Procurement reform in Victoria – overview
What is the VGPB?

Focuses the role of the VGPB on driving
procurement planning, capability development
and oversight of high-risk procurements.
The VGPB is the governing body responsible for
developing, implementing and reviewing policies and
practices in relation to procurement of nonconstruction goods and services across the Victorian
Government.
Benefits
The VGPB does not purchase goods and services on
behalf of the government, nor does it market to
government on behalf of suppliers.

VGPB policies apply to Victorian government
departments and mandated entities as per the
requirements of the Financial Management Act 1994.
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Have SPCs changed under the new
reform?
Improved value-for-money.
Less administrative burden for organisations and
suppliers.
Substantial efficiencies from better procurement
practices.
Better interaction between government and the
marketplace.
Increased transparency:
– Suppliers can access an overview of each
department’s planned procurement activities
on their website.
– Clear line of accountability in departments.
Increased
procurement
capability
and
professionalism.
Improved procurement planning, contract
management and market analysis.
State Purchase Contracts (SPC) aggregate demand and
deliver value for money for commonly purchased
goods and services for Victorian government entities.
SPCs will remain unchanged and all entities are
encouraged to continue to use these contracts at
www.vgpb.vic.gov.au.

The Victorian Government Purchasing Board (VGPB)
has introduced a new, modernised approach to the
procurement of goods and services. Value for money,
accountability, probity, and scalability are the founding
principles of the new framework.
All Victorian government departments and mandated
entities are affected by the reform and are
transitioning to the new framework.
The new policy framework recognises procurement as
a core business function and moves away from a
financial threshold to a complexity and risk based
model.
Key features

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Five streamlined policies (instead of the former 38)
to direct procurement process and practices.
Greater emphasis on organisational and strategic
procurement governance and planning.
Departments choose best approach to market by
assessing the complexity of procurement and the
level of expertise required to manage it.
Removes dollar value thresholds and prescriptive
rules of how to approach the market.
Accountability rests with the department to
ensure high standards of probity, governance and
process.
Departments have flexibility to establish a
procurement environment relevant to their
activities.
Emphasis on capability building for all government
staff.

Who is affected by the reform?
Non-mandated entities and local government are not
required to adhere to VGPB policies, however are
encouraged to align their procurement processes with
VGPB policies as a matter of good practice.
How procurement has changed
Government procurement was traditionally based on
dollar value thresholds. In other words, the path to
market was chosen based on the value of a product or
service.
For example, if a department decides to buy a widget
costing $85 000, the former VGPB policy framework
required a minimum of three written quotes. If a
department spent more than $150 000, it was
mandated to release a public tender.
Procurement decisions based on dollar value do not
take complexity and capability into account. For
example:
Complexity

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Can I buy this off the shelf?
What are the risks?
What is the total cost of owning this product?
Have I made contact with relevant suppliers? What
path to market best suits the market dynamic?
Procurement complexity refers to the level of difficulty
involved in procuring a good or service. It considers a broad
range of factors including risk, total cost of ownership,
broader government objectives, and market dynamics
associated with the procurement activity.
Capability

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Do I know enough about the market?
Am I skilled in negotiating?
Do I know how to best manage a contract?
Do we have the resources, systems and processes
in place to manage this successfully?
Basing the approach to market on a balance of
complexity and capability leads to substantial
efficiencies, not just dollar value, at all levels of the
procurement process, potentially decreasing costs for
government and suppliers.
What about suppliers?
The increased emphasis on forward planning,
transparency and probity will improve the interaction
and contract management between suppliers and
government.
It will be easier for suppliers to access information on
government procurement opportunities, both ongoing
supply arrangements and one-off opportunities. This is
particularly beneficial for small to medium enterprises
that wish to participate in the government
marketplace.
Forward planning

When were the reforms introduced?

The new VGPB policies were gazetted on 7 February
2013.

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Transition to the new framework has taken place over
the past 12–18 months with all government
departments and mandated entities expected to
finalise their transition by 1 January 2015.
Implementing the reform
To transition departments and mandated entities:

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prepared a procurement strategy that:
– aligns procurement activity with departmental
business objectives and broader government
initiatives;
– creates better performance reporting;
– was approved by the accountable officer; and
– reviewed by the VGPB.
published a procurement activity plan on their
website that:
– lists all upcoming procurement activities and
the appropriate business unit to contact;
– helps
suppliers
access
government
procurement opportunities; and
is reviewed no less than annually to ensure suppliers
can access up to date information.
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established the role of chief procurement officer
to:
– provide expert advice to the accountable
officer; and
– oversee the procurement function.
established an internal procurement unit to:
– support procurement operations across the
department; and
– ensure appropriate capability is applied to
procurements undertaken.
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Departments and mandated entities undertake an
in-depth market analysis and review before
making any approach to market.
This reduces substantial time and costs associated
with unnecessary procurement processes.
Transparency
Suppliers can access procurement activity plans
online to see all upcoming procurement activities
for a department and mandated entities.
Activity plans include business unit details making
it easier for suppliers to contact the appropriate
business unit.
Probity
Departments and mandated entities are to engage
with suppliers in a fair and equitable manner.
Suppliers have access to the same information and
standards of probity, confidentiality and security.
Help and support
The VGPB has created guidelines, templates and tools
to help government implement the new framework.
These documents are available on the VGPB website.
VPS staff can also join the procurement people group
on
the
VPS
hub
(https://www.intranet.vic.gov.au/home) to be part of
the conversation of how to adopt better procurement
practices.
Email vgpb@dtf.vic.gov.au to be added to a mailing list
for news and events.
Suppliers
can
visit
Business
Victoria
(www.business.vic.gov.au)
and
Tenders
VIC
(www.tenders.vic.gov.au) to learn more about
accessing government procurement opportunities.
More information
Visit the Victorian Government procurement portal
(www.procurement.vic.gov.au) for updates on the
reform.
Procurement reform in Victoria – overview
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