program across five key projects: North East Link Project, Level Crossing Removal Project, Westgate Tunnel Project, Major Road Projects Victoria and Rail Projects Victoria. MTIA has a dedicated CPO.

Procurement profile in 2019–20

218 one-off supply contracts approval valued at $190.9 million (contracts valued at $100 000 or more).

2 critical incident contract approvals valued at $2.3 million (contracts valued at $100 000 or more).

Highlights:

  • after merging DoT, VicRoads and PTV, the Procurement Branch worked with stakeholders to develop an integrated procurement framework, which has since been approved by DoT’s executive board
  • implemented procurement and contract management training modules
  • engaged several Aboriginal enterprises offering labour-hire services for construction, achieving both social procurement and workforce outcomes
  • rolled out a central reporting tool to improve social procurement and Local Jobs First reporting
  • began introducing a single source-to-contract tool to manage the end-to-end procurement process across DoT, VicRoads and PTV

Top categories of contract approvals:

  • professional services
  • rolling stock
  • franchise services
  • ICT services
  • human resources

Centre-led procurement function.

Mainly transactional complexity profile:

  • transactional - 65%
  • leveraged - 13%
  • focused - 20%
  • strategic - 2%

Department of Transport

Accountable Officer: Paul Younis, Secretary

Chief Procurement Officer: Lisa Williams, CPO

Internal Procurement Unit Chair: Janine Haddow, Procurement Advisory Committee Chair 

Major Transport Infrastructure Agency

Accountable Officer: Corey Hannett, Director-General

Chief Procurement Officer: Juliana Tiong, CPO

Internal Procurement Unit Chair: Arthur Apted, Procurement Oversight Committee Chair

Performance

Overall, DoT performed relatively well given the big machinery of government changes in 2019. The department’s new integrated procurement framework and upcoming implementation of a single source-to contract tool (Zycus) will enable the Procurement Branch to build capability, apply controls and use automation to reduce the risk of errors.

Download this document for DoT’s performance in 2019–20. Given the changes to DoT’s procurement profile in 2019, it is not possible to make a meaningful comparison with previous years.

Department of Treasury and Finance

The Department of Treasury and Finance (DTF) provides economic, financial and resource management advice to help the government deliver its policies. DTF’s procurement profile focuses largely on professional services to support these functions and is primarily transactional.

DTF is the lead agency for most non-ICT SPCs through its Strategic Sourcing Group.

Invest Victoria transitioned into DTF as a result of machinery of government changes on 1 January 2019. DTF began overseeing its procurement from 1 July 2019.

Procurement profile in 2019–20

25 one-off supply contract approvals valued at $6.2 million (contracts valued at $100 000 or more).

1 SPC approval valued at $65.0 million (contracts valued at $100 000 or more).

Highlights:

  • implemented the Oracle Cloud finance system, which has improved reporting and strengthened oversight of procurement process and spend
  • released updated contract management guidance to the department
  • increased both successful and unsuccessful supplier satisfaction with results of 100 per cent and 55 per cent respectively
  • continued to focus on increasing engagement of social benefit suppliers
  • drove new and refreshed opportunities for SPCs such as banking and financial services and fuel and associated products

Top categories of contract approval

  • professional advisory services
  • eServices
  • Oracle systems
  • staffing services
  • print management and associated services

Decentralised procurement function.

Transactional complexity profile

  • transactional - 96%
  • strategic - 4%

Accountable Officer: David Martine, Secretary

Chief Procurement Officer: Steven Harris, CPO, Strategic Sourcing Group, Corporate and Government Services Division

Internal Procurement Unit Chair: Andrew Witchard, Executive Director, Revenue Group, Economic Division

Performance

DTF has maintained a focus on strong procurement process and controls this year while adapting to working from home. DTF continued to create value from its procurement activity, and managed well the vast majority of its spend by volume. DTF continues to build its overall capability and suppliers expressed satisfaction with DTF’s processes. Planned procurement is increasing as a proportion of total procurement which adds to the controls in place and transparency of the department’s annual activity.

Download this document for DTF’s performance in 2019–20, compared with the two previous years.

Cenitex

Cenitex is an information and communications technology (ICT) shared services agency, providing integrated and reliable ICT infrastructure, application hosting and desktop services for Victorian Government departments and agencies.

Procurement profile in 2019–20

16 one-off supply contract approvals valued at $28.5 million (contracts valued at $100 000 or more).

4 critical incident contract approvals valued at $0.4 million (contracts valued at $100 000 or more).

3 SEPC approvals valued at $3.7 million (contracts valued at $100 000 or more).

Highlights:

  • implemented a source-to-award system to enable authorised business unit representatives to carry out some self-service purchasing
  • started delivering a program of works to improve IT security across government
  • uplifted the capacity and support of several ICT contract to meet the Government’s work-from-home requirements
  • finalised its first social procurement strategy

Top categories of contract approvals:

  • software
  • server/storage equipment and services
  • project and professional services
  • accommodation services

Centre-led team of procurement experts.

Mostly transactional and leveraged procurement profile:

  • transactional - 37%
  • leveraged - 47%
  • focused - 16%
  • strategic - 0%

Accountable Officer: Frances Cawthra, Chief Executive Officer

Chief Procurement Officer: Tim Jones, General Manager Procurement, Finance and Business Services

Internal Procurement Unit Chair: Sharon Copeland-Smith, Executive Director, Strategy and Governance

Performance

Cenitex improved across all performance measures in 2019–20. Cenitex focused on continuing improvements in benefits management, engaging with stakeholders as a business partner rather than a transactional provider, and improved forward planning. Cenitex also strengthened governance after going through its first VGPB audit.

Download this document for Cenitex’s performance in 2019–20 compared with the two previous years.

Victoria Police

Victoria Police is the primary law enforcement agency of Victoria, Australia. It was formed in 1853 and operates under the Victoria Police Act 2013. It provides policing services to the Victorian community 24 hours a day, seven days a week, working to keep all Victorians safe.

Procurement profile in 2019–20

24 one-off supply contract approvals valued at $28.8 million (contracts valued at $100 000 or more).

24 SEPC approvals valued at $76.3 million (contracts valued at $100 000 or more).

36 critical incident contract approvals valued at $18.1 million (contracts valued at $100 000 or more).

Highlights:

  • piloted an online procurement tool and used DocuSign for electronic approvals and workflow management
  • successfully renewed Victoria Police’s Chartered Institute of Purchasing and Supply (CIPS) procurement accreditation and was awarded CIPS Procurement Excellence Standard Award certification

Top categories of contract approvals:

  • forensics
  • corporate support
  • uniform and equipment
  • IT and communications

Primarily centre-led procurement function.

Transactional complexity profile:

  • transactional - 85%
  • leveraged - 8%
  • focused - 6%
  • strategic - 0%

Accountable Officer: Shane Patton, Chief Commissioner of Police

Chief Procurement Officer: Kirsten McFall, Director Procurement and CPO, Procurement Division

Internal Procurement Unit Chair: Chris O’Farrell, Executive and Chair of the Police Procurement Board, Director, Infrastructure Business Services

Performance

Download this document for Victoria Police’s performance in 2019–20 compared with the two previous years.


Reviewed 13 October 2020