Express law No. 48

1 December 2006

Cessation of the Endorsed Supplier Arrangement

Agencies
are no longer restricted in acquiring major office machines
(MOM) and information communications technology
(ICT) goods and services from endorsed suppliers.

The
Australian Government Endorsed Supplier Arrangement (ESA)
ceased operation on 29 November 2006 as a result
of an announcement by Senator the Hon. Richard Colbeck,
Parliamentary Secretary to the Minister for Finance
and Administration, revoking the mandatory use of endorsed
suppliers for the provision of ICT and MOM goods and
services to the Australian Government.

Existing ICT
and MOM endorsed suppliers have become members of a new
ICT Multi Use List administered
by the Department
of Finance and Administration, however use of this
list is not mandatory.

Effect on requests for tender
and other procurement processes

Approaches to the market
in preparation

Agencies preparing requests for tender
and other documentation to be used in approaches to the
market should ensure
that they do not contain any condition for
participation or
other requirement that tenderers be an endorsed
supplier.

The ICT Multi Use List provides an opportunity
for suppliers to state their credentials
and for agencies
to identify
suitable suppliers. Agencies may also use
the list for select tender processes.

Approaches to the
market that have been released

Where an
agency has released an approach to the market that includes
a requirement that tenderers
must be
an endorsed supplier either at the time
of submission of
their tender
or prior to contract, the agency will need
to consider the appropriate course of action
it should take.

As a matter of process, one of the most
important considerations will be compliance
with the
Commonwealth Procurement
Guidelines, particularly in terms of
obtaining value for money. Accordingly,
if the nature of the services is such
that it is likely that greater value for money
will be
obtained
by cancelling
the approach to the market process, then
it would be in the public interest to
do so. However,
if an assessment
is made which suggests that there would
be little
or no
significant change in value for money
by cancelling and re-issuing the approach
to the market or
if significant costs have been incurred
by the suppliers
and the
agency, then it may be contrary to the
public interest to cancel
and re-issue the approach to the market.
This is a matter
which would have to be assessed on a
case by case basis depending on the circumstances
of
each case.

If an agency has a preferred
supplier who was not ESA endorsed, and was therefore
excluded from the
tendering
process,
the agency should approach the ESA
contact at the Department of Finance and Administration
for assistance
in facilitating
inclusion.

Where an approach to the
market has not yet closed, agencies should immediately
consider
issuing
an addendum to remove
any endorsed supplier requirements.
This
would be an appropriate course of
action to take
even where
the
agency is still
in the process of considering whether
the process should be cancelled.

A
form of addendum suggested by the Department of Finance
and Administration
is contained
in the advice
to procurement
officers issued by Finance on 29
November 2006 (see attached).

Effect
on financial, insurance and guarantee requirements

Agencies
should note that they can no longer rely on the ESA
to ensure
that
mandatory
levels of insurance
are in
place with suppliers that were
endorsed.1 Any requirement
an agency has with
respect to minimum
insurance
levels or to guarantees or
financial undertakings must be
included in documentation and
related contracts when making an
approach to the market.

Effect
on contract management

Agencies should review existing
contracts to identify what
action may be necessary
as a
result of the
cessation of
the ESA. For example, contracts
that contain a requirement
that the contractor
must
at all times
be an endorsed
supplier should be amended
so that the contractor
is not in
breach
because it is no longer
possible for them to comply with this
requirement.

For further information please contact:

Elizabeth Pulle
Lawyer
Australian Government Solicitor
T 02 6253 7535 F 02 6253 7306
elizabeth.pulle@ags.gov.au

Tony Beal
Senior Executive Lawyer
Australian Government Solicitor
T 02 6253 7231 F 02 6253 7306
tony.beal@ags.gov.au

See also:
http:www.parlsecfinance.gov.au/media/2006/mr_052006.html
http://www.finance.gov.au/ictmul/


Note

  1. Existing endorsed suppliers are permitted to use
    the ESA logo and promote the fact of their endorsement
    until
    the end of 2007, but the obligations under the former
    ESA Head Agreement ceased on 29 November 2006.

Important: The material in Express law is
provided to clients as an early, interim view for general
information only, and further analysis on the matter
may be prepared by AGS. The material should not be
relied upon for the purpose of a particular matter.
Please contact AGS before any action or decision is
taken on the basis of any of the material in this message.