Have you come across words like panels, panel arrangement and panel tenders? Find out what they're all about here in this article.
What is a Panel Arrangement?
A panel arrangement is a method of procurement that is typically used for goods and services required on a regular basis such as groceries, cleaning products, fuel, office stationery, and consumables.
A panel will typically comprise one or more suppliers who are selected following a tender process which contains standard terms and conditions under which the suppliers must deliver the goods/services.
Once a panel has been selected, Buyers e.g., local councils, can purchase goods/services from selected panel members without going through a formal procurement process. Only when goods and services are purchased from a panel member does a contract arise. It is quite possible to be selected for a panel and never be awarded a contract to supply any goods or services. Panels have a set period of operation, typically from 1-6 years, after which they may be refreshed via a new tender process.
Opened and Closed Panels
Open panels can accept new suppliers at certain times during the contract period. Closed panels are restricted to suppliers who were invited to the panel at the start of the contract.
Why Panel Arrangements are used?
For Buyers
Buyers benefit from panel arrangements due to reduction of time spent analysing the market and effort for them to buy goods, works or services. Suppliers have already been assessed for their ability to provide goods, works or services, cancelling out the need for the buyer to research this, and giving buyers confidence about the quality and capability of the supplier. This allows them to address risks that affect delivery, quality and value for money.
For government organisations, this means having consistency across the goods, work and services they procure. Panels can also be used for regular, large purchases, where a single provider might struggle to meet the organisation’s requirements.
For Suppliers
While making it onto the panel or being a preferred supplier does not guarantee you’ll gain any new business, it does mean that you will be in the limelight and buyers will be more likely to buy from you.
By becoming a preferred supplier or being accepted into a panel-agreement, you now carry significant weight with the buyers. You won’t need to prepare as many tender responses (a big plus), and you can maintain business relationships with the buyer organisations.
How can Suppliers get onto a Panel?
Seek appropriate opportunities as they arise on Australian Tenders.
Register your business with the organisation on its procurement portal or e-Tendering website. This is often a government department or organisation.
Show your capability, a strong value proposition, a willingness to work with your buyers to meet their needs, and some degree of flexibility (you may have to work with your competitors in some cases).
Once you make it onto the panel, you need to be able to respond to requests quickly and efficiently and be prepared to submit tenders/quotes when they are requested.
What is required?
Several obligations must be met for those who are part of a panel arrangement. A few of these requirements have been highlighted below as examples. These requirements are requested by the buyer organisation WALGA panel arrangement and may differ according to the buyer organisation/ government. To see what a real Preferred Supplier Arrangement/Program (PSA) entails, check out WALGA’s program here.
- Best Price Guarantee
There is a legal requirement for all preferred suppliers to provide their best pricing and conditions of supply exclusively through the buyer’s panel arrangement.
- Full Compliance
The integrity and reputation of the buyer are built on the fact that the appointed preferred supplier delivers in accordance with their contractual commitments. This includes cooperating with any compliance audits that the buyer establishes directly or through an independent auditor.
- Quarterly Management Reporting
You may need to provide a quarterly activity report to the buyer on activity generated under the PSA. This includes all work with members that has not been tendered. The buyer maintains confidential data on contract usage, including actual expenditure per member and projected savings against market prices (as outlined in your bid to be part of the panel).
- During the contract
The parties involved will comply with specific contract management activities, including establishment and management of KPIs (for the preferred suppliers and the buyer), ongoing compliance and risk management, audits and quarterly contract management meetings/contacts.
The table below provides direct links to purchasing departments from each state across Australia and pages to learn more about their schemes and panel arrangement.
To check out tender opportunities from your service industry, request our Sample Tender Alert email.