Cooperative Procurement Guideline

Broadly speaking, there are three CPA models. They are the:

1. Multi-User Arrangement – are a ‘mini-CUA’ led and managed by a State agency, or an Authorised Body from which other State agencies or Authorised Bodies may buy;
2. Distributor model – where a State agency conducts a procurement as the principal to the contract and then distributes the goods or services bought to the other participants; and
3. Group Buying Arrangements – where a single Request process is used to establish multiple customer contracts for the participating State agencies and/or Authorised Bodies.

The examples below show the three models and explain when the Department of Finance’s approval is required: Where approval is required from the Department of Finance, use the approval template.

Multi-User Arrangement - Developing a new contractual arrangement

Example 

An Agency wants to establish a Standing Offer arrangement with a supplier or suppliers and thinks that this arrangement may be useful to other entities. The Standing Offer arrangement includes access provisions to allow for this, such that other participants can purchase from the Standing Offer arrangement by establishing their own customer contracts.    

Department of Finance approval required

Approval is required when establishing the Standing Offer arrangement, but not for subsequent purchases made.

Multi-User Arrangement – Accessing an existing contractual arrangement

Example 

Agency 'A' previously established a Standing Offer contract for their agency in accordance with the box above, which contains provisions to allow other entities to purchase off it. Agency 'B' wants to purchase from it.

Department of Finance approval required

Approval would have been sought when the arrangement was developed. It is not required for this subsequent purchase as a customer contract. 

Example

Agency 'A' has an existing contract Standing Offer in place however it does not include provisions to allow for access by additional entities. Agency ‘A’ now wants to open this contract up to other participants. The supplier(s) have agreed to this course of action. Agency ‘A’ proposes to vary the Standing Offer to include access provisions.

Department of Finance approval required

Approval is required before the Standing Offer can be varied in this manner. 

Example

A State agency wants to access an existing Standing Offer contractual arrangement where a non-State agency (i.e. Authorised Body) is principal to the contract.

Department of Finance approval required

Approval is required to: 

1. declare the non-State agency (principal) an Authorised Body   
2. access the Standing Offer arrangement.

Distributor Model – Lead agency distribution model

Example 

An Agency undertakes a procurement as principal to the contract and then distributes the goods, services or works to the other participants.

Department of Finance approval required

If only Agencies are participants - No 
If one or more Authorised Bodies are participants - Yes 

Group Buying Arrangement - Single Request process with individual customer contracts for each participant 

Example

Multiple participants have the same purchasing requirement and issue a single request document. The participants then create and manage their own individual contracts created from the request process.

Department of Finance approval required

If only Agencies are participants - No  
If one or more Authorised Bodies are participants - Yes 

Multi-User Arrangement Model

The multi-user arrangement model can be thought of as an agency-led common use style arrangement that is not maintained by the Department of Finance.

This model enables agencies to establish Standing Offer contracts that can be accessed by other participants. While not limited to these scenarios, some examples include:

• where an agency establishes a Standing Offer that can be used by other agencies within the same portfolio;
• where an agency wants to establish a Standing Offer arrangement that can be accessed by the not-for-profit sector or local government bodies;
• where an agency wants to access a Standing Offer arrangement that has been established by another State agency; or
• where an agency wants to access a Standing Offer arrangement that has been established by an entity that is a non-State agency (i.e. Authorised Body). 

Under dot points 1 and 2 above, the lead agency is responsible for establishing and administering the Standing Offer. Participants can purchase from the arrangement by setting up their own customer contract.

The lead agency must seek the Department of Finance’s approval before establishing this arrangement.

Under dot point 3 above, the lead agency is a non-State agency and does not need Department of Finance’s approval before establishing their Standing Offer arrangement. However, State agencies need to seek Department of Finance’s approval to purchase from this type of Standing Offer arrangement where a non-State agency is the principal. The non-State agency by default than becomes a participant to the CPA.

As the new procurement framework comes into operation, Agencies may identify existing Standing Offers that they may wish to open to other participants. If this is the case, the agency would need to propose a variation to the Standing Offer to enable access. The Department of Finance’s approval is required before the variation can be made.

Further information on access provisions can be found under the heading - Accessing a Contractual Arrangement Established by Another.

