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Sharpening the Pencils – CIPSA

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Hi all,

This is the first post in a series that will form the Australian Government Procurement blog. I hope that like our work on the ICT blogs, our stakeholders will find this a useful communication mechanism – in both directions. It won’t be just a broadcast channel. We really do want your opinions.

This speech was given to a CIPSA forum in March 2013 – about a month after I took over the procurement responsibilities. While things have moved on since then, I think it is a useful view of where we are starting this work from.

Regards

John

Sharpened pencils with the focus on the discarded sharpenings. Captioned sharpening the pencils, the future of Australian Government procurement

Photo by tango.mceffrie used under Creative Commons

I took over my Procurement Coordinator responsibilities on the 4th of February, so I’ve been in the job about 30 days. I’m not here to change the world immediately, or indeed to change much of what’s going on. I think, as you’ll see, much of the work that’s been done in procurement in Finance, and across the Government, is in pretty good shape, and certainly what I think I’m going to be doing is sharpening the pencil a bit, moving the focus marginally, just to pick up some things as they change, rather than recreating a whole new arrangement.

That should be useful information for those of you who work in industry, or indeed in Government, who think, “Well we’re not going to have to cope with a whole slew of new information or new policies.” Of course that can change, but I’m going to give you my first thoughts when we start.

A macro photo of Australian currency. Captioned, 'How Much? $41.4B in FY 2011-12

Photo by Theen … used under Creative Commons

We spend an almost… well very large amount of money in Government procurement, $41.4 billion in 2011/12. Interestingly, it seems to go up by $10 billion, or down by $10 billion, a year. So the 41.4 in 11/12 was 10 billion up on the previous year, but the year before that was 10 billion down, and the year before that was 10 billion up. So obviously there’s some sort of cycle of spreading out of things. I guess it’s to do with the length of contracts when they’re signed, the sort of timings that they have, but it shows a consistently large amount of money being procured by Government.

That’s in 11/12, over 80,000 contracts, which is a quite considerable amount. Now I’m someone who’s very interested in looking at evidence based policy. I’m interested in the logic of why we do things, and when I’m doing… looking at what we should do, I want to look at the facts behind what it is that we’re doing now to work out where there’s something wrong. So let’s have a look at those statistics as we work our way through them.

A graphic of the Australian Flag stamped in steel. Captioned, 'Buying Australia, services: 98%; goods: 53%; combined: 78%'

Photo by thelearningcurvedotca used under Creative Commons

Firstly, we buy a lot of Australian stuff – 98% of the services are sourced in Australia; 53% of the goods; the overall combination there, 78% purchased of Australian material. I think that’s a good thing, and it reflects I think the quality of service that we do get from our Australian suppliers. Let’s have a look at the goods versus services break. About 55% is goods; about 45% is services, out of that 41.4 billion.

By value, 96% was made up of purchases greater than $80,000, obviously 4% less than $80,000. Now this comes from the AusTender data that we collect from all agencies, and very recently we published on data.gov.au all the procurement data back to 1999, I think. It comes in two sets of data, a pre-AusTender set of data, and then the years from I think it’s 2005 on in AusTender. We’re going to continue to publish that open data, to allow people to see what’s going on, and to draw their own conclusions, or indeed make their own studies about what’s occurring in Whole-of-Government procurement.





 

Now of course you could have accessed that data previously by going to AusTender, it was all in the open already, you just needed to know how to search it, what to search for. By putting the actual XLS file, CSV files, up on data.gov.au we hope that we’ll contribute to providing more open data, and let people see more of what’s going on.

Look at the number of contracts, again interestingly above 80,000 29% of contracts, below 80,000 71% of contracts. That’s been a reasonably consistent figure over the years, and it shows how much work is done in that more simple procurement arrangement. You know, of course, that contracts below $80,000 aren’t generally covered procurement in the context of the CPRs, they’re more subject to agency Chief Executive Officer instructions as to how we go about procuring those, and that varies from agency to agency. But I think it does give you an interesting view of the sorts of decisions we have to make when we’re putting procurement policy in place. Should we be concentrating on small, large value contracts, or should we be concentrating along about the contracts that affect most people, given the weight of them that are below $80,000?

