A panel is the end result of a procurement process, where a number of suppliers are appointed through a contract or deed of standing offer.
A panel is formed following an assessment of suppliers against evaluation criteria. Only suppliers that represent value for money would be included on a panel.
Method of procurement
The procurement process has already been conducted to establish the panel. Procurement can then be undertaken directly with any supplier on the panel.
Opportunity for inclusion
Unless a panel has been established with the ability to add new suppliers (i.e refreshable), the opportunity for additional suppliers to join the panel will generally be limited.
- A panel arrangement is a tool for the procurement of goods or services regularly acquired by entities. In a panel arrangement, a number of suppliers are selected, each of which are able to supply identified goods or services to an entity.
- A panel is generally established by open tender and is usually established through deeds of standing offer (deeds) with contracts formed under those deeds when the goods or services are acquired.
- Officials must first determine whether the goods or services they are looking to procure are subject to a coordinated procurement.
- If not subject to a coordinated procurement contract, entities should consider whether to participate in, or allow other entities to participate with them, in a cooperative procurement arrangement. Potential use by other entities must be specified in the request documentation and can be extended to all entities or to a group of entities.
- Officials should contact their Central Procurement Area to assist in determining whether coordinated or cooperative arrangements do or should apply.
How Panel Arrangements Operate
- Panels are of most benefit when they cover goods or services that are purchased regularly, as they allow entities to enter into contracts with panel members without a further procurement process. The costs of establishing a panel can therefore be offset by the efficiencies of being able to order from the panel.
- In a panel arrangement, a deed of standing offer or a contract exists between an entity and each supplier on the panel detailing:
- the type of goods or service the supplier will provide;
- the set/indicative price for the goods or service; and
- the manner in which the entity will procure the goods or service from the supplier, including any process for competition between panel members, where appropriate.
- A contract is formed under a standing offer each time an entity purchases goods or services under the panel arrangement.
- A panel cannot be used to purchase goods or services that fall outside the scope of the arrangement.
- Panels have a set period of operation. Deeds of standing offer should include a clear end date. This could be a stated date beyond which any extension options can no longer be exercised.
Planning and Establishing a Panel Arrangement
- For the purpose of assessing whether a panel arrangement exceeds the relevant thresholds for the application of the Division 2 – Additional rules of the CPRs, the value of a procurement is the estimated total value of the goods or services that may be procured from all members of the panel over the life of the panel arrangement. That is, the threshold is not the amount of each separate contract under the panel; it is the estimated total of all contracts or deeds of standing offer relating to the panel.
- A panel is generally established through an open tender process: Open tender – a procurement procedure in which a request for tender is published inviting all suppliers that satisfy the conditions for participation to submit tenders. All suppliers who meet the stated conditions for participation must be considered in the assessment of tenders.
- Where more than one type of goods or service is to be included in the panel, the structure of the panel arrangement needs to be considered. An entity may, for example, decide to divide a panel into different categories or sub-panels to reflect the different types of goods or services required, especially if not all potential suppliers can supply all categories.
- Generally an entity should not specify the exact number of panel members required in the tender documentation, as entities will be bound by this number. This could see the unnecessary exclusion of potentially strong panel members.
- Matters to consider when deciding on a preferred number of panellists include:
- the market characteristics (e.g. the size of the market; the likely suppliers and their customers; and whether the market is undergoing change);
- the type of goods or service being purchased;
- the amount of work likely to be generated over the term of the panel;
- the need to provide choice of providers for users; and
- flexibility, in the event that panellists withdraw or underperform.
- The request documentation for establishing panels should address a number of specific issues, including:
- an explanation of how the panel will operate;
- a clear definition of the nature and scope of the goods or services, including any exclusions from the panel’s scope;
- notice of whether the panel is to be exclusive or non-exclusive (i.e. whether the goods or services will only be provided to the entity from within the panel arrangement or may also be purchased through other procurement processes);
- that there is no guarantee of work;
- the duration of the panel, including any extension options;
- a general indication of the intended size of the panel;
- where there will be cooperative procurement with other entities;
- the process of selecting suppliers from the panel; and
- a requirement for indicative or set prices or rates, including a pricing schedule or outline of the pricing format required from tenderers.
Managing a Panel
- The contract manager should ensure clear, consistent and regular communication between the entity (including panel users) and the panel members.
- The contract manager should ensure that panel users adhere to matters relating to the panel, such as the scope, pricing and manner of purchase.
- Information for users concerning a panel's operation needs to be readily available, up-to-date, and consistent, in accordance with the size and complexity of a panel arrangement.
- Ideally relevant information on a panel should be made available to the entity’s officials through the entity’s intranet site and through a single point of contact, usually the contract manager.
- The scope of a panel arrangement should be carefully defined. If the scope is defined too broadly it may create excessive work in evaluating submissions and managing the panel. If it is defined too narrowly it may reduce the benefits of the panel for the entity.
- The appropriate duration of a panel should take into account such factors as: the strength and maturity of the market; the time, effort and cost required to set up the panel; and any factors relevant to the goods or services being procured.
- When ordering goods or services under an existing panel arrangement, entities must ensure that the order is made within the period covered by the deed of standing offer. The delivery or completion date for that goods or service may however extend beyond the expiry date of the deed of standing offer.
- It is not necessary to terminate a procurement process to establish a panel simply because it will result in a single supplier. Such an arrangement is appropriate as long as it represents value for money.
- Always seeking a single quote for a panel may not represent value for money. Seeking more than one quote or allowing for the quoting of firm prices for work segments can allow for competitive tension, and should be allowed under the relevant panel arrangement.
- Unless a panel agreement provides for an option to extend the duration of the panel, it will cease to exist once it reaches the end of its agreed life-span. If the goods or services that the panel was providing continue to be required, a new tender process must be undertaken.
- The execution of extension options is the same for a panel arrangement as it is for any other procurement process. Decisions should be based on consideration of value for money and should be appropriately documented.