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Government Procurement Reform

Government Procurement Reform. MFD Sector Briefing. 1. Agenda. Background Machinery of government Procurement reform Business participation All of Government contracts Sector specific data Conclusion. 2. Background. 3. Why reform procurement?. 30 – 70% of operating costs

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Government Procurement Reform

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  1. Government ProcurementReform MFD Sector Briefing 1

  2. Agenda • Background • Machinery of government • Procurement reform • Business participation • All of Government contracts • Sector specific data • Conclusion 2

  3. Background 3

  4. Why reform procurement? • 30 – 70% of operating costs • Business feedback • Economic downturn • Unacceptable risk profile • Lost efficiency opportunities • Build strategic capacity 4

  5. Ministerial Support & Scrutiny • Hon Bill English (Chair) • Hon John Key • Hon Gerry Brownlee • Hon Simon Power • Hon Tony Ryall • Hon Stephen Joyce • Hon Rodney Hide 5

  6. Governance • Expenditure Control Committee • Chief Executive VfM Group • Government Procurement Reform (MED) • Administrative Services Review (The Treasury) • Cross cutting Value for Money initiatives 6

  7. Machinery of Government 7

  8. Government Structure PUBLIC SECTOR STATE SECTOR STATE SERVICES PUBLIC SERVICE e.g. Departments e.g. NZDF, Police, DHBs, Crown Entities e.g. NZ Post, Meridian, Uni’s e.g. Local Government 8

  9. Reporting and barrier removal • Quarterly reports to Cabinet • Minister briefings • Intervention reports to ECC as needed • Ministers notified: • Good practice • Undermining behaviour • Ministerial intervention needed 9

  10. Procurement Reform 10

  11. Procurement Reform • Cost Savings • Capability and Capacity Building • Enhanced Business Participation • Governance, Oversight and Accountability 11

  12. Key Reform aspects • 4 Year programme • Supports other VFM initiatives • Transform procurement thinking • Strategic procurement capability 12

  13. Enhanced Business Participation • Cutting red tape • Improving transparency • Increasing opportunities • Sustainable markets 13

  14. Business feedback • Procurement capability • Conditions of contract • Standard documentation • Evaluation method • Futile bidding enquiries • IP risk • Engagement 14

  15. All-of-GovernmentContracts 15

  16. Target Areas Secure Supply Strategic Critical Risk Streamline Tactical Sourcing Value 16

  17. All-of-Government Contracts • National/international market dominated • Common needs • Lower supply risk • Reflect other jurisdictional experience • Not syndicated contracts 17

  18. Key Drivers • Need for change • Strong performance management • Reduce overhead • Total cost evaluation • Meet diverse customer needs • Maintain/enhance competition 18

  19. Transition • Managed transition • Soon as practical • Aim for 100% by 30 June 2012 • Current contracts: • Extend till transition period • Re-tender 19

  20. Centres of Expertise (CoE) • Additional resources • Dedicated category managers • Strong market knowledge • Relationship management • Key performance measures • Supplier incentives 20

  21. Centres of Expertise (CoE) • Desktops/Laptops - DIA • MFD’s - DIA • Vehicles - MED • Stationery - MED 21

  22. Key Data Craig Doherty 22

  23. Data Collection • State Sector data • 163 of 198 agencies responded so far • Analysis based on information submitted • Further validation to be undertaken • Firm up demand during budget setting 23

  24. Spend & Units by Sector – IT Hardware Note: Number are rounded to $1M 24

  25. 12.0 80% of total spend 10.0 8.0 6.0 4.0 2.0 $M Pareto – Significant Procurers MFDs 25

  26. MFD suppliers: 26

  27. Timelines • Establish CoE team now • Market engagement • Firm up demand by Christmas • Out to Market quarter 3 • Contract award by June • Mobilisation from July 27

  28. Challenges • Minister expectations • Diverse client base • Change management • Undermining activities • Sabotaging behaviour 28

  29. Summary • Change management project • Strong agency support • Ministers will remove barriers to progress • Dedicated category management • Supplier incentives • Transition as soon as practical 29

  30. Conclusion 30

  31. Conclusion • Open dialogue • Centre of Expertise • Improve efficiency • Market sustainability • Better value for tax-payers 31

  32. Contacts:CoE Manager:Craig Doherty – 04 495 7267coe@dia.govt.nzReform Project Manager:Christopher Browne – 04 470 2334chris.browne@med.govt.nz 32

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