Drug and Alcohol Office Procurement – responding to reform James Hunter Director Client Services and Development

1. Drug and Alcohol Office Procurement – responding to reformJames HunterDirectorClient Services and Development >

2. DAO – Statutory Authority under the Alcohol and Drug Authority Act 1974, core functions: Treatment and Support Prevention Workforce Development Policy and Strategy Research AOD Sector – 38 Not-for Profit Organisations and 3 Government providers Peak WA Network of Alcohol and other Drug Agencies (WANADA) DAO and the Alcohol and Drug Sector

3. Main service types Integrated Metro Community Drug Services and DAYS (5 services) Regional Community Drug Service Teams (7 services) Residential Rehabs (9 services) Sobering-up Centres (9 services) Detox (3 main services, plus some hospitals) Pharmacotherapy (e.g. Methadone, Buprenorphine, Naltrexone) (numerous services) Other specialist services (numerous services) The Alcohol and Other Drug Sector

4. DAO Funding Government providers – $17.6 million (35%) Not for Profit NGOs – $32.7 million (65%) Total of $50.3 million is approx 80% of DAO budget Other funding Commonwealth Government Fundraising / donations The Alcohol and Other Drug Sector

5. 2009/10 - Change is coming!

6. Budget announcement – 15% in 2011/12, average of 10% in 13/14 Decision to extend all DAO agreements to 30 June 2012 Delivering Community Services in Partnership Policy All eligible DAO service agreements have received the 15% ($4.4 million in 11/12 for AOD sector) - this was the easy part! Initial information indicates salary boosts of 5% to 12% in the AOD sector Some early reports of decreased staffing turnover An effective but blunt instrument Component 1 Process

7. Average of 10% price adjustment, some will get more, some less, and some none at all Our focus has been on: Putting the Policy into immediate practice with request processes Designing a process for expiring agreements – 30 June 2012 Collecting material for DAO’s Agency Implementation Plan and Component 2 DAO and sector capacity building – including this forum funded from the Government’s Fostering Partnership grants process Component 2 - Preparing

8. DAO is required to submit an AIP in June 2012, that covers: Our capacity to undertake reform What we have done so far What we plan to do We are focusing on Demonstrating commitment and capability Partnership and collaboration with our sector and FaCS Unit Positioning the sector to maximise the opportunity of Component 2 funding Agency Implementation Plan

9. Goldfields Community Drug Service Team Northwest Alcohol and Other Drug Support Royalties for Regions initiative – Kimberley and Pilbara New Policy in Practice – New agreements Open Request Processes

10. Preferred Service Provider process for residential rehab program services and a few specialist services Extensions for 2012/13 year for remaining services (most services) New Policy in Practice - Expiring AgreementsTwo groups

11. DAO’s – Preferred Service Provider Process Delivering Community Services in Partnership Policy & State Supply Commission policy on Open and Effective Competition Community service Commercial Does need still exist and is there an existing service provider? Yes - assess for Preferred Service Provider status No & funding > 150k PSP status  - Sole Supplier Request process No PSP status Request / tender process (Restricted or Open process) Consult to refine service requirement Issue Request (tender) Receive Offer, evaluate, Community Services Procurement Review Committee Provide letter of acceptance to finalise service agreement or letter of preferred respondent to clarify issues before finalising service agreement

12. DAO has historically utilised PSP, with Open Requests only used for new funding or for when underperforming contracts expire. DAO’s strategy going forward is being finalised and will be reflected in our Agency Implementation Plan. Delivering Community Services in Partnership Policy supports a range or processes: Open Request Restricted Processes PSP Direct Negotiation Broader procurement strategy and 2013/14 process

13. DAO’s strategy will be scrutinised independently via our AIP Approach taken needs to demonstrate it will deliver best outcomes and value for money for the community Likely to be a mix of PSP and Open Request, with some agreements extended for a further year Greater focus on agreeing outputs and outcomes in Service Agreements (what services, how much service, and what quality of service) Broader procurement strategy and 2013/14 process

14. A key objective of Government is to reduce the administrative burden on the NFP sector Strategies planned to be introduced by DAO include: Longer contract terms, with the norm being 3years + two 1 year options (5yr total) Reduced financial reporting Largely automated reporting (SIMS) To make this work DAO’s challenge is to specify the right outputs/outcomes in the beginning, and your challenge is to price your services accurately Reducing the administrative burden

15. Opportunity toaddress sustainability issues in the sector. Opportunity to clarify and more sharply define and measure the outcomes we are purchasing on behalf of the community Work for DAO has increased in the short term – but has been coupled by increased support from FaCS Unit Increased external scrutiny of processes and decision making re purchasing services via CSPRC and FaCS unit DAO perspective so far

16. A framework now exists for the development and promotion of best practice in service procurement Relationships are critical in any complex change process – we are focussed on collaboration with WANADA and the sector, and the FaCS Unit The sustainability of reform appears secure due to high level commitment and a central unit in place to drive it (FaCS Unit) DAO perspective so far

17. Procuring services on an outcomes basis is hard - need to better define and measure outcomes Pricing services sustainably to deliver outcomes is also hard Funding models are evolving e.g. self directed service design Inputs (resources required) and outputs (products of activity) are the way most people understand service procurement and delivery Challenges remaining

18. Capacity of the Sector – the sector is diverse with a range of organisations providing services Capacity of DAO – Capability assessment to occur in May 2012 Component 2 – the challenge is to use the opportunity to address remaining sustainability problems Relationships – how to maintain and strengthen them while changing the way we do business Challenges remaining

19. Anxiety about the consequences, intended and unintended, reform will have in the medium/long term Increased external scrutiny of procurement processes in our sector An evolving response to the DCSP Policy – how to remain flexible but also provide stability and certainty Commonwealth Government – a key player with a different approach to service procurement Challenges remaining

20. Questions?