Agencies should note that the multi-user arrangement model does not allow an agency to establish an arrangement to purchase goods or services already the subject of a common use arrangement (i.e. capable of being used by all agencies), as this function has been specifically reserved to the Department of Finance under section 25 of the Act.

Distributor Model

The distributor model allows a lead agency to undertake a procurement that is for the benefit of other agencies or Authorised Bodies.

In this model, one agency acts as the lead agency and undertakes the purchase as principal to the contract, and then distributes the result of the procurement to the other participants. This model is more appropriate to use where the contract is for a discrete purchase, i.e. not a Standing Offer arrangement. 

As an example, suppose there is a specific need for a known supply of a specialised product common to a few other agencies and/or Authorised Bodies (i.e. the purchase of a few heavy-duty vehicles). The lead agency can approach the market and establish a contract that caters for the aggregated volume. The lead agency then arranges to provide the products to the other participants.

Group Buying Arrangements

Group Buying Arrangements occur when a group of participants approach the market together by issuing a single Request document, but then enter into and manage their own separate contracts with the successful supplier or suppliers.

These arrangements do not require formal approval from the Department of Finance if the participants are all agencies. If one or more Authorised Bodies are involved, Department of Finance approval is required.

Cooperative Procurement Arrangements (CPAs) can either be:
•    between agencies; or
•    between agencies and Authorised Bodies.

Authorised Body

Certain entities that are not agencies can be Authorised Bodies. The Department of Finance maintains a list of Authorised Bodies. The types of entities that can be Authorised Bodies include charitable organisations, local governments, universities and other entities established by legislation.

It is important to note that being on the Approved Register of who can buy from CUAs does not automatically enable an Authorised Body to enter into a CPA. Agencies seeking to enter into a CPA with an Authorised Body are always required to seek approval from the Department of Finance first. Agencies will be approved to enter into CPAs with Authorised Bodies on a case by case basis.

Cooperative Procurement Arrangements with other jurisdictions

A new feature of the Act is that it enables agencies to enter into CPAs with entities from other jurisdictions. This could include a Commonwealth government entity, a government entity from another State or Territory, and even local government authorities in other States or Territories. However, these entities must be declared as an Authorised Body first.

Where an agency wants to enter into a CPA with an entity from another jurisdiction, the agency must seek advice from the Department of Finance before proceeding with the arrangement, as there may be additional requirements that need to be applied to the process. This includes making sure the desired entity from the other jurisdiction is duly declared as an Authorised Body under the Act.

Access 

Careful attention is needed to ensure the contractual arrangement allows for access by other participants.

When establishing a multi-user arrangement CPA, agencies should ask themselves whether:

• the approach to market and contractual documentation adequately identify who the participants are. For example, are the participants named as individual entities or does the documentation refer to a class of participant(s)?
• the Supplier or Suppliers are fully informed as to who the other participants are.

A multi-user arrangement model CPA would ideally list all of the potential customers in the request documentation and incorporate this into the resulting Standing Offer contract.

However, relevant clauses could also be included in the approach to market and subsequent contract to allow an access arrangement to occur at some future stage.

Entities seeking to access an existing arrangement should consider whether:

• the contract or Standing Offer allows for potential access by other entities;
• the entity’s needs (specified requirements) are within the scope of the existing arrangement;
• the entity will achieve value-for-money by accessing the existing arrangement;
• whether access by other participants would unduly reduce opportunities for local industry SME participation; and
• whether the market has changed substantially since the existing arrangement was put in place.

Requirements

Participants seeking to access an existing arrangement must consider whether the Standing Offer adequately caters for their purchasing requirement. Participants must also consider whether the market has changed since the arrangement was established.

Scope and Volume

Allowing another participant to access an established multi-user agreement should not alter the scope of the procurement (noting that a change in volume does not necessarily mean an alteration to the scope).
Participants should be careful in planning and coordinating the anticipated volumes under the resultant Standing Offer or contract. Where access or increased volumes by additional entities occurs, the entity should consider whether a new approach to market would deliver a better value for money outcome.

