4.8. Managing panel arrangements

Panels can be an efficient tool for the procurement of goods or services regularly acquired by entities. In a panel arrangement, a number of suppliers are selected through a procurement process^[90] who are each able to supply identified goods or services to an entity (or entities where it is intended that a number of entities will access the arrangement). A panel is usually established by entering into deeds of standing offer^[91] with contracts formed under those deeds when goods or services are acquired.

The way entities manage their panel arrangements will naturally vary to suit the nature, size and volume of work anticipated from the panel. Nevertheless, a common approach adopted by entities is to appoint a dedicated panel manager to administer the arrangement and to ensure that the entity achieves best value for money from the panel. In undertaking this role, panel managers should have access to entity guidance on managing panel arrangements and assistance from the entity’s central procurement and contract advisory unit, where these exist.

Key elements of panel management include establishing regular communication with panel suppliers and users, providing guidance to users on panel operation, monitoring and reviewing procurement activity under the panel arrangement, considering any options for extending the term of the panel, and maintaining adequate documentation. Where a panel allows for access to other entities or has been established by a group or cluster of entities, it is important that procedures for its use and management are established, understood and agreed to by all parties. These elements of panel management are discussed below. The management of individual contracts are discussed in Part Five of the Guide.

Communication with suppliers and users

An important element in the establishment and ongoing administration of any panel arrangement is ensuring clear, consistent and regular communication between the entity (including panel users), and the panel suppliers. Key elements of communication include:

• ensuring users are aware of the existence of the panel, for example by promoting the panel through the entity intranet site, and where appropriate, through written advice to portfolio or other entities^[92];
• clarifying and ensuring suppliers’ understanding of their obligations under the deed of standing offer and supporting arrangements. This may be facilitated through the scheduling and conduct of briefing sessions with suppliers, especially at panel commencement;
• managing supplier expectations and resource availability, for example through routine advice on anticipated work flows and potential opportunities under the panel. This may entail the conduct of periodic briefing sessions or the provision of forward work plans for the panel. It is also beneficial to advise suppliers of changes in the business environment and any related impact on the expected use of the panel;
• making transparent to suppliers and users the process for selecting panel members, including any competitive quoting process, as well as how supplier performance in delivering goods or services will be monitored and reported;

• The development and implementation of a communication strategy may be a useful tool to support the delivery of consistent, clear and regular communication between the entity and suppliers.

  advising panel users and suppliers of changes to the deed of standing offer or supporting arrangements. This may include, for example, notification to users of a change in a supplier’s specified personnel or contact information, communication to users and suppliers of the result of any required review of rates, or extension of the use of the panel to other entities;
• providing formal or informal feedback to both panel users and suppliers on supplier performance in delivering contracts; and
• responding to routine enquiries about the panel from users or suppliers.

The development and implementation of a communication strategy may be a useful tool to support the delivery of consistent, clear and regular communication between the entity (including users) and suppliers.

Guidance for users on panel operation

To facilitate user understanding of suppliers, it is useful to provide information on the capabilities of each supplier. The mechanisms for accessing information on supplier pricing and supplier performance in delivering contracts under the panel should also be advised. Information for users concerning a panel’s operation needs to be readily available, up-to-date and consistent. It is good practice to make relevant information available through an entity’s operational guidelines or equivalent, on entity intranet sites and through a single point of contact (usually the panel manager).

The information available will depend upon the size and complexity of the panel arrangement. However, this information should always include whether the panel arrangement is exclusive or non-exclusive^[93], and the contact details of the panel manager. Information for users typically also sets out:

• the panel scope (what can and cannot be procured through it);
• the panel term and conditions, including supplier and user obligations;
• who the suppliers are and their contact details. To facilitate user understanding of suppliers, it is useful to include information on the capabilities of each supplier and their performance in delivering contracts under the panel. Where panels are divided into different categories to reflect the different types of goods or services required, it is beneficial to present a matrix of categories applicable to each supplier;
• how panel members may be selected from the panel. For some panels, an entity may allow users to purchase directly from the panel member of their choice, particularly for routine low-value purchases. For complex panels, or where large volumes are likely to be purchased, entities may require users to seek competitive quotes. Irrespective of the method used for selecting panel members, the need to assess value for money for individual purchases under a panel arrangement should be reinforced with users;
• if applicable, when and how requests for quotations under the panel arrangement can be sought; and
• if official orders are to be raised, their location, and how they are to be executed, including required approvals.

