Victorian Government
Purchasing Board
Market analysis and review policy
Version 1 (February 2013)
Secretariat
Victorian Government Purchasing Board
Department of Treasury and Finance
Level 6, 1 Macarthur Street
Melbourne Victoria 3000
Australia
Telephone: +61 3 9651 1699
Facsimile: +61 3 9651 5951
procurement.vic.gov.au
Supply policies are made by the Victorian Government Purchasing Board (VGPB) pursuant to s54L
of the Financial Management Act 1994. They have legislative force and must be complied with.
This new supply policy only applies to departments approved for transition by the VGPB. The
current supply policy framework will run concurrently with new supply policies until all
departments have transitioned to the new supply policy framework.
© State of Victoria 2014
This work is licensed under a Creative Commons Attribution 3.0 Australia licence. You are free to
re-use the work under that licence, on the condition that you credit the State of Victoria as
author. The licence does not apply to any images, photographs or branding, including the
Victorian Coat of Arms, the Victorian Government logo and the Department of Treasury and
Finance logo.
Copyright queries may be directed to IPpolicy@dtf.vic.gov.au
If you would like to receive this publication in an accessible format please email
information@dtf.vic.gov.au
This document is also available in Word and PDF format at dtf.vic.gov.au
Context
This policy outlines the requirements for market analysis and review. It is mandatory for all
Victorian Government departments and any public bodies (hereafter referred to as
‘organisations’) that are subject to the supply policies of the Victorian Government Purchasing
Board (VGPB).
The Market analysis and review policy covers three components.
1. Market analysis and review
Market analysis and review provides an understanding of market dynamics to determine the
optimal market approach. It can also determine the viability of a procurement requirement.
Figure 1 highlights where market analysis and review takes place in the procurement process.
Individual
procurement
activity
Figure 1: Market analysis step in the procurement process
market analysis and review policy
Review procurement
requirement
Conduct
market analysis
Sourcing phase
Develop plan for
market approach
Evaluate, negotiate &
select supplier
Create a contract
Commit to a contract
Manage contract
Contract review
or closure
Contract management phase
2. Aggregated purchasing
Aggregated purchasing is an important mechanism used to drive efficient government
procurement.
3. Disposal of assets
As part of market analysis and review, an organisation will develop a whole-of-life appraisal and
consider the best process for disposal of assets.
For further information and advice on applying VGPB policies (including guides, tools and
templates), visit the Procurement Victoria website at http://www.procurement.vic.gov.au.
Victorian Government Purchasing Board
Market analysis and review policy, Version 1 (February 2013)
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1.
Market analysis
Market analysis and review follows the assessment of complexity of the procurement activity
either at the category level or at the individual procurement level where the procurement activity
falls outside of a category or is critical or high risk.
1.1
Mandatory requirements
An organisation must:
 consider the outcome of the complexity assessment to determine if the assessment at the
category level establishes the basis for being able to approach the market;
 undertake further complexity analysis at the level of the individual procurement activity
where the category assessment provides insufficient detail to determine the optimal approach
to market;
 conduct market analysis to identify the capability and capacity of the market to supply and
identify opportunities for market based solutions;
 reassess the procurement requirement with regard to the market analysis; and
 prepare a statement of grounds, or business case, which supports the decision to proceed
with the procurement and identify the optimal market engagement strategy.
Note: A sourcing process is not required when purchasing from a state purchase contract or a sole entity
purchase contract.
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Market analysis and review policy, Version 1 (February 2013)
2.
Aggregated purchasing
Aggregated purchasing arrangements take the form of state purchase contracts (SPCs) or sole
entity purchase contracts (SEPC). SPCs incorporate a number of organisations, whereas SEPCs
apply to a single organisation. An SPC or SEPC can be established and managed in a number of
ways—sole or multiple suppliers, open or closed panels, register or more formal contractual
arrangement for example.
2.1
Mandatory requirements
2.1.1 Governance arrangements for SPCs
An organisation must inform the Department of Treasury and Finance (DTF) of any analysis of
spend or assessment of complexity that indicates grounds for aggregating demand.
DTF is responsible for the establishment and management of SPCs. DTF may grant lead agency
status to another organisation where:
 the organisation has consulted with DTF regarding the category of goods and services
proposed for aggregation;
 the organisation has demonstrated to DTF that it has the capacity to establish and manage an
SPC as the lead organisation;
 DTF has determined that the category of goods and services is appropriate for an SPC;
 DTF assumes an oversight and advisory role throughout the SPC process; and
 Lead agencies are to report on the use of SPC(s), spend and savings generated to DTF when
requested.
2.1.2 Process for establishing an SPC
An SPC can only be established after approval by the Assistant Treasurer. Where the lead agency
is outside DTF, a business case must be endorsed by DTF prior to seeking approval by the relevant
Minister.
