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Government Procurement Reform

Government Procurement Reform IT 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 Business feedback

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Government Procurement Reform

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  1. Government ProcurementReform IT 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 SERVICE PUBLIC SERVICE e.g. Ministries e.g. NZDF, Police, DHBs e.g. NZ Post, Meridian 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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