Download - Government Procurement Reform
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Government ProcurementReformVehicle 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 SERVICE
e.g. Ministries
STATE SERVICE
STATE SECTOR
PUBLIC SECTOR
e.g. NZDF, Police, DHBs
e.g. NZ Post, Meridian
e.g. Local Government8
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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
1. Cost Savings
2. Capability and Capacity Building
3. Enhanced Business Participation
4. 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
Value
Ris
k
Tactical Sourcing
Strategic CriticalSecure Supply
Streamline
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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
• MFD’s - 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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Average Annual Spend (Millions)Passenger Cars
4x4 Ute's Vans Total
Public Service $19 $2 $8 $3 $31
State Service $31 $3 $2 $5 $40
State Sector $5 $3 $4 $2 $14
Average Annual UnitsPassenger Cars
4x4 Ute's Vans Total
Public Service 1000 100 200 100 1300
State Service 1600 100 200 200 2100
State Sector 300 100 200 100 700
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Pareto – Significant Procurers Vehicles
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$0
$10M
$20M
$30M
$40M
$50M
$60M
$70M
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Vehicle suppliers:
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18%
13%
11%
10%8%
6%
6%
5%
4%
4%
15%
HyundaiGSB Supplycorp Ltd HoldenVolkswagonToyotaCustom FleetFleetPartnersLocal Car DealersHondaFordOther
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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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