Our SME participation rate is pretty reasonable as well – 39% of contracts in 11/12 by value went to SMEs, 55% by number. That’s well above the Government targets for SME participation, so I think – and again it’s been relatively constant over time – so I think there’s some interesting conclusions to draw about that.
Now one of the things I’m also responsible for, as I mentioned, is being the Procurement Coordinator, and this has been an interesting part of my role because I hadn’t read – because nothing goes wrong in ICT procurement – I hadn’t read the requirements that the sort of complaint handling that the ICT Procurement Coordinator was responsible for, and as I sort of read into it I thought, “This could be a bit tricky,” and I got an email probably in the first week I was in the job from a person complaining about something, so I said, in preparation for this my speech, to my team, “Look, you better give me the data for complaints, so I know how many there are, and what it is we have to deal with.”

A photo of a statue depciting an adult holding apart two struggling children. Captioned, 'Procurement Coordinator'

Photo by Whistling in the Dark used under Creative Commons

Well in two years there’ve been four complaints and three Inquiries of the ICT Procurement Coordinator. Now I’m sure my predecessor, John Grant, would say that I’ve already ruined the average by getting one in two weeks, but the challenge I think here is to ask ourselves what does that mean in a policy sense? Does it mean that there’s very little wrong with Whole-of-Government procurement? Does it mean that the procurement complaint mechanism, or the inquiry mechanism, isn’t well known? Does it mean that people know about it and don’t engage because they don’t think they’ll get the right outcome anyway?

I don’t know the answer to that. So I think it does open, in my mind, the question what do we need to do to make sure that mechanism is working as well as it could, and how will we know that it is? And I’m going to leave that as a bit of an open question at the moment. But there is this question in my mind as to whether or not there are policies or processes that we need to improve, perhaps only marginally, in that area, to work our way through.

Now, in terms of what Whole-of-Government procurement we’re doing, I’m now responsible for quite a lot of it. Now in the ICT area I already had somewhere between a third and half my job was to do with ICT procurement, so I’ve got a relatively long history in doing procurement work. It’s indeed interesting that in my old Division, as it existed it AGIMO, 75% of the Division was cost recovered as a consequence of the work we did in coordinated procurement and other cost recovered activities. I think the ratio now, having picked up a couple more branches of procurement that are also cost recovered, that it’s actually much higher than that.

Now I think that opens some interesting questions as to what do we need to do to make sure we get the balance right there? Are there things that this synergy of moving procurement organisations together might be able to improve? Are there things that perhaps could be done better if we drew them together out of the various branches they’re in now, or move them between? Again, something of an open question at the moment as we start to look at what we’re doing in the new expanded Division.

A photo of a bustling crowd in an airport terminal. Captioned, 'All together now, travel'

Photo by Stuck in Customs used under Creative Commons

Now let me talk about travel just for a moment. When we did the baseline for the travel procurement coordinator procurement contracts, the Government was spending some $530 million a year in air travel. That worked out at about 378 domestic, and about 152 million on overseas travel. We saw, as soon as coordinated procurement started, a significant decrease in the amount of travel expenditure that was occurring as I think we got better prices, and anything as soon as you start to measure it, I think performance generally picks up. That’s just the… you know, the way that bureaucracies work.

This year, we look at the trend so far this year, in 12/13, versus the trends in previous years, and I think it looks like to me at the moment that we’re some 15 to 20% down in both the number of trips, the number of sectors travelled, and the cost that we’re paying for that amount. Now that’s obviously good news, but again I think it opens some interesting questions. Is it because we’ve got better arrangements, and some of our figures show where savings have occurred, or costs have been avoided as a consequence of those better arrangements – is it because of that? Is it because people are travelling less due to other economic factors? Has there been some other slowdown? What… is it because we’ve now got better Telepresence things provided by my Telepresence team – is that the reason that we’re seeing these changes? It’s something of an open question, and again it touches on the notion, I think, of getting better analysis of what we’re doing – and more on that to come.

