Agency C case studies of procurements under $80,000

1. Agency C case studies of procurements under $80,000

2. About this document Methodology This document contains an analysis of three procurement case studies provided by Agency C. Each case study was analysed against a high level process model to understand actual procurement processes employed and to identify areas of good practice, unnecessary and / or duplicated processes, and convoluted processes (inefficient / ineffective). ThinkPlace has worked with a small group of people in Agency C to develop this document. Agency C provided three procurement case studies that describe actual procurement processes ThinkPlace reviewed the case studies validating them against processes mandated by the agency CEIs and relevant policies. ThinkPlace worked with Agency C staff who are directly involved in the case study to identify areas of good practice, unnecessary and/or duplicated processes, or convoluted processes. Contents Procurement case studies Procurement narrative - case study 1 4 Procurement narrative - case study 2 5 Procurement narrative - case study 3 6 High Level Analysis of Case Studies 7 Summary of process issues and insights Good practice, unnecessary and convoluted processes 14

3. Procurement case studies In this section, three procurements under $80,000 that best represent typical procurements, examples of good practice and examples of convoluted processes are explored. These case studies describe the facts, processes and experiences of the procurement.

4. Case Study 1 Selling agent for a cottage in South Australia.

5. Case Study 2 Consultant services for conduct of pricing review

6. Case Study 3 Purchase of 6 x GigaBit modules

7. High level analysis of case studies In this section, case studies are validated against processes mandated by the agency CEIs and relevant policies

8. Agency C Procurement ProcessesGood practice, unnecessary and convoluted processes Actual process Issues Improvements Initiate procurement process     Approach market Establish contract Receive goods and services Pay for goods and services • Case Study 3 • What actually happened • Procurement officer approached market without planning • What were the issues • No issues • What are some improvement ideas? • None • Case Study 1 • What actually happened • Market analysis was undertaken to value the price of a cottage – from that the percentage of agent’s fees could be calculated • Procurement Officer developed: • Procurement plan • Project Plan • Evaluation Plan; • EOI for 5 agents and RFQ to 4 agents; • Advice to SEWPAC regarding sale • Due diligence process • Procurement Officer obtained delegate pre-approval based on Project Plan and Ministerial Brief • Sought advice from PAT regarding procurement activities – was advised not to undertake EOI and to proceed with RFQ • What were the issues • Process over-engineered for a simple low risk/ low value procurement; requirement of management was conflicting with advice given by PAT regarding EOI process • Agency CEIs were confusing to an officer new to procurement resulting in excessive paperwork • Agency C culture is very risk averse which result in management requiring excessive paperwork • Current process is driven by experience of Procurement Officer and risk appetite of management • What are some improvement ideas? • Provide education at all levels • Culture change required to increase level of risk tolerance • Considerations checklist to guide staff new to procurement • A single template for procurement plans • Toolset available in a central place accessible by procurement officers, delegates, etc. • Case Study 2 • What actually happened • Procurement was valued at approx. 25 days consultancy time. • Procurement estimated at $40k • Procurement actual was $16.5k • Business requirements were distributed to Branch staff for consultation, taking 3 weeks • Procurement Officer developed • Procurement Plan • Evaluation Plan • draft RFQ documentation (using a select approach from existing panel) • What were the issues • The clearer the business need the better the assessment one can make about whether procurement approach will meet the procurement principles/ outcome • What are some improvement ideas? • Standard templates for Procurement Plan and Evaluation Plan (already in use by business area) • Procurement Plan and Evaluation Plan form the basis for Delegate Reg 9 pre-approval

