Capturing data on procurement of goods and services in 2019-20
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.
Trends in contract approvals
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) in 2019-20
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 in 2019-20
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 in 2019-20
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).
Trends in procurement complexity
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.
Reviewed 30 September 2021