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Fixed Panel versus Multi-Use List Debate just got more interesting

by Chris Huckstepp •
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Proponents on either side of the fixed panel versus Multi-Use List (MUL) debate will have scrutinised Auditor General Ian McPhee’s Report on the ‘Establishment and Use of Multi-Use Lists’ (the Report) for points that suit their argument. The Audit examined all categories of procurement – not just ICT.

Released on 26 June 2014, the Report contains a succinct summary of the differences between MULs and Procurement Panels, which is quoted verbatim at the end of this article.

In essence, The Audit found that of these two approaches (MULs and Procurement Panels), “the arrangements applying to MULs are not so well understood and, in most cases, greater consideration needs to be given to whether a MUL is most suited to an agency’s particular procurement objectives.”

The main scope of the Audit was:

  1. The policies and practices supporting the establishment and use of 16 MULs across three agencies; and
  2. Procurements from these MULs where the procurement had a value greater than $80,000. 

The Report found that the three audited agencies using MULs were:

  • Failing to approach adequate numbers of suppliers;
  • Treating suppliers inconsistently; and  
  • Neglecting to provide them with adequate deadlines.

“Consequently agencies’ approaches, to varying degrees, were not fully effective in satisfying the procurement principles, which among other things encourage fair and open competition”, the Report stated.

The Report has been issued just weeks ahead of the expected issue of the Report of the Senate Finance and Public Administration References Committee Inquiry Into Commonwealth Procurement Procedures (the Senate Inquiry). The Senate Inquiry Report was originally due to be released on 10 July 2014, but Intermedium has established that it is now likely to be released no earlier than 17 July 2014.  

Both Victoria and NSW have established Multi-Use-Lists as their preferred procurement vehicle. Intermedium commented in June that: “Coalition governments, NSW and Victoria in particular, have eschewed fixed term panels in favour of continuously open, multi-use lists for the procurement of IT Services. In these jurisdictions, it has now been policy for some time that procurement occur via the large omnibus ‘registers’ or ‘lists’. These are characterised by large numbers of suppliers. NSW, for example, has rationalised its almost 50 ICT State Contracts of the mid 2000’s down to the ICT Services Scheme and five other panels.”

The Australian Information Industry Association (AIIA) has indicated it favours the MUL approach in its submission to the Senate Inquiry, arguing that “procurement processes can create a significant compliance burden for business and in some instances, hamper competitive dynamics through overly restrictive tender frameworks… A one stop pre-qualification or certification process… [operating] across jurisdictions…” is preferable.

A key point of difference between MULs and procurement panels is that multi-use listed suppliers do not have to meet a value for money assessment for inclusion in the list.

“Although establishing a MUL can be quick and relatively inexpensive for an Australian Government agency, each subsequent use of a MUL takes time. The reason for this is that the process of establishing a MUL is not a procurement in itself and does not involve a comparative assessment of suppliers to determine value for money. The value for money assessment is undertaken later, at the time that the goods and/or services are procured from the MUL,” the Report states. 

The Report also states that “MULs provide flexibility and enable agencies to easily identify suppliers that meet certain conditions or that have specific expertise.”

In contrast, fixed term panel members must undergo a value for money assessment in order to be included on the panel.

The Bureau of Meteorology (BoM), the Department of Industry (Industry) and the Attorney-General’s Department (AGD) were audited.

The Audit found that BoM and Industry lagged behind the AGD in properly managing MUL-based procurements. BoM was deemed ‘not adequate’ with regard to ‘planning’, ‘approach to market’, and ‘evidence of assessment and notifications to suppliers’.  For example, it allowed a supplier just eight days to provide a response - two days less than specified in the Commonwealth Procurement Rules.

Issues with transparency and fairness were also identified. When establishing their MULs, neither BoM nor Industry first notified the full market of their intention by posting an ‘approach to market’ (ATM) notification on AusTender, although they did post a notice under the MUL section of AusTender.  As a result, the Audit found that potential suppliers might have lacked adequate notification.

All three agencies accepted the findings of the Audit and indicated their intention to adopt the Audit’s recommendations.

The Audit’s first recommendation is that Government “provide for efficient and effective procurement processes and the achievement of value for money… [by]:

(a) clearly [defining] objectives in order to determine the most appropriate procurement method; and

(b) where a multi-use list is chosen, strengthening processes to promote competition and equitable treatment of suppliers.”

The second recommendation is that “to provide for greater accountability and transparency when using a multi-use list, the ANAO recommends agencies concisely document the basis for short listing potential suppliers and the basis for selecting a particular supplier to evidence value for money.”

The findings of the Audit will be familiar to many suppliers, yet few suppliers voice their concerns and issues at a formal level. 

The Federal Government’s Head of Procurement, John Sheridan told the Senate Inquiry in April 2014 that he meets “regularly with vendors, three to four times a week, to discuss general procurement issues as well as ICT-specific issues… [and that] vendors rarely use such opportunities to raise concerns about the procurement process.”

 

AUDIT REPORT DEFINITION OF MUL AND PROCUREMENT PANELS

“MULs allow agencies to prequalify suppliers for later use in a procurement. They provide flexibility and enable agencies to easily identify suppliers that meet certain conditions or that have specific expertise. All suppliers who meet the conditions must be included on the list. Inclusion of a supplier on a MUL does not involve a value for money assessment of suppliers and does not usually create a contractual relationship. Suppliers can be added to a MUL enabling agencies to include new market entrants over time. 

Procurement panels are established following a competitive value for money assessment process and involve a contractual relationship for a set period of time. Once established, panels generally provide ready access to goods and services, particularly for high value procurements as the additional rules in the CPRs for such procurements do not apply. Generally, panels do not allow for new suppliers to be added to the panel once established.”

 

Related Articles:

Federal Agencies hang onto panels, despite rationalisations elsewhere

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