A photo of a network switch with lots of cables plugged in. Captioned, 'Bigger bytes, ICT coordinated procurement'

Photo by dualdfilpflop used under Creative Commons

In ICT coordinated procurement, obviously I’m a little more familiar with this work, so I might go on about it just a bit. I think it’s interesting to see what it is we have changed since we’ve been doing this. I’ll start with something that doesn’t get much publicity. The ICT Services Portfolio Panel policy talked about what we would do about the more than 120 ICT Services Panels we had in 2011. Sir Peter Gershon had recommended that we do something about tidying up industry, and we did a lot of work trying to work out what it is we could do, and you would forgive me for thinking we could probably have some form of central approach, something that we could do to take all that responsibility away and do it ourselves. But clearly that wasn’t a useful thing as agencies saw it doing, it wasn’t even useful as vendors saw us doing it, so we looked at a policy approach to doing this, and essentially we settled on the notion that agency… that portfolios should have no more than three ICT Services Panels between them.

There are 19 portfolios, three each would be 47, that’s… it would be 57, that would be a whole lot of better than the 126 or 127 we had to start, and we gave them a target of getting to that by the end of 2014. Well at the end of last year we were down from 126 to 58 already. One agency had moved from ten Panels to five. Now I think what we see here is the sort of smarter procurement that we’d like to put across all of the things that we’re doing. Reducing complexity for agencies, reducing complexity for vendors, and it’s interesting, I think, how such a relatively small change can drive that sort of big outcome, just a small policy change driving that sort of outcome. And it’s those little tweaking of the levers that I think is quite valuable.

A macro photograph of a pile of paperclips. Captioned, 'Officeworks, MOMS & SOS'

Photo by Jamiesrabbits used under Creative Commons

Now in desktop hardware procurement, when we started this work we were paying 55% above the Australian average across the Government for desktop hardware, we now pay more than 50% below the Australian average, saving some $27 million over about two years against Australian average costs. The first Whole-of-Government procurement we did under coordinated procurement was the Microsoft VSA. We’ve saved $100 million off the standard Government D price for Microsoft software over the four years of that contract, and we’re in the middle of renegotiating that now as it expires at the end of June this year.

We’ve got some 300,000 devices under that contract, and some 260,000 users. When we started we had 42 contracts for 41 agencies, we now have one contract that covers some… over 80 agencies, and over 125 entities in those 80 agencies, being covered by this improved way of doing things. And again, I think that gives you the feel for what can be done centrally. In internet based network connections we had a target to save $55 million over four years. We’ve currently allocated the savings of $60 million over five years, which isn’t quite the same target, but we’re getting very close to the $54 million over four years target. How has that occurred? It’s really interesting I think in terms of what procurement changes occurred there.

Essentially agencies, which I think we all appreciate are busy, have lots of work to do, and a hard time getting all the procurement things they need to do, would often get towards the end of the contract and say to themselves, “Well actually, if we go out to market for this it’s going to be really hard, do we want to throw everything up in the air? We’ll go and talk the vendor.” The vendor would say, “Well I can offer you increased capability, and you’ll get much more for what you’re paying, and that’ll be really good.” And often agencies would take that option, saving money over what they were doing previously.

But I don’t think that any of you who’ve got an internet connection at home, I don’t think what we saw was that that behaviour was taking advantage of the fall in internet based network connection costs that had happened dramatically over those years. Indeed since we’ve started this work we’ve seen the costs of doing this, costs of internet based network connections, being reduced sometimes by the same provider providing the same service, by greater than 50% as a consequence of moving to the new contractual arrangements, in a better… with the Commonwealth in a better bargaining position. And the money that I talked about saving, which goes back to budget, doesn’t cover the money agencies have also saved in other… when they wanted new capability or extended capability, because we didn’t take that money back.

In Data Centres we’ve avoided $24 million in costs over a set of contracts that have already put out… been signed up for about $340 million. You all know that avoided costs isn’t the same as savings, I’m not going to labour that point, but we clearly see how we can improve there. And last night we announced on our blog that we’re going to refresh the Data Centre, or look at refreshing the Data Centre Facilities Panel this year, or in the second half of the calendar year. We’re going to consult widely about that first, just to see what we can do there, in order to pick up the changes that have occurred since we did this work initially in 2010. You’d all appreciate that some of those things changed quite quickly.
Indeed when we look at what we did with mobile phones, originally we set up three parts of the mobile phone contractual arrangement – data carriage, handsets, and accessories. Now we thought we’d set up this pretty cleverly, at least I did, and what I discovered when we looked again at the data, was no-one was buying accessories, essentially they would go and buy them down the street on their credit card, or maybe even their own money, it wasn’t worthwhile going through the panel in order to do that. And indeed the handset behaviour, we’ve got a lot of mobile phones in the Commonwealth as you can appreciate, but agencies were still tending to buy them in numbers of ten, or something like that, tens, rather than thousands, and of course because we’d wrapped those handsets with useful Whole-of-Government contractual arrangements like warranties, and returns, those sorts of things, we discovered that people didn’t treat their phones that way.