Cooperative Procurement that involves purchasing from an Authorised Body’s existing Standing Offer Arrangement

Where an agency wants to enter into a CPA with an Authorised Body to procure from an existing Standing Offer arrangement that the Authorised Body has in place, the agency must seek advice from the Department of Finance before proceeding with purchase.

For example, the Department of Finance may ask you to substantiate that:

• the procurement process undertaken by the Authorised Body has adhered to the principles of the Western Australian Procurement Rules;
• by purchasing from an Authorised Bodies’ contract, the agency itself is adhering to the principles of the Western Australian Procurement Rules; and
• purchasing from the arrangement is not contrary to the Government’s policy objectives.

When used appropriately, CPAs can provide benefits to the participants, including:

• an increase in buying power leading to price savings through volume discounts;
• increased efficiency to both the CPA participants and industry by reducing duplications of the same procurement;
• decreased administration burden for suppliers, where they deal with a lead participant to the CPA; and
• opportunities to collaborate across jurisdictions, across levels of government and between government and non-government entities (for instance, charitable bodies).

Examples of Effective Cooperative Procurement Arrangements

CPAs may represent value-for-money where smaller entities with a common purchasing requirement can approach the market together. This can reduce both government administration costs and tendering costs for industry.

Similarly, a CPA may be appropriate where the procurement is in a specialised area that only relevant to certain entities; for instance, specialist pharmaceutical products, agricultural equipment or heavy machinery.

When a Cooperative Procurement Arrangement is inappropriate

CPAs may limit opportunities for suppliers due to fewer approaches to the market for tenders. CPAs, if used unwisely, could limit regional business or SME engagement.

Participants must consider whether using a CPA represents the best value-for-money outcome by considering the full spectrum of cost, non-cost and sustainable procurement principles. This includes weighing a CPA against the other available procurement options.

It is possible to still engage in CPAs while allowing for SME engagement and regional business participation. Aggregating the requirements across entities and approaching the market together does not mean that only one supplier can be engaged.

Step 1 - Identify the opportunity

The process starts with identifying an opportunity for a CPA. This can occur:
•    through direct communications between agencies and Authorised Bodies;
•    where a common purchasing requirement exists for agencies in the same portfolio;
•    by reviewing forward procurement plans published by agencies; or
•    where the Department of Finance identifies and communicates to the relevant agencies that a CPA opportunity exists.

Step 2 - Determine whether the CPA opportunity represents value-for-money

The potential participants should (individually and collectively) determine whether a CPA would deliver a value-for-money outcome.

Step 3 - Seek approval from the Department of Finance (if required)

If Department of Finance approval is required, the participants (usually through the lead agency) should begin communicating with the Department of Finance at the earliest available opportunity. Finance has developed an approval template for this purpose.

Email the approval requests to the Department of Finance, Advisory Services by email at procurementadvice@finance.wa.gov.au

Where participants are not State agencies, as defined by the Procurement Act, they will need to be Approved Bodies.  Advisory Services can also provide assistance on approving Authorised Bodies.

Step 4 - Define the roles and responsibilities of the participants

Participants to a CPA must outline their respective roles and responsibilities, usually through a Memorandum of Understanding (MOU).

Participants need to consider, at a minimum:

1. Resourcing (at both a team and agency level):
   1. who will prepare the approach to market?
   2. who will form the evaluation panel?
   3. who will be the lead agency for the CPA?
   4. who are the key contacts for each participant?
2. Communication:
   1. who will communicate with suppliers?
   2. who will liaise with the Department of Finance?
3. Contract Management:
   1. who will manage the resulting contract(s)?
   2. does the contract adequately enable the sharing of information between participants?
   3. how will the participants report on the CPA?
   4. how will the arrangement operate?
   5.  how will orders be placed and goods or services provided?
   6. will there be an administration fee payable to the lead participant?
   7. who will monitor expenditure under the arrangement, and complete contract variations if the total contract value is likely to be exceeded?

Step 5 - Conduct the procurement in accordance with the relevant Procurement Directions

The CPA must be undertaken in accordance with the Procurement Directions, including the Western Australian Procurement Rules. This includes, but is not limited to, ensuring the Department of Finance is engaged to facilitate the procurement process if required, minimum advertising periods are met, the appropriate procurement method is used, and that relevant contract information is published on Tenders WA.