What is multi-stage purchasing?
A multi-staged purchasing process is where information is requested from suppliers in order to gain knowledge about the market, obtain industry input, or to shortlist suppliers before seeking offers.
Why use multi-stage purchasing?
A multi-stage tendering process can be used to:
- gain market knowledge (however, it should not been used as a substitute for conducting market research);
- shortlist appropriately qualified tenderers; and
- obtain industry input.
When to use multi-stage purchasing
A multi-stage purchasing process may be more costly and time-consuming for both suppliers and agencies, and it should only be used where:
- the best way to meet the requirement is unclear;
- it reduces the cost to industry and the agency;
- it is considered appropriate to prequalify businesses and restrict the issue of formal tenders (to reduce the cost of tendering);
- there are benefits which cannot be obtained by researching the market through conventional means; and/or
- maximum flexibility is required throughout the procurement process.
What process should be used?
The most common multi-stage processes are set out below. Information on how to use these processes to select a supplier is contained in Treasurer's Instruction 1108.
When is it used?
Expression of Interest (also known as a Registration of Interest)
To shortlist potential suppliers before seeking detailed bids, generally, when the information required is specific and the agency is unsure of the capability of suppliers to provide the required goods and services.
Request for Proposal
When the project or requirement has been defined, but where an innovative or flexible solution is sought.
Can be used as either a one stage or a multi-staged process. Where used as a multi-staged process, agencies must comply with the same processes as required for an EOI.
Multi Use list
Is usually used when specific goods and/or services are acquired on a regular basis from a various range of suppliers. In such cases, agencies may establish a multi-use list in relation to the supply of specific goods and/or services and suppliers can apply for registration. When goods and/or services provided for on the multi-use list need to be procured, agencies may then seek a response from suppliers on the list.
A multi-use list must be set up in accordance with the requirements set out in Treasurer's Instruction 1122.
Refer to the information below on the distinction between a multi-use list and a panel arrangement.
Licence or Specific Legal Requirement
Can be used when there is a need for the supplier to be the holder of a specific type of licence or to have been determined by the agency, authority, or organisation to comply with specific legal requirements that exist independently of the procurement process eg a banking licence.
Request for Information
A RFI is not a true procurement process. It is generally used at the planning stage of a project to assist with defining the project or requirement. It is only to be used to solicit information from suppliers that will assist in the development of the project or requirement and must not be used to select or identify a provider.
When using an RFI, issues relating to intellectual property and copyright must be clarified prior to using the information obtained to prepare any quotation or tender documentation. Crown Solicitor advice should be sought.
Agencies should be aware of the following:
- mandatory requirements relating to each process are set out in Treasurer's Instructions 1108. For example, when using a multi-staged EOI process, suppliers must be provided, in advance, with the evaluation criteria that will be used to make a decision at each stage of the purchasing process;
- requirements regarding advertising and seeking at least two bids from local businesses are the same for multi-staged procurement as for a standard quotation or tender process;
- requirements in relation to setting up of a multi-use list are located in Treasurer's Instruction 1122; and
- where a procurement is impacted by a free trade agreement, additional requirements may apply.
Distinction between a multi-use list and a panel arrangement
A multi-use list is a list of prequalified businesses, intended for use in more than one procurement process. Those businesses included on the list will have responded to a call for interested parties and then satisfied pre-determined conditions for participation.
In order to use a supplier from the list, an agency must go through a further procurement process and invite suppliers to submit quotations or tenders as set out below:
- For procurements valued at $10 000 or less, quotation processes are at the discretion of agencies. Agencies are required to weigh the value of the purchase and the cost of seeking quotations against the need to ensure that value for money and the other government procurement principles contained in Treasurer's Instruction 1101 have been observed. All mandatory requirements of Treasurer's Instruction 1105 apply;
- For procurements valued at more than $10 000 but less than $100 000, agencies must seek at least three written quotations from the suppliers included on the multi-use list. All mandatory requirements of Treasurer's Instruction 1106 apply; or
- For procurements valued at or over $100 000, agencies must seek a tender response from all those persons who are included on the multi-use list. All mandatory requirements of Treasurer's Instruction 1107, other than the requirement to call for open tenders, apply. Approval for direct/limited submission sourcing (as opposed to calling for open tenders) is NOT required provided the multi-use list has been set up in accordance with the mandatory requirements set out in Treasurer's Instruction 1122.
When using a multi-use list, the evaluation process can be simplified given that part of the process has already been undertaken when setting up the multi-use list.
A multi-use list is required to be open for new applicants either continuously or annually and there must be no limitation placed on the number of potential participants. A multi-use list will usually operate indefinitely and will not contain prices nor indicative prices as this will be something that needs to be determined in the evaluation process that will be undertaken when quotes or tenders are called.
Note: participation in a multi-use list may also be used as an essential criterion or condition for participation in an open tender.
A panel arrangement, by comparison, is an arrangement under which a number of suppliers may each supply goods or services to an agency. A panel can be established through an open tender process or through a multi-staged purchasing process.
Once a full evaluation process has been completed, all the successful suppliers will enter into panel arrangements with the agency for the potential supply of the goods or services specified in the arrangement - although there is no guarantee that any person on the panel will necessarily be called upon to supply the goods and/or services
Once the panel has been established there is no need to undertake a further procurement process and agencies can purchase directly from the established panel.
A panel has a finite number of participants, operates for a finite period and can be re-opened at the conclusion of the period. It will usually provide indicative or set prices for the goods and/or services supplier.