As all of you know, if your phone breaks, you need it fixed right away, or you need a new phone, you’re not going to wait six weeks for it to be fixed, that would be too much imposition generally speaking, so people weren’t using that usefully, so we took that work out of the contractual arrangements and got back to just having data carriage. I think the ability to learn from what we’re doing is an important part of what Commonwealth procurement is about, and we need to concentrate on picking up what are the lessons and changes in our processes.

I took over the major office machines and stationery work when I took over my new responsibilities. We’ve seen that the major office machines contract has reduced the price of devices, largely multifunctional devices, by some 10%, and reduced the ongoing maintenance and supply costs by some 25%. Pretty useful reductions. In stationery we’ve seen a 17% overall reduction in stationery costs, and a 40% reduction in some agencies, who were obviously using very flash pens beforehand. No. I think there’s enough… it seems to us that there’s enough across the catalogue to meet agencies needs, and we’ve got means of adjusting those when they occur.

Again, I think we’re seeing some relatively simple things here, aggregating demand, getting the procedures in place, and making it easier for agencies to procure things, so that they can concentrate instead of procuring the stuff that is done in common across agencies, they can concentrate on procuring the things, or doing the work that is special to their agency, and I think that’s a useful lesson to keep in mind.

A photo of a large collection of toy cars. Captioned, 'Fleet'

Photo by k♥money used under Creative Commons

I also picked up Fleet. This is a really interesting thing, just to get the statistics of what’s involved in the Government’s Fleet arrangements. We’ve got some 14,000 vehicles across the Government Fleet, ranging from 31 motorcycles to 1,125 heavy commercial vehicles. We supply 103 agencies with those vehicles, an asset base of some $405 million. Sixty-four percent of the vehicles are Australian made, and 26% are imported by Australian manufacturers, so the Australian buying power here is also very high, covering some 90% of the vehicles involved.
Eighty-seven percent have a five star ANCAP rating, which is you know a pretty good thing I think. Two of the vehicles are electric, 77 run on LPG, 380 are hybrid vehicles. We spent in 11/12 over $18 million in fuel, and that was about 14 million litres of fuel. Now because we bought gas, and diesel, and ULP, and other fuels, it doesn’t particularly usefully pan out to a per litre cost, but to save you doing it, it’s about $1.30. I wish I could get that for my car.

A photo of a brick wall with notices plastered to it. Captioned, 'Advertising, campaign and non-campaign'

Photo by CEE Bankwatch Network used under Creative Commons

The other thing that I look after is advertising. Now advertising I think is a really interesting conundrum that we face at the moment, because the market has changed very, very significantly, and all of us know that. The rivers of gold that use to flow in newspaper advertising largely from Government sources have completely tried up, for several reasons. Firstly the growth of online advertising, secondly the changes in what we are doing anyway in terms of when we’re advertising, and what it is we’re advertising, and it’s given us a really interesting challenge, I think, in what we do about procurement overall.

At what stage now, if we’re signing up for Whole-of-Government contracts, are we prepared to sign up for two years, or three years, or four years, if we know, yes, the vendors will often say you can get more discount if you sign up for longer, but at what stage should we look at the way agency behaviour is changing, the market is changing, and say, “Well actually, I’m going to forego a bit of the saving that I can get initially, on the basis that it might… deciding to take that might tie us into expenditure that really we don’t want to fork out for in the future.” Getting that balance right, I think, is a really interesting challenge, and that once upon a time you thought, “Well that’s something you have to do in IT,” but I think now we have to think more broadly than that as to what are those long term challenges or medium term challenges in our contracting arrangements.

