What is changing?
The government is expanding the remit of the Victorian Government Purchasing Board to ensure better procurement practices and greater consistency across government.
These policies are designed to make it easier to do business with government. Suppliers may notice benefits such as:
- simpler and more consistent tender processes that will help small, medium, and local businesses supply to government
- proactive market engagement to help identify new suppliers
- more information released sooner through
- timely and relevant feedback will be offered to all suppliers.
There are also benefits to government such as simplified processes, greater oversight of government spending, and better value for money.
Many of these policies will apply from 1 July 2021. But one part of the expansion – requiring agencies to make greater use of the government’s state purchase contracts – will not occur from 1 July 2021 but will apply to agencies progressively over a two-year period starting from 31 December 2021.
Transition dates will depend on agencies’ total annual expenditure on goods and services (excluding construction). Higher spending agencies will transition first.
All existing contracts held by agencies will continue to operate. Agencies will only move to state purchase contracts when current contracts expire.
Transition dates for agencies are described in the following table.
|Annual spend on goods and services |
(existing contracts will not be affected)
|$50 million or more||31 December 2021|
|$20 million to $50 million||31 December 2022|
|$10 million to $20 million||30 June 2023|
|$2.5 million to $10 million||31 December 2023|
|Less than $2.5 million||Not required to transition|
Which agencies are affected?
The expansion will bring in a range of mostly small- to medium-sized government agencies, including some TAFEs, water corporations, and catchment management authorities.
All government departments and most larger agencies have been within the VGPB’s remit for a number of years and are already required to use state purchase contracts. This includes many government offices in regional areas, such as:
- Victoria Police stations
- Corrections Services
- Department of Land Water and Planning
Some agencies are not within the VGPB’s scope and are not included as part of the expansion, such as public health services, hospitals and local government.
Finally, as per the table above, smaller government agencies – those with annual spend on goods and services (excluding construction) below $2.5 million – will be exempt from the requirement to use state purchase contracts.
What goods and services are covered by state purchase contracts?
State purchase contracts cover a range of common use goods and services, such as:
- electricity supply
- telecommunications services
- computer hardware
But state purchase contracts make up only a very small proportion of government’s procurement expenditure. The vast majority of each agency’s procurement spend will be in areas that are not covered by state purchase contracts, such as:
- waste management
- environmental management and services.
Agencies can also seek an exemption from using a state purchase contract if a regional supplier can offer the same or better value, or if an agency’s needs cannot be met through the state purchase contract.
In addition, some state purchase contracts (including legal services and travel) have built-in exemptions that mean that agencies can sometimes purchase directly from regional businesses without applying.
What does this mean for businesses?
Each state purchase contract is structured differently.
Some state purchase contracts have a single supplier, or a closed panel of suppliers, from which agencies can purchase. Such contracts typically run for 3-5 years and have a rigorous application process (which can take up to 12 months) to ensure that the suppliers chosen are those that can best fulfil the government’s needs.
Others operate as ‘open panels’ – they may include several hundred suppliers, and suppliers can join at any time. Such panels have no expiry period and have a quick, light-touch application process that simply requires suppliers to demonstrate that they are insured, are not at risk of insolvency, and do not have a history of .
All suppliers – metro and regional, large and small – can apply to join open panels or bid for state purchase contracts through the tender process.
What about regional businesses?
And many state purchase contracts facilitate the purchase of goods and services from regionally based businesses, for example:
- Staffing services provided in regional areas (such as temporary IT, admin or accounting staff) are normally provided through suppliers’ regional offices, employing staff based locally.
- Regional small and medium print businesses are regularly sub-contracted to fulfil government orders.
- Motor vehicles are typically purchased from local dealers.
- Petrol is purchased from service stations across Victoria.
More regional suppliers will be called upon to meet demand in regional areas, as more agencies transition to state purchase contracts. Suppliers taking part in state purchase contracts will be able to offer their goods and services to a much larger number of government agencies across the State.
Where can suppliers get more information?
All new opportunities are advertised on the Buying for Victoria website.
Reviewed 02 May 2023