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, with total annual spend under SPCs estimated to be about $2.4. billion in 2022–23.
The transition to SPCs under the expansion program began with the largest agencies transitioning to use the mandatory SPCs from the end of 2021. This will continue until all expansion agencies with a yearly spend on non-construction goods and services of $2.5 million or more, are purchasing through SPCs. The last group to transition will be the small agencies who will transition by 31 December 2023, or upon the expiry of existing contracts.
This will result in greater use of SPCs across a wider range of government agencies, with all the benefits that come from greater aggregation, including greater consistency, streamlining, risk reduction and economies of scale (see ).
SPCs have already proven beneficial to many expansion agencies that have been using them for many years with great results and will continue to do so.
Who can access state purchase contracts?
The role of the VGPB
The VGPB reviews and endorses business cases for the establishment of new SPCs before approval by the relevant Minister. The VGPBis also consulted on SPC replacements and extensions (other than exercising contractual options).
Six business cases for new SPCs were reviewed and endorsed by the VGPB in 2022–23. This included SAP which was established in 2022–23, and five business cases for SPCs to be established in 2023–24 and 2024–25.
State purchase contracts approved in 2022-23
In 2022–23, 4 SPCs were approved as listed in Table 14 and Table 15. This compares to 7 SPCs approved in 2021–22.
The total estimated value of these SPCs is likely to increase as expansion agencies continue to join the SPCs over the next 12 months.
Table 14: Non-ICT SPCs established in 2022–23
|Project title||Total estimated value ($m) ||Contract term (yrs)||Options (yrs)||Complexity level||Market approach method||Type of arrangement||No. of suppliers|
Mail and Delivery Services
Table 15: ICT SPCs established in 2022–23
|Project title||Total estimated value ($m)||Contract term (years)||Option(s) to extend (years)||Complexity level||Market approach||Type of arrangement||No. of suppliers|
|Microsoft Enterprise Agreement|
|Data Centre (DXC)|
Table 14 -15 note: The contract values in the following 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).
Mail and delivery services
Following the expiry of the previous Document Exchange Mail SPC on 1 November 2022, under a panel arrangement. The new SPC has evolved to match industry capability and enables users to choose from 4 suppliers, providing more flexibility to meet the differing needs of departments and agencies.
The new SPC provides maximum coverage in terms of operational geographic requirements across the State with greater spend under contract and an increased ability to drive and influence innovation and cost reduction through ongoing reviews of spend data and supplier management. It also offers the ability to directly engage services from a Victorian work-integrated social enterprise which supports employment of migrants and refugees that face barriers to employment due to socioeconomic disadvantages.
Microsoft Enterprise Agreement
Following extensive stakeholder engagement across the Victorian Government to understand the current Office 365 landscape, the new represents a significant reset of the pricing structure and services available, with better alignment to the State's cyber security needs. The Victorian Government will enjoy the benefits of a higher security posture under the best possible commercial framework with this agreement which also incorporates material value in support of Victoria’s emergency response volunteers.
Data Centre (DXC)
The Victorian Government’s largest data centre contract was renewed ensuring business continuity for the next 5 years.
The was established in May 2023. It provides a wide range of cloud products and services ranging from human resources and people service platforms to data analytics and business process modelling. It represents a platform that is broadly used and forms part of the Victorian Government’s architectural direction for these types of services. The contract, which has been independently benchmarked, is a best-in-class commercial arrangement that will support Victorian Government entities of all sizes by providing the benefits of SAP’s vast service catalogue with wide ranging benefits including commitments to local jobs and social procurement outcomes.
Case study: New Mail and Delivery Services SPC boosts social procurement
The Victorian Government seeks to leverage its buying power to create social value beyond the value of the goods or service being purchased. In line with the , government buyers consider opportunities to deliver social and sustainable outcomes as part of every procurement activity.
During the recent renewal of the Mail and Delivery Services SPC, the courier service component was revised to expand the opportunity to smaller, local suppliers that could service specific regions.
This enabled Local Transit, a Victorian social enterprise, to successfully join the panel of suppliers, alongside Australia Post, FedEx and Toll. As a smaller operator, Local Transit provides courier services to Melbourne’s central business district and metropolitan suburbs and has a mission to create job opportunities for refugee and migrant workers facing socioeconomic barriers to employment.
By enabling social enterprises to participate, the Mail and Delivery Services SPC is providing broader value to the Victorian community by creating employment opportunities for disadvantaged jobseekers.
The new Mail and Delivery Services SPC provides maximum coverage in terms of operational geographic requirements across the State. It also offers the ability to directly engage services from a Victorian work-integrated social enterprise which supports employment of migrants and refugees that face barriers to employment due to socioeconomic disadvantages.
Variations to state purchase contracts in 2022–23
Seven SPC variations were reported in 2022–23, as listed in Table 16 and Table 17. Reasons for variations range from aligning expiry dates to related policies to incorporating social procurement requirements into the agreement.
Table 16: Variations to non-ICT SPCs in 2022–23
|SPC||Total estimated value ($m)||Reason for variation|
|Security Services||80.0||Contract extended by 18 months to include a number of improvement outcomes to deliver on government initiatives.|
|Electricity – Large Sites (above 40 MWh)||112.0||Contract varied to align SPC expiry date with Climate Change policies.|
|Electricity – Small Sites (below 40 MWh)||14.0||Contract varied to align SPC expiry date with Climate Change policies.|
|Travel Management Services||46.0||The contract was extended by 1 year and 9 months due to changing demands and variability of spend following the COVID-19 pandemic to enable a review of the future travel strategy and develop a business case for the future SPC.|
Table 17: Variations to ICT SPCs in 2022–23
|SPC||Total estimated value ($m)||Reason for variation|
|Microsoft Enterprise Agreement||0||Contract varied to strengthen data security control and provide better alignment to the Victorian Protective Data Security Framework and privacy act.|
|Multifunction Devices & Printers||0||Contract varied to incorporate social procurement targets and measures.|
|Microsoft Azure Enterprise Agreement – 15% PAYG||120.0||Contract varied to provide a stronger discount structure and reduction in the cost of cloud hosting.|
Case study: Small, regional and social benefit suppliers join Professional Advisory Services Panel
Following the expansion of the VGPB policies to a wider range of government agencies, the Department of Government Services (DGS) is seeking to broaden the diversity of suppliers to SPCs to meet the needs of incoming agencies.
In 2022, DGS conducted a request for tender (RFT) to add suppliers to the . The PAS SPC is a panel of suppliers pre-approved to provide commercial, financial and tax advisory services to government departments and agencies. The panel arrangement enables agencies to run an efficient and competitive process to engage suppliers with pre-negotiated terms, conditions and ceiling rates.
DGS streamlined the tender response process and allowed suppliers to tender for subsets of services to make it more accessible to smaller suppliers. The RFT was shared through a wide range of channels to encourage more businesses to respond.
Following the tender, DGS added 109 micro and small businesses, 2 social benefit suppliers and 12 regional suppliers to the panel. These businesses now have access to government contracts, while departments and agencies benefit from a greater diversity of suppliers.
The new Professional Advisory Services SPC has a greater diversity of suppliers including small and micro businesses, social benefit suppliers and regional businesses.
Reviewed 01 November 2023