Panel monitoring and review

Effective monitoring and review of procurement activity under a panel supports compliance with external reporting requirements^[94], assessments on whether to exercise an option to extend or renew a panel arrangement, knowledge of supplier performance, and the identification of opportunities for improving the overall management and use of the panel. Key areas of monitoring and review relevant to panel arrangements include:

• review of user compliance with the operational requirements of the panel, for example, the scope, pricing and method of purchase;
• monitoring the performance of suppliers in delivering goods or services procured. Approaches adopted by entities include supplier self-assessment checklists (which are validated by the user), feedback forms on supplier performance against key performance indicators (which are completed by the user at the completion of each contract), or exception reporting on supplier underperformance to the panel manager;
• panel usage, for example, the number and value of individual contracts entered into under the panel arrangement or service category, and the contributions of different suppliers; and
• supplier and user views on entity administration of the panel, including options for improvement.

Evaluating panel extension options

Standing offers for panel arrangements often include extension options. Well in advance of a panel approaching the end of its period of operation, the panel manager should determine whether the goods or services to be procured are subject to a coordinated procurement arrangement. If not, any extension option included in the panel arrangement should be considered on the basis of whether it would provide value for money.

An entity may decide to exercise an extension option for only some of the members of the original panel arrangement. Indicators such as timeliness, quality of services and quantity of services would contribute to the value for money assessment.

Key factors to consider when deciding whether to exercise an option to extend a contract or panel arrangement, are discussed in Part Five of this Guide.^[95]

Documentation

As with all aspects of government procurement, entities must keep adequate records. Documentation for a panel arrangement should include the rationale for establishing a panel; formal documentation such as the request documentation, deeds of standing offer and individual contracts with suppliers; the evaluation report, decisions regarding the exercise of extension options, record of usage of the panel and records concerning transition at the conclusion of the arrangement. Records should be kept of what decisions have been made and the reasons behind them. The records should be able to demonstrate that the panel is not being used to avoid competition or to discriminate against suppliers.

Managing cooperative panel arrangements—additional considerations

A cooperative panel arrangement includes an entity accessing another entity’s established panel arrangement (described as piggy-backing) or where a group of entities have jointly established the panel arrangement (described as clustering).^[96]

When considering requests from other entities to use an existing panel arrangement, the panel manager should ensure that the panel’s request documentation and standing offer allow for additional entities to access the panel (and that suppliers agree to this, where required). Also, the manager should ensure that the additional use by the entity is within the scope of the existing panel arrangement. Where access is granted, the roles and responsibilities of each entity need to be agreed, including such things as how the added entity will access the panel, how the panel will be administered with regard to payment and any reporting requirements, and how feedback to the suppliers will be managed. A common practice adopted by entities is to confirm the agreed arrangements in writing, such as through a Memorandum of Understanding (MOU).

In cases where the panel arrangement has been established by a group or cluster of entities, it is good practice to have a lead entity actively manage the panel arrangement. The role and responsibilities of the lead entity in managing the arrangement should be clearly defined and communicated to both the entities and suppliers so that all parties know and understand the panel procedures. Panel procedures should reflect consideration of any fees to be charged to participating entities for accessing and using the panel, processes for the placement of orders, payment and reporting, responsibilities and arrangements for ensuring communication between the parties, for example, the communication of changes to the panel arrangement and dealing with suppliers and entity feedback, and panel monitoring and review arrangements, including entity and supplier obligations.

 

 

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