By combining demand for commonly used goods and services, government can harness greater economies of scale when negotiating with suppliers. Aggregating purchasing power allows organisations to negotiate lower prices and better terms and conditions. It also reduces risk and the administrative burden on buyers and suppliers. The Victorian Government has numerous
More than 200 organisations benefit from the time and cost savings offered by SPCs. Total annual spend under SPCs was estimated to be about $2.4 billion in 2021–22.
The transition to SPCs under the expansion program began with the largest agencies transitioning across to SPCs at the end of 2021. This will continue over the next two and a half years until all expansion agencies, with a yearly spend on non-construction goods and services of $2.5 million or more, are purchasing through SPCs.
This will result in greater use of SPCs across a wider range of government agencies, with all the benefits that come from greater aggregation, including greater consistency, streamlining, risk reduction and economies of scale (see ).
SPCs have already proven beneficial to many expansion agencies that have been using them for many years with great results and will continue to do so.
Who can access SPCs?
All Victorian Government departments and specified entities can access SPCs. This includes entities declared under section 54AA of the FMA, including the . Government owned entities and Government supported organisations such as not-for-profit organisations that receive at least 25 per cent of their funding from a Budget Sector Agency can also apply to access SPCs through the relevant lead agency.
The role of the VGPB
The VGPB reviews and endorses new SPC business cases prior to approval by the relevant Minister. The VGPB is also consulted on SPC renewals, replacements and extensions (not including exercising contractual options). Four business cases for new SPCs were reviewed and endorsed by the VGPB in 2021–22, including the and SPCs established during 2021–22, and two business cases for SPCs to be established in 2022–23.
State purchase contracts approved in 2021–22
In 2021–22, seven SPCs were approved, as listed in Table 9 and Table 10. This compares to four SPCs approved in 2020–21. Several sourcing activities were put on hold in 2020–21 due to the initial COVID-19 pandemic disruptions which resulted in a higher number of market engagement activities during the past 12 months.
The total estimated value of these SPCs is likely to increase as expansion agencies join SPCs over the next two years.
Twelve variations to SPCs were also reported in 2021–22, as listed in Table 11 and Table 12. Reasons for variations range from ensuring service continuity to incorporating social procurement requirements into the agreement.
Note: The contract values in the tables are estimates. Expenditure occurs as organisations order and consume goods and services over the contract term of the SPC. Total estimated value includes the initial contract term and any options to extend the contract (although these may or may not be exercised).
Table 9 lists the SPCs established by DTF in 2021–22. The table lists the SPC title, total estimated value, contract term, options to extend, complexity assessment outcome, market approach method, type of arrangement and number of suppliers.
Table 10 lists the SPCs established by DPC in 2021–22. The table lists the SPC title, total estimated value, contract term, options to extend, complexity assessment outcome, market approach method, type of arrangement and number of suppliers.
Variations to SPCs in 2021–22
Table 11: Variations to DTF-managed SPCs in 2021–22
|SPC||Total estimated value ($m)||Reason for variation|
|Banking and Financial Services||Nil – Operational requirement||Three variations made to adjust for operational requirements.|
|Electricity – Large Sites (above 40 MWh)||Nil – Operational requirement||Contract varied to incorporate requirements for VGPB expansion agencies and add social procurement requirements.|
|Electricity – Small Sites (below 40 MWh)||Nil – Operational requirement||Contract varied to incorporate requirements for VGPB expansion agencies and add social procurement requirements.|
|Natural Gas – Large Sites (above 10 000 GJ)||Nil – Operational requirement||Contract varied to incorporate social procurement requirements.|
|Natural Gas – Small Sites (below 10 000 GJ)||Nil – Operational requirement||Contract varied to incorporate social procurement requirements.|
|Stationery and Workplace Consumables||41.0||Contract extended by 12 months to maintain value for money and supply chain stability during COVID-19.|
|Document Mail Exchange (DX) Service||1.4||Contract extended by 4 months to provide sufficient time for the new Mail and Delivery Services SPC to be established.|
|Master Agency Media Services||5.6||Two variations were made to adjust for operational requirements.|
Table 12: Variations to DPC-managed SPCs in 2021–22
|SPC||Total estimated value ($m)||Reason for variation|
|Telecommunications Services Contract (TPAMS2025)||153.0||Contract extended by 3 months to support the launch of the Victorian Telecommunications Services Panel.|
|Citrix Systems||10.5||Contract extended by 12 months with the inclusion of cloud services to the Citrix price book.|
|Data#3||103.9||Contract extended by 12 months to allow sufficient time for robust market testing.|
|eProcurement Platform||0.8||Contract extended by 12 months to provide service continuity.|
Case study: Diversifying Victorian Government suppliers to include more regional and social enterprise businesses
The SPC provides commercial and financial advisory services, tax advisory services, financial assessment services and probity services to departments and agencies. The pre-negotiated contract terms and ceiling rates enable a more streamlined and standardised engagement. This means departments and agencies can run an efficient and competitive process with panel suppliers focused on achieving a value-for-money outcome.
