Financial Contestability

31st Governance Institute of Australia National ConferencePeter Lacey

Executive Director, Social Services Procurement Transformation

Department of Housing and Public Works

December 2014

Why we are transforming procurement

Apr 2013

PTP Wave 1

March 2014

PTP Wave 2 and beyond

Dec 20132018

Renewal Procurement

Review

Oct-Dec 2012 June 2013

The process of achieving contestability is:

• Reviewing the delivery of services to ensure the best possible solution is provided at the best possible price.

• Encouraging more efficient and more innovative service delivery, whether by the public, non-government organisation or private sector.

• An ongoing process to challenge the status quo.

• Ensuring service delivery outcomes remain contestable.

Renewal means our services will be contestable

What we’re doing to make it happen

• Detailed functional design and implementation strategy• Strategic governance• Procurement performance measurement• Delegations

• Workforce strategy• Procurement capability strategy• Capability and capacity resourcing

• Source to contract process• Procurement process framework• Contract register• Unsolicited proposals policy• Contract management framework• Standard contracts and tender documents

• Procurement technology enablement• Contract Lifecycle Management system (e.g. QContracts)• RMS – ICT contingent labour• QTravel

• Progression to category-based whole-of-government procurement

One Government approach to procurement

2013 Enabled early value

2014 – 2018 One Government transformation journey

Developed and launch new principles-based Queensland Procurement Policy

Ran proof of concept: strategic sourcing

Modelled and base-lined transformational initiatives

Enabled $60-92m in benefits Developed benefits realisation

framework Recommended: new way of

working Business case: funding to change

how we work

BaselineBusiness Case

Ou

tco

me

People

Process

Technology

Organisation

Mega Category

Management

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Better managing investment for now and for the future

Actions now for the future:• More strategically managing our investment to maximise value and

outcomes7

Demand for social services is increasing

Projected increase in spend to meet this need

Significant implications – unsustainable

Market Stewardship: choice and competition• Co-creating markets that empower service users and

incentivise outcomes• Monitoring service quality and price (including access)• Identifying and addressing supply gaps• Reducing barriers to market entry and increasing

entrant capability• Reducing barriers to and impacts of market exits• Avoiding crowding out (investment and supply)• Fostering regional, small and medium enterprises, and

hidden champions

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Two models of market governance:1) The control model governance chain

Source: McKinsey

Shareholder environment

Independenceand performance

Capital market liquidity

Corporate context

Institutionalcontext

Transparency and accountability

OECDPrinciples

Concentrated ownership

Reliance on family, bank and

State finance

‘Insiderboards’

Incentivesaligned with

core shareholders

Limitedtakeover

market

Under-developednew issue

market

Inadequateminority

protection

Limiteddisclosure

Two models of market governance:2) The market model governance chain

Source: McKinsey

Shareholder environment

Independenceand performance

Capital market liquidity

Corporate context

Institutionalcontext

Transparency and accountability

OECDPrinciples

Dispersedownership

Sophisticatedinstitutionalinvestment

Non-executivemajority boards

Aligned incentives

Active takeover

market

Active privateequity market

(incl. IPOs)

Shareholderequality

Highdisclosure

What’s in it for Government and Service Users?

Coordinated and integrated approaches to managing investment

Clear, structured visibility of spend

Tap into industry ideas

Strategic relationships with providers Better understanding client need

Competitive solutions

Better services and outcomes with available resources

Better value for money

Stronger market

Government and

community confidence

that spend is effectively managed

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What’s in it for Providers?

Easier to find contracting opportunities

Transparency of funding approach

Simpler contracting

More meaningful reporting

Improved productivity

Sustainable, client focussed outcomes through enabling innovative service delivery models

Value in service delivery is recognised

Strategic relationships

Quicker and easier to do

business with

Government

Resources are directed to service delivery

Outcomes are

recognised and rewarded

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