9. Agency C Procurement ProcessesGood practice, unnecessary and convoluted processes Actual process Issues Improvements Initiate procurement process     Approach market Establish contract Receive goods and services Pay for goods and services • Case Study 1 • What actually happened • Procurement Officer rang 5 real estates asking for their expression of interest • Procurement Officer released the RFQ to 4 interested parties and received quotes • Procurement officer assessed the quotes and developed • Evaluation Report incl. probity review and • Risk assessment • Procurement officer sought sign off of Evaluation Report • Procurement officer then sought Reg 9 sign off • What were the issues • Procurement Officer was advised by a senior manager to undertake an EOI process in addition to RFQ • Multiple approvals were sought (EOI, RFQ, Procurement Plan, Evaluation Report, Reg 9) • What are some improvement ideas? • Consolidate approvals into pre-approval and Reg 9 approval • Case Study 2 • What actually happened • RFQ was sent out to 3 parties on panel • Quotes evaluated and documented in Evaluation Report which also included risk assessment and value for money statement • Evaluation Report was the basis for Reg 9 approval • The process took 3 weeks from release of RFQ to Reg 9 approval • What were the issues • None • What are some improvement ideas? • Evaluation Report is the basis for Reg 9 approval. • Development of Evaluation Plan adds value only for procurements that involve more than one quote • Case Study 3 • What actually happened • A quote was obtained via existing panel • To test value for money principle, another quote was obtained via ringing supplier directly • A purchase request was drafted after the procurement was valued. The request included requirements and reason for selecting vendor. • What were the issues • This approach skips the planning process and checks for available budget • What are some improvement ideas? • This approach works for procurement of goods, but may not work for services.

10. Agency C Procurement ProcessesGood practice, unnecessary and convoluted processes Actual process Issues Improvements Initiate procurement process     Approach market Establish contract Receive goods and services Pay for goods and services • Case Study 1 • What actually happened • Procurement Officer advised unsuccessful applicants via letter and debrief if requested 1 month after RFQ was sent out • What were the issues • Paperwork for low value procurements is excessive • Documentary requirements placed on industry discourages competition • What are some improvement ideas? • Streamline paperwork for procurement officers • Streamline documentation requirements for industry Case Study 2 No change from process map • Case Study 3 • What actually happened • Purchase request raised including risk assessment and justification for using vendor • Purchase request approved by Delegate (obtaining Reg 9 approval) • What were the issues • None • What are some improvement ideas? • None

11. Agency C Procurement ProcessesGood practice, unnecessary and convoluted processes Actual process Issues Improvements Initiate procurement process     Approach market Establish contract Receive goods and services Pay for goods and services Case Study 1 No change from process map Case Study 2 No change from process map Case Study 3 No change from process map

12. Agency C Procurement ProcessesGood practice, unnecessary and convoluted processes Actual process Issues Improvements Initiate procurement process     Approach market Establish contract Receive goods and services Pay for goods and services • Case Study 1 • What actually happened • No AusTender reporting • What were the issues • Business area not aware of AusTender reporting requirement • What are some improvement ideas? • None • Case Study 2 • What actually happened • No change from process map • What were the issues • None • What are some improvement ideas? • Procurement reviews are not standard practice but would inform better practice if they were made standard • Case Study 3 • What actually happened • No change from process map • What were the issues • None • What are some improvement ideas? • None

13. Summary of process issues and insights In this section, a summary of process issues and improvements are presented

14. Agency C Procurement ProcessGood practice, unnecessary and convoluted processes • GOOD PRACTICE • Proven techniques, methods and processes • Consolidate and implement a standard template for planning and reporting (e.g.Procurement Plan, Evaluation Plan and Evaluation Report) • In circumstances where procurement approach is direct source to one supplier, an Evaluation Plan does not add value. For other circumstances, an Evaluation Plan is considered good practice. • Approach the Delegate for pre-approval with a Procurement Plan including a plan for how to evaluate the procurement. • Approach the Delegate for Reg 9 approval with an evaluation report. • Periodic reviews of a sample of procurements to determine whether the procurement outcome met the business need, also informing better practice • UNNECESSARY OR CONVOLUTED PROCESSES • Redundant, inefficient, ineffective processes • The lack of a minimum requirement and standard documentation means that procurement officer is unsure what is required • Multiple approvals are sought throughout the process, generally the result of interpretation of guidance materials or inexperience on behalf of the Procurement Officer • Advice given by PAT is not always consistent with line manager advice, resulting in confusion, excessive paperwork and in turn driving risk-averse behaviour • Lack of training at all levels to show staff how to undertake a procurement • The focus is on getting the procurement through and approved – rather than the outcome and achievement of procurement principles.

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