A photo of two toy seaguls on a buoy. Captioned, 'Observations'

Photo by mikewoods used under Creative Commons

I’m going to now talk about some observations I’ve made in the first sort of four weeks or so that I’ve been in the job. It’s important to note that I don’t intend to be like a seagull, which is sort of fly in, crap all over the place, and fly out again. I’m in it for the long haul. I’m going to talk about the observations that I’ve made to date. They’re not particularly fully formed, they’re not everything I think needs to be done, they’re just a first glimpse of the issues that I think are worthwhile pursuing as I look at what’s coming up.

A tightly cropped image of a man peering through binoculars. Captioned, 'Strengths'

Photo by Nit Soto used under Creative Commons

Firstly, let’s look at strengths. Government procurement works. We successfully procure a whole bunch of stuff all the time. Most of it is relatively routine, it doesn’t attract very much attention in the Press, certainly when things go wrong it attracts more attention, and I think we’ve all learnt to live with that, but generally speaking it works quite well. I don’t think anything is broken in this area when I look at what the Whole-of-Government is doing.

Coordinated procurement works, too. Not perfectly, but we’ve clearly got reductions in the costs and the expenditure that we’ve had in place, and the processes, the indirect cost reductions that coordinated procurement has given us as a consequence of what we can do. Now I think in the non-ICT coordinated procurement space we’ve probably just about tapped most of the things we can. I’m not… I don’t believe personally that it’s up to me to tell agencies how to do business, or get involved in agency business; I’m interested in looking at those common things that are across all agencies.

Now as well as the ones we’ve had in place, we’ve tried a couple of other things, like accountancy services, we’ve looked at what could be done there, and our scoping studies have shown us that really in the non-ICT area there’s not a lot more that we can do in coordinated procurement. Now that doesn’t mean we can’t do it better, and I think we can. The… if you think about online booking for airline flights, less than 60% of our airline flights are done through online booking. Now that’s a considerable improvement over the year before, some 40%, or the year before that, the first year, some 17%. But I think all of us, when we’re booking our holidays, book our flights online relatively easily, relatively simply. The question is why can’t we get more of that across the Commonwealth if it saves money? Is there something we can do to improve the way we book our travel? Is there something we can do to improve the way we actually do our whole travel arrangements? And we’re looking at some of those things.

Some of you would know that the Travel2 tranche of work is being rolled out by the 30th June this year, and that affects hire cars, accommodation, and credit cards. And I think, “Well, what are the things we could do to make that just a little bit better when it next comes around?” So this year, when I’m looking at travel which next comes around, or finishes at the end of Travel1 airline and travel management companies, which finishes at the end of June 2014, what is it that we need to do to improve that?

I know from… and it’s always difficult to draw parallels between various categories of supply, and I think you have to be careful doing that. But I know that one of the reasons we got such good arrangements in the Microsoft volume sourcing agreement was because we changed from one large account, well from a range of large account resellers to one large account reseller, and the discount, because of getting all that business, the discount off the margin that was being paid to large account resellers, which started out at the declaratory 15%, most agencies would get ten to 12 %, reduced to ten to 12%, some agencies down to five, we were getting… we got as a consequence of this work, and in two successive contractual periods, less than 1% margin as a consequence of having one provider.

Now the interesting thing I think in travel management companies, or other things, is there more we can do if we reduce the number of people who provide these services go Government? I don’t know. I don’t know. But it seems to me that there’s some effort we can do to tweak what we’re doing in coordinated procurement in the non-ICT area, and improve it.

In the ICT area is there more work to do? Yes, I think there is. It might not necessarily be under the mandated way of doing coordinated procurement, but it might be things we can put in place that are useful, like the Data Centre as a Service Panel, which has clearly worked out quite well for us in terms of providing low cost Cloud services quickly for agencies. More on that later.

As I said, few formal complaints. I don’t… that’s a strength at the moment, but I am interested in knowing why that’s the case, and following that through. Standardisation I think helps us. We’ve seen in our standard contracts for less than $80,000, 17 of the 19 portfolios have taken those up. I’m interested to know why the other two didn’t, because I’m interested in seeing how we can improve. But clearly that increases certainty for particularly small business, makes it easier for agencies to do things, and I’m interested in what we can do, again to improve in that area.