The number of agencies using mandatory SPCs like PAS is set to increase significantly as expansion agencies not already using SPCs transition their procurement needs across to these contracts. To support the additional agencies and their different locations, sizes and needs, DTF recently gave the market the opportunity to apply for the PAS SPC panel.
DTF’s procurement team developed a communications strategy for the tender to further diversify the panel by encouraging applications from SMEs and regional and social benefit businesses. DTF advertised and promoted the panel broadly by working closely with the Department of Jobs, Precincts and Regions and social procurement intermediaries and supplier representative/industry bodies.
Expanding the panel provides an opportunity for suppliers already supporting VGPB expansion agencies to participate in the panel and expand their customer base.
New SPC opportunities
DPC managed SPCs
Amazon web services
In 2021–22, DPC established the . AWS provides a world class, secure hosting platform which supports the Victorian Government’s cloud ambitions under its Digital Strategy 2021–2026. The AWS SPC will achieve value for money from aggregating volume to leverage cost savings and will give Victorian Government users – and in particular users from smaller departments and agencies – the benefit of better tools with which to deliver government services digitally.
Victorian telecommunication services
The VTS SPC was refreshed in 2021–22 to maximise value for money. The number of service towers were consolidated from five to four to deliver the Victorian Government’s current and future service needs in a simple standardised way. It offers an expanded panel of suppliers with better regional coverage, making it easier for small and large government buyers to consume services.
The VTS is a flexible agreement offering the latest services and product catalogue across a panel of suppliers resulting in high-quality and affordable services for customers while also improving access to innovative and emerging technologies. The refreshed SPC also expanded the number of suppliers on the panel to better meet the different needs of large, small and regional government agencies.
DTF managed SPCs
Banking and financial services
In October 2021, the panel launched with three banks. The new panel model gives government agencies more flexibility by providing access to a broader range of banking services and products in the metropolitan and regional areas. The contract also provides greater opportunity to improve delivery and efficiency outcomes by taking advantage of increased market competition and better ability to access and adopt new products, services and innovations as they evolve over time. The SPC incorporates supplier social procurement commitments that will work to increase the employment and training opportunities for women and youth in Victoria.
Print management and associated services
The offers access to a dedicated account management team of print experts serviced by over 300 approved print suppliers which include regional suppliers and social benefit enterprises. The scope of the SPC has been expanded to include signage, branded merchandise and mailing and distribution services with the inclusion of print consultancy that will lead to greater end-to-end efficiencies.
The new commenced in October 2021. The new arrangement has 14 master vendors supported by more than 60 tier-2 suppliers. It provides geographic coverage across the state with 149 metro and 97 regional and rural locations. The SPC offers an increased scope of roles to meet the needs of government agencies, and includes a simple, competitive price structure with discounts, underpinned by robust service level and social procurement commitments.
Rapid antigen test kits
The COVID-19 pandemic resulted in high demand for rapid antigen tests (RATs) and emergency supplies across the health sector, non-health government departments and agencies, industry and the community. DTF and worked together, leveraging HealthShare’s expertise to identify and model expected usage patterns relating to the RAT category to develop and implement the from December 2021. The aggregation of purchasing volumes helped drive the most economical whole-of-government, value-for-money outcome for the RAT Kit SPC.
Case study: Procuring rapid antigen tests to support the COVID-19 recovery
In 2021, rapid antigen tests (RATs) were introduced to support the COVID-19 recovery.
With demand across government, a whole of Victorian Government procurement strategy to purchase RATs was developed. The approach aggregated this demand and centralised purchasing to produce competitive pricing for RATs into the future. It also ensured consistent quality of RATs used across departments and agencies. DTF partnered with HealthShare Victoria (HSV) on a joint procurement approach, with input from the Department of Health on the procurement specifications.
The objective was to establish a SPC as quickly as possible with a panel of suppliers providing high-quality Therapeutic Goods Administration (TGA)-approved RATs.
In what was quickly becoming a constrained market, any delay in establishing this contract would reduce the savings that could be achieved through an aggregated process and reduce the ability to procure in the large volumes required to secure supply to meet future demand.
To enable a rapid response, DTF invoked the VGPB’s critical incident policy, which gives organisations flexibility to streamline procurement processes in response to an emergency.
The SPC business case was approved by the Assistant Treasurer and governance of the procurement was overseen by a project control board supported by an independent probity adviser. An open tender process was conducted to provide an opportunity for all suppliers to participate.
A partnered approach with HSV was key to the success of the procurement. A contract was awarded to a panel of seven suppliers that could meet the specifications and timelines to supply high-quality and competitively priced RATs to health and non-health departments and agencies.
Reviewed 20 September 2022