Hi procurement fans,
This is the second of our procurement blog posts. As an extra treat, not only is there a transcript of a speech but there is also a YouTube video. For those of you who can’t get enough of Australian Government Procurement, it should be just what you need.
The new blog format includes a range of useful links to our existing procurement guidance, for both buyers and sellers. The links are on the right hand side of the normal desktop page. We are working on a solution for the mobile site. I’d encourage those interested to check them out.
We are also tweeting about procurement using the hashtag #AusGovBuy.
I hope you enjoy the video.
Regards
John
Thanks, Andrew. Commonwealth procurement is a big red bus and I’m the Fat Controller. One of these is a picture of me, you’ll have to work out which one. They’re QR codes if you didn’t understand that.
Why is Commonwealth procurement a big red bus? Well first of all, it provides a vehicle for everybody to use, and it’s a relatively well understood vehicle. It’s relatively open, you can look in the windows and see what’s going on inside, no one tries to hide anything. It treats just about everybody the same. People come in, sit in the bus, take up their seats and they get to where they’re going. They know where the bus is going because the route is published well in advance. It’s very clear what the route is and there’s a lot of documentation about it. But the bus stops at every stop along the way, and what that means is the speed of the bus isn’t necessarily very fast, you don’t often get an express ride, and even if you’re in the normal ride of the bus there’s a challenge if there’s external traffic that can slow it down. It doesn’t necessarily run like a train on its own rails and the ability to clear everybody out in front. It’s held up by the sorts of things that hold up all other sorts of traffic.
The way that you get on the bus is relatively clear, it’s explained, you know to go to the stop put your hand out, you need to pay as you go in. The fees are relatively well set. They vary according to the length of the trip but not really according to the comfort or the speed. And the challenge of that is that we’ve developed a very good process, I think, in Commonwealth procurement for doing relatively standard things.
But try and get the bus driver to move slightly off the route. Try and get him to drop you a bit closer to home or to pick you up half way between stops. All of a sudden it’s really difficult to do because it requires change, and the sorts of change that it requires actually have to be worked through with a whole bunch of people. Because if the bus diverts to pick you up at your house, what happens to the people who were expecting it at the next stop when it doesn’t get there, or if it’s delayed, or indeed your house was on a shorter route and it gets there too fast and it’s not there when people were expecting it? What about the people who looked up the bus route four years ago, wrote it down and think it hasn’t changed since then? How are they keeping up to date with changes, or do they just show up and all of a sudden no one’s there to pick them up?
The challenge of the bus analogy I think is that what i
t shows is we’ve got a system that deals very well with the routine, and it delivers people, it delivers the passengers at the end and delivers all the things that we need, and we get stuff procured in the Commonwealth. The vast majority of procurements go through reasonably easily. I think our current figures show that 98% in 11/12, 98% of the procurement of services we did came from Australian sources that all worked pretty well. Overall, if you look at the cost of goods and services procured, 78% came from Australian sources, why is the difference? Well we don’t build a lot of aircraft carriers, I think that’s the sort of real challenge there. Big ticket items come from overseas and that changes the goods balance to a certain extent.
What we see, again to sort of continue to torture the analogy, is that the analogy copes very well or the bus copes very well with normal size of procurements, normal passengers. But if passengers have quite legitimate special demands we start to have a bit of an issue. We have to tag things onto the bus. Now you all would have seen the buses that get around Canberra with those, he says sort of riskily, relative empty bike racks on the front of them, a policy tagged onto the bus to allow a few people to do a particular thing. It’s a good thing, I don’t deny it, it’s a useful thing to be doing, but it’s an example of a bus connected policy or a procurement connected policy that tends to add things onto the service we are providing in a way that starts to affect everybody whether or not it was meant to affect everybody.
Some of those policies, and there are 22 procurement connected policies, some of those procurement connected policies complicate… although they’re all put in there for very good reasons and departments have good reasons for wanting them, they’re put in there and they can make it very complicated to do things, and as a consequence of this complication we then have to do something about it. So what we’ve started to… what we’ve doing over a considerable period of time is we’ve been starting to get external advice to make sure that we’re compliant with everything that we do in procurement policy and this isn’t a bad thing.
It’s OK to get advice about specialist things, particularly in the legal sense. Legal advice, it’s a good idea to get legal advice for specialist legal things, but we have to make sure because of the way lawyers work, all quite reasonable, we have to make sure that we ask them the right questions. If we ask them what are all the reasons I can’t do this, they’ll give us a very long list of reasons why we can’t do something because that’s their job. Or alternatively, if we ask them how can we make this work legally, they’ll give us an equally long list of exactly what to do to make something work. And it’s the art of asking lawyers the right questions that differentiates, I think, between the useful use of legal advice and the not so useful use of legal advice. Now I’m sure none of you are doing this, but one of the things I see… I have seen regularly in the time I’ve been doing procurement which is sort of getting along a bit, I’ve been on that bus for some time, I often wonder whether I’ll actually get to the station.
The challenge for us to say, are we asking the lawyers for