Deed of Standing Offer (DSO)

What is a Deed of Standing Offer (DSO)?

A Deed of Standing Offer (DSO) is the formal legal instrument that underpins a Standing Offer Arrangement. It is a binding deed (not a contract in itself) where the supplier offers to provide specified goods or services at agreed terms whenever the agency chooses to order them.

How Does a DSO Differ from a Contract?

A key distinction: a DSO is an offer, not a contract. The agency is not obligated to purchase anything. A binding contract only comes into existence when the agency issues a purchase order or work order under the DSO. This means:

• The supplier is bound to deliver at the agreed terms if an order is placed
• The agency is not bound to place any orders
• Each order creates a separate contract under the umbrella of the DSO

What Does a DSO Contain?

A typical DSO includes:

• Scope of goods or services covered by the arrangement
• Pricing schedule — either fixed prices or an agreed pricing methodology
• Term — the period during which the standing offer is valid (typically 2-5 years, often with extension options)
• Conditions of Contract that apply to each order
• Ordering procedures — how the agency will place orders
• Performance standards and service levels
• Reporting and governance requirements

When is a DSO Used?

DSOs are the preferred mechanism for Commonwealth agencies when establishing Standing Offer Arrangements. They are particularly common for:

• IT services and hardware
• Professional services (consulting, legal, accounting)
• Facilities management and maintenance
• Temporary staffing

Tips for Tenderers

• Understand that a DSO does not guarantee revenue — you must still compete for individual work orders.
• Price carefully — your rates are locked in for the term of the deed, so account for cost escalation.
• Maintain capacity — you are expected to deliver when called upon, even if orders are unpredictable.