Generally speaking the… I think the review of the Commonwealth procurement rules and the reissuing of them last year has proved successful, again measured by the fact that we’re still procuring, measured by the fact that we don’t get that many complaints, but I’m not silly enough to think that there aren’t things we could do to improve them over time. There’s an interesting balance, I think, of what’s in the CPRs and what isn’t. There are 22 procurement – I think it’s 22 – procurement connected policies that say in order to do procurement you ought to do these things, and they range from things that are about sustainability, to things that are about equal opportunity. And I don’t… well I’m sure my staff won’t mind me saying the first thing that new procurement staff wanted me to do was drink the procurement connected policy Kool-Aid and make sure that I maintained the wall against those when we could have them. Why? Because if you bundle things into procurement, it makes it more complex and more difficult for both agencies and vendors – there’s got to be a better way to do those things.

Now, you know what it’s like, you get a new job and people tell you things, and you think, “Yeah, well this is obviously just the bee in their bonnet.” Every week that I’ve been in the job someone from another agency has suggested, “We could have a procurement connected policy that did this” – every single week, so it’s five already. It’s interesting just to see how people go about thinking that, and what it is we can do across agencies to get the policy outcomes that Government wants, without creating of our own volition sort of red tape and confusion in some of those areas.

A photo of a superman figurine. Captioned, 'Weaknesses'

Photo by Johnson Cameraface used under Creative Commons

Now even Superman is affected by kryptonite, so the fact that we’ve got good procurement arrangements doesn’t mean there aren’t some weaknesses we need to consider. It takes a long time to do things. Most of that’s useful. We’ve got useful timings in the CPRs to say this is how long it takes to do things, this is the minimum you need to put in place in order to that. But I don’t think anyone would suggest that our timescales are as tight as they could be, and we all know that this creates problems for business, for Government, in the terms of how fast they want to do things, and I think looking at what we can do in this time area in reducing complexity is a useful thing to be doing.

Secondly, is in process. There’s lots of process involved in doing this work, and again I’m interested in saying, what are the shortcuts that we can take to reduce that process, without reducing the overall effect. Risk management is the particular thing that I’m interested in. Finance has some really good risk management guidelines, very well defined, clearly talks about what… about sort of the consequence and the likelihood, and what I like about them is if you apply them properly you can see that sometimes often people overestimate risk because they don’t look at things, and they don’t look at these guidelines, and they get tied up in thinking there’s a high risk when there isn’t.

Now I’m not saying we don’t do things that are relatively risky in a procurement sense, and that we need to mitigate those risks, but I think the notion that we don’t look at them carefully enough is something we need – in terms of making an accurate assessment of risk – is something we need to consider.

I’m always concerned when I see probity Lawyers treated as a second source of legal opinion, as opposed to just looking at probity matters. And I do think that we’ve got to be careful about making sure how we instruct our Solicitors. All of us know that if you ask the Solicitor or the Lawyers why you can’t do something, they’ll provide you diligently page after page of reasons why you can’t do something. But alternatively if you ask them how you can do something, they’ll provide you page after page of how you can do something. Proper instruction of Solicitors or Lawyers, and proper working of the balance between legal consultation and probity consultation is very important in my view to reduce process. Consultation generally with our vendors, with our customers, with the range of people that are stakeholders in procurement, is something I think we could do better as well.

A macro photo of cards on a poker table. Captioned, 'Opportunities'

Photo by John-Morgan used under Creative Commons

What are the opportunities? Well as I said, this year we’ve got some major refreshment of – that’s probably not the right noun – some major refreshing of the… some of the coordinated procurement things, airline travel, travel management companies, campaign advertising, non-campaign advertising, the Microsoft volume sourcing agreement, and Data Centre facilities, are all on in the next 12 to 18 months, so it’s going to be a fun time doing those procurements again. At one stage, two years ago, I was doing 13 at once. I’m not going to go there again. But certainly there’s a lot on in that area, and that gives us the opportunity to do things.

