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With the Federal Government’s Desktop Hardware Panel expiring mid-2015, the Department of Finance (Finance) is due to issue a request for tender for a replacement for the panel by the end of 2014.
According to its Annual Procurement Plan, Finance will approach the market in the second quarter of 2014-15 with a ‘RFT to establish whole of government panel for the provision of ICT Hardware & Associated Services’.
The existing Desktop Hardware Panel has been in operation since 2010. Established for an initial three year period with an option for two 12 month extensions, both options have been exercised and the panel is now due to expire on 9 August 2015.
While the scope of the new panel will certainly differ from that of the existing panel, the extent of the upcoming changes is not yet established.
The current panel covers the provision of Desktop PCs, Mobile PCs including tablets, Monitors and Associated Services.
In February 2014 Finance sought feedback on the scope and operation of the new panel.
Announcing the consultation process Assistant Secretary Mundi Tomlinson said “Finance is considering how it may achieve better value for money for the Commonwealth in the procurement of ICT Hardware, including desktop hardware and associated services.”
“I invite feedback and comments from Industry and Agencies on how the Commonwealth may improve the performance of the arrangement and what it could consider for inclusion into its future ICT hardware and associated services procurement arrangements.”
One change which has already been determined is the removal of tablet devices from the scope of the Hardware panel.
Tablets will be shifted into the new Mobile Panel which is currently in the tender evaluation stage of the procurement process. The new Mobile Panel will replace the existing Telecommunications Commodities, Carriage and Associated Services (TCCAS Panel).
A $200 million panel
The Desktop Hardware Panel has had a minimum of $199.6 million total contract value (TCV) and 1,432 contracts over its first four years of operation according to Intermedium’s analysis of the AusTender data.
This analysis is based on Intermedium’s identification of relevant contracts by their Standing Offer Notice (SON) as posted on AusTender. It is highly likely that total value of procurement through the panel is higher, as it is not compulsory for agencies to specify a SON ID on panel contracts.
While there are 12 vendors on the panel, the top four vendors have won approximately 90% of the business recorded against the panel.
Over the four years of the panel’s operation Acer is the top ranked supplier through the panel with 33.9% of TCV with $67.7 million across 120 contracts. Nearly 90% of Acer’s TCV through the panel comes from the Department of Human Services (DHS) with 21 contracts with a value of $60.6 million
Second placed Hewlett-Packard has 27.1% of TCV, which is $54.0 million across 400 contracts. Hewlett-Packard’s top customer is the Department of Defence (Defence) with a TCV of $33.8 million over 248 contracts – 63% of HP’s total business through the panel.
Dell ranked third at 18.7% of TCV, $37.3 million and 402 contracts, with Ethan Group ranked fourth with 14.4% of TCV, $ 28.7 million and 363 contracts. Both Dell and Ethan Group supplied to a much broader customer base than Acer and HP.
However the supplier rankings on the panel vary from year to year.
At this stage the highest value supplier for 2013-14 looks likely to be Hewlett-Packard with $22.6 million and 103 contracts for the year to date. Acer was the top supplier in both 2012-13 with 40 contracts and $18.3 million and in 2011-12 with 20 contracts and $34.5 million. Dell was the top supplier in the panel’s first year of operation 2010-11 with 95 contracts and a TCV of $11.1 million.
On the agency side DHS and Defence accounted for 61% of the TCV of the panel. DHS was the top ranked agency over the four years buying $69.2 million of hardware in 49 contracts, followed by Defence with $52.7 million and 502 contracts after which agency TCV dropped sharply. The next highest ranked agency was the Department of Social Services with $9.7 million and 40 contracts.
As with the suppliers agency rankings also varied from year to year.
Defence looks likely to be the highest spending agency for 2013-14 with $30.5 million and 156 contracts. DHS was the top purchaser for the three preceding years with $17.2 million and 19 contracts for 2012-13, $37.3 million and 13 contracts for 2011-12 and $11.0 million and 8 contracts for 2010-11.
Use of the panel is mandatory for agencies subject to the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
Finance undertook a review of the panel ahead of its initial extension in July 2013 which found that the panel was responsible for $27 million in savings in its first three years of operation.
According to Finance the panel reduced the cost of desktop hardware for Government agencies from 55 per cent above the Australian average price to 50 per cent below the average price.
"These savings are retained by agencies. As a consequence, the current panellists have been offered and are in the process of accepting an extension of 12 months,” said a spokesperson from the Department of Finance and Deregulation.
The strong cost savings achieved through the panel can be attributed to the use of a Best and Final Offer (BAFO) mechanism, a quarterly under which Finance aggregates agency demand for desktop hardware and vendors make an offer based on this aggregated demand. The vendor with the lowest price wins the right to supply for the quarter.