Government Procurement Reform

1. Government Procurement Reform Seize the opportunities

2. Discuss • More detail • Questions • Challenges • Barriers & options • Opportunities • Future Involvement

3. Reform themes Specific actions in year one

4. Four themes • Cost savings • Build capability and capacity of procurers • Enhanced NZ business participation • Improved: • governance, • oversight and; • accountability

5. Expenditure Control Committee Procurement Reform Governance Group – CE’s VFM Workstream 1 Cost Savings Implementation Team Workstream 4 Governance etc Implementation Team Workstream 2 Capacity & Capability Implementation Team Workstream 3 NZ Business Implementation Team CoE IT Equip CoE Vehicles /Fleet CoE Office Equip Workstream 1 Advisory Group Workstream 2 Advisory Group Workstream 3 Advisory Group Workstream 4 Advisory Group IT Client Group Vehicles/ Fleet Client Group Office Equip Client Group

6. Cost savings

7. Cost savings • Agencies provide a detailed report on their procurement expenditure (historic and planned) • 2. Undertake analysis of reported agency procurement expenditure to identify trends and potential areas for consolidation at a national, sector or local level to drive savings • 3. Establish CoE within agencies to lead sector (multi-agency) and national (A-o-G) contracts

8. Cost savings • Agencies use approved national/sector collaborative contracts. • Agencies to publish improved annual procurement plan and annual procurement strategy. • Implement common commodity coding. • Investigate opportunities for outsourcing/shared services. • 8. Core team to launch and mandate standardised procurement processes, standards, tools to agencies.

9. Cost Savings • Develop and launch standard government conditions of contract. • 10. Core team to undertake a feasibility study to determine IT support framework needed to support this reform agenda.

10. Discuss • Questions • Challenges • Barriers & options • Opportunities • Future Involvement

11. Building capacity and capability of New Zealand procurers

12. Build capacity and capability • 11. Finalise and launch a procurement capability assessment model to measure agency performance. • Undertake procurement capability assessments in the top 10 spend/risk agencies and make recommendations for improvement. • 13. Agencies not targeted for on-site capability assessment to undertake a self assessment. • 14. Develop and launch core competency standards for government procurement roles.

13. Build capacity and capability • Agencies spending over $50M pa to participate in benchmarking procurement performance against the private sector. • Present a report/research to the Department of Labour to determine if MCIPS qualified procurers should be placed on the long-term skills shortage register. • 17. Review and establish market norms/ranges for procurement salaries and highlight results to agency CE’s. • Agencies to fill/fund procurement resource needs, including on-going budget for training and development.

14. Build capacity and capability • 19. Identify opportunities for procurement shared service centres. • Agencies to ensure that suitably skilled and experienced procurement professionals are included in project teams for works from their inception. • 21. Establish a pool of 3 x strategic procurement experts to support strategic/complex procurement projects across government (in year one place in CoE’s). • 22. Invite the Treasury to provide support to government PPP projects.

15. Build capacity and capability • Produce training needs analysis, course outlines and source training providers in support of minimum procurement competency standards agreed. • 24. CE’s in top 10 agencies (spend/risk) to implement the procurement capability and competency frameworks with training needs analysis tools. Note expand in year two. • 25. Agency CE’s to ensure that all staff involved in procurement activities must be trained in basic procurement principles. • 26. Agencies to offer all dedicated procurement personnel free access to CIPS study modules (via e-Learning)

16. Build capacity and capability • 27. Establish and run an accelerated CIPS programme for key agencies including CoE’s. • Develop and launch procurement career development plans. • Build capacity by recruiting and training 3 x graduates (place in CoE’s).

17. Discuss • Questions • Challenges • Barriers & options • Opportunities • Future Involvement

18. Enhanced New Zealand Business Participation

19. Enhanced NZ Business Participation • 30. Examine opportunities to reduce bias against SMEs by Prime Contractors. • 31. Ensure reform agenda implementation focuses on raising the capability of government procurement personnel. • 32. Identify industry information requirements and identify specific actions needed to implement. • 33. Reduce the complexities and compliance costs of tendering by SMEs.

20. Enhanced NZ Business Participation • 34. Examine ways to help SMEs bid for business now while also growing their capability into the future. • Consider practical actions that can be taken to include a skills requirement in government contracting. • Encourage the whole public sector to advertise contracts on GETS. • 37. Examine mandatory timeframes for contract adverts to appear on GETS and tender response periods. • 38. Identify current/proposed minimum procurement specification standards/policies that present high added compliance costs for NZ business and present reform options to ECC.

21. Discuss • Questions • Challenges • Barriers & options • Opportunities • Future Involvement

22. Governance, Oversight and Accountability

23. Governance, oversight & accountability • 39. Agree that the Prime Minister and all other Ministers will champion procurement reform. • 40. Communicate and get buy in e.g. from Agency CEs. • 41. Invite ECC to monitor reform progress. • 42. Recruit, establish and manage a core team to deliver the procurement reform agenda. • 43. Agencies to ensure procurement is appropriately positioned and resourced.

24. Governance, oversight & accountability • 44. Critically review current procurement policies impacting the procurement reform agenda and make recommendations to ECC. • Review all future government policies impacting procurement policy/practice and make recommendations to ECC. • Work with the Treasury to examine if there are any barriers to best value procurement and report to ECC. • 47. Develop plain English procurement policy, accountability and governance standards.

25. Governance, oversight & accountability • Agree and implement within agencies simple KPIs on savings / value added contribution. • 49. Develop a standard methodology to measure $ savings and mandate to agencies. • 50. Agencies to implement common procurement policy and report savings quarterly to CE and reform team. • 51. Support ‘Gateway’ principles and examine options with SSC to increase use and support to ‘Gateway’ in this reform. • 52. Invite OAG to forward all procurement audit findings to the core team, who will review and forward any relevant policy items/ assistance tools to the relevant agencies.

26. Governance, oversight & accountability • Work with OAG to develop strategic procurement audit guidance. • Undertake strategic procurement reviews in agencies as required. • 55. Agency CEs to ensure there are no unofficial buying practices e.g. payment on invoice without a purchase order. • 56. Produce guidance/tools to streamline transactional procurement activities.

27. Discuss • Questions • Challenges • Barriers & options • Opportunities • Future Involvement

28. Next Steps

29. Next steps • Briefings & workshops • Fine tune actions • Agree governance structure • Finalise Year One CoE’s • Establish resources • Deliver actions • Report to Cabinet

30. Contacts: Phil Weir Tel: 04 470 0030 E-mail: phil.weir@med.govt.nz Christopher Browne Tel: 04 470 2334 E-mail: chris.browne@med.govt.nz