We’re getting improved data as a consequence of getting reporting on what’s done in coordinated procurement. Soon we’ll have a tool in place – interestingly enough deployed in the Cloud through Data Centre as a Service, very cheaply – we’ll have a tool in place that will allow us to examine our travel spend very closely, and easily pick out visually outliers. Now there might be a useful reason why someone has to spend three weeks in $1,800 a night accommodation. Previously we haven’t been able to see that very clearly. Now it stands out, or will under these new arrangements stand out very well, and we’ll be able to look at those outliers and address that level of management based on better data. I think greater standardisation is an opportunity, too. As we build on the way that many of these things have been well accepted by agencies we can look at them and say, “Well how can we expand that to make more acceptance of these common things?”
I think we can consult better with all those stakeholders, than we’ve done at the moment, particularly external stakeholders. That doesn’t mean we have to do everything they say, it means though that we have to listen and look at what it is we can do to improve. I don’t think we’ve got a mortgage on the best way to do procurement. I think we’ve got some very good practitioners and a lot of good experience, but I think there’s always something we can learn. And I think we also have to look at what the additional options we have in doing things are, what is it that we could change marginally that would get us better results? The question I mentioned before about standard contracting, what would get those other two agencies over the line in terms of using standard contracting?

In Data Centre as a Service, we put in place compulsory arbitration to cover the cost under $80,000, contracts under $80,000, so that the small business or the medium business singing up to that head agreement was in a position to know that their legal costs wouldn’t run amuck if something went wrong, but rather they were contained by compulsory arbitration clauses, so they had a way of managing disputes with the Government that was cheaper and easier.

A photo of a minifig tied to train tracks and a ne'er-do-well minfig is looking on. Captioned, 'Threats'

Photo by atomiclizard used under Creative Commons

What are some threats? There’s one that’s particularly in the context of IT and Cloud computing, it’s the ability of the business to buy things outside the normal procurement framework. Now a lot of businesses think that’s a wonderful thing, and I can understand why they would, but what I know is if you’ve got six or seven business groups in your organisation all buying a new financial management system in the Cloud, because they can do that easily and it’s better than using their Excel spreadsheets, and then in two years the people who did that move, you don’t have a view of a contract, you don’t have a view of where the corporate information is, and you’re tasked with putting it back together again, that’s going to be a challenge.

I think we have to avoid over complication and look at what it is that we’re doing and saying, “How could I make this simpler, and are those things I’m being asked about really important, do I really need to do those? Is there a policy outcome that’s driving them? Or am I just wrapping a bit too much risk averseness around it? We have to look at some threats in the area of market viability, in the context of as the market changes, what if it falls out; what if you know advertising in newspapers dies off completely; what if the price of online advertising plummets because more people are using it; what do we do to make sure our long term contracts are appropriately thought about when we do that?

And then finally, what do we do if we… I think there’s a danger of failing to adapt to change, recognising that when change is occurring that we need to be not at the front foot, on the front edge of that change necessarily, but we need to at least be riding the wave of change, rather than being dumped into the beach by it. And I think it’s important just to think in our work how we go about doing that.

A photo a tree-shrouded walkway extending into the distance. Captioned, Immediate way ahead

Photo by write pictures used under Creative Commons

For my immediate way ahead based on, as I said, a month worth of review of this, we’re going to set up a procurement blog, like we have an IT blog at the moment, so that people can… we can run content things past the general public, put out… show statistics, ask for comment, look for consultation, and see what can be improved. And as a consequence I’m hoping we’ll get improved consultation. It’s pretty good I think with agencies already, due to the good work of my predecessor and the team, but I think we could do some more talking to the public as well, or vendors.

I think we should look at what we can do in terms of disposal policy. I think there’s a lot of things that have held us up there at the moment, and it appears to me that if we did something simple around this, we might be able to save the Commonwealth some money. I did think briefly about whether we could dump it all on Ebay (ripples of laughter), and I haven’t ruled that out, but there are some interesting things I think we can do in that area, too.

We are going to open up more data and provide more data publically so people can do the analysis, look at what’s going on, and perhaps generate ideas and indeed even business opportunities as a consequence, and finally, bringing all those things together. Next week we’re running an IT Expo, it’s the second time we’ve done this, about coordinated procurement, picking up the stuff that was in IT and major office machines as well. I’d like to invite you to it, but if you’re not already coming then it’s probably too late, as there over 500 public servants attending next week. I think we’ve got 65 odd vendors providing services, a range of speakers, and so a better understanding of what we’re doing in the IT procurement space for people.

It’s an exciting time to be doing this work. I really like it, and I think there’s a lot of opportunities for all of us to do it better. Thanks for your attention.


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