Establishing a panel contract? Don’t forget section 186
It's important for Victorian councils to ensure they establish and use panels in a way that is consistent with relevant laws and their own procurement policy
It is becoming increasingly common for councils to seek to establish panels for the procurement of works, goods and services over a contract term.
These panel arrangements typically involve:
- the council seeking tenders from potential contractors, suppliers or consultants for engagement on a panel
- each successful tenderer being required to execute a single contract with the council under which they agree to provide relevant works, goods or services over a particular term (this Contract Term could involve an initial term plus one or more options to extend the panel)
- the council issuing a works order to a panel member as and when it requires that particular panel member to provide works, goods or services.
Panel arrangements are attractive for many reasons. These include simplifying the procurement process (since the council only goes out to tender once) and potentially offering significant potential for value for money as panel members can be asked to ‘hold’ their rates (potentially subject to CPI adjustment) over the term of the contract.
It is important, however, for councils to be careful to ensure that they establish and use panels in a way that is consistent with both s 186(1) of the Local Government Act 1989 and the council’s own procurement policy.
This is because a panel arrangement that is not established properly may not give rise to a binding contract being formed for the purposes of section 186(1).
Has your council considered establishing a panel? In what circumstances could they be used at your council? Have you taken steps to ensure that s.186 will be complied with in establishing a panel?
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