SPCs may be established as a mandated or non-mandated arrangement.
Where the SPC is mandated, the business case must identify the organisations required to
participate in the SPC.
The accountable officer for the lead organisation responsible for establishing the SPC must:
 take into account any comments made by the Assistant Treasurer prior to engaging with the
market;
 inform the Assistant Treasurer of the outcome of the market engagement process; and
 authorise an SPC contract/head agreement on behalf of the Victorian Government.
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2.1.3 Obligations for parties using an SPC
Parties using a mandated or non-mandated SPC must comply with the rules of use established by
the lead agency for purchasing under the contract.
Where an organisation is a participating party to a mandated SPC, but has an existing contractual
arrangement covered by the scope of the SPC, it must migrate to the SPC upon expiration of the
initial contract period.
An organisation may commit to an SPC after its establishment and be included as a participating
party. The organisation is then bound to use the contract and comply with the rules of use.
A request to extend an existing contractual arrangement is subject to the approval of the
accountable officer for the lead agency.
2.1.4 Contract management framework for an SPC
The lead agency must adopt a contract management framework for an SPC. The category
manager for the SPC is to nominate those participating parties who must establish a contract
manager role to manage the organisation’s participation in the SPC.
The lead agency for the SPC must produce an annual report on the management and use of the
SPC arrangement which can be accessed by each participating party.
Participating parties must report information to the lead agency as requested.
2.1.5 Establishing an SEPC
When an assessment of the spend in a particular category of goods and services, or a complexity
assessment identifies the potential for aggregating requirements in the organisation, you must
consider establishing a SEPC.
An SEPC can only be established after approval of a business case by the accountable officer or
delegate.
An organisation must adopt a contract management framework for the SEPC.
2.1.6 Rules of use for SPCs and SEPCs
All SPCs and SEPCs must detail the rules of use for buyers intending to purchase from the
contract.
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2.1.7 Exemptions
Table 1:
Type of exemption Details
Approval by
Exemption of a
department or public
body prior to
establishing an SPC
The case for exemption is
to be included in the
business case for
establishing the SPC to be
approved by the Assistant
Treasurer.
Exemption of a
participating party
from a mandated SPC
Exemption for a
one-off purchase
An organisation can only be exempted from the SPC
if it can demonstrate that it is unable to obtain value
for money under the proposed SPC.
The exemption sought can encompass the whole
organisation, or a business unit within the
organisation.
A participating party may seek an exemption from
using a mandated SPC where it can demonstrate that
special circumstances have arisen in relation to
sourcing from the SPC. Factors that may justify
granting an exemption could relate but not be
limited to:
a supplier on an SPC arrangement is no longer able
to service an area;
regional suppliers can now offer the same or better
value for money; or
machinery of government changes alter the
relevance of the supply arrangement for the
participating party.
The exemption sought may be for:
the whole or part of the organisation;
the whole or part of the SPC supply agreement; or
a fixed period of the supply arrangement.
A participating party may seek exemption from using
an SPC for a one-off purchase where its procurement
needs cannot be met by the SPC.
A case for granting the
exemption is subject to
the approval of the
accountable officer of the
lead agency.
A case for granting the
exemption is subject to
the approval of the
category manager for the
SPC.
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3.
Disposal of assets
3.1
What is disposal of assets?
Disposal of assets should be considered when the asset is identified as being:
 obsolete due to changed procedures, functions or usage patterns;
 no longer complying with occupational health and safety standards;
 reaching its optimum selling time to maximise returns;
 beyond repair; or
 surplus to requirements.
Disposal of assets can present the organisation with opportunities to optimise the use of an
asset, including:
 extending the life of an asset by transferring it to another business unit or organisation;
 recovering material for recycling prior to sending the asset to landfill; and
 transferring assets to not-for-profit organisations.
3.2
Mandatory requirements
The disposal of assets is a key consideration in the forward planning of any procurement activity.
Assets of (or belonging to, or in the care, custody, or control of)an organisation are to be
disposed of in a way that takes into account probity, security, sustainability and transparency, as
well as environmental and social factors. An organisation must develop and apply an asset
disposal process that details:
 parties/business unit responsible for managing the process;
 disposal options appropriate to the nature of the asset and broader government objectives;
 management of issues of risk, liability, safety and security;
 the process for keeping the organisation’s assets register up to date; and
 issues of risk, liability, safety and security associated with the use of the asset by other parties
when transferring an asset to another location or entity.
If the evaluation of disposal options does not warrant modification to extend the life of the asset
or transferring it to another party or recycling, the asset must ordinarily be disposed of by way of
public auction or public tender. An alternative approach must be sought where cost of disposal
process exceeds residual value of the asset.
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