Government Procurement Reform

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Government ProcurementReform

• Vehicle Sector Briefing

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Agenda

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

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Background
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Why reform procurement?

• 30 70 of operating costs
• Business feedback
• Economic downturn
• Unacceptable risk profile
• Lost efficiency opportunities
• Build strategic capacity

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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

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Governance

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

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Machinery of Government
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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
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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

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Procurement Reform
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Procurement Reform

• Cost Savings
• Capability and Capacity Building
• Enhanced Business Participation
• Governance, Oversight and Accountability

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Key Reform aspects

• 4 Year programme
• Supports other VFM initiatives
• Transform procurement thinking
• Strategic procurement capability

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Enhanced Business Participation

• Cutting red tape
• Improving transparency
• Increasing opportunities
• Sustainable markets

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Business feedback

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

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All-of-GovernmentContracts
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Target Areas
Strategic Critical
Secure Supply
Risk
Tactical Sourcing
Streamline
Value
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All-of-Government Contracts

• National/international market dominated
• Common needs
• Lower supply risk
• Reflect other jurisdictional experience
• Not syndicated contracts

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Key Drivers

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

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Transition

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

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Centres of Expertise (CoE)

• Additional resources
• Dedicated category managers
• Strong market knowledge
• Relationship management
• Key performance measures
• Supplier incentives

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Centres of Expertise (CoE)

• Desktops/Laptops - DIA
• MFDs - DIA
• Vehicles - MED
• Stationery - MED

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Key Data

• Phil Weir

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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

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Spend Units by Sector Vehicles
Note Number are rounded to 1M
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Pareto Significant Procurers Vehicles
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Vehicle suppliers
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Timelines

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

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Challenges

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

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Summary

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

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Conclusion
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Conclusion

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

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ContactsReform Project ManagerChristopher
Browne 04 470 2334chris.browne_at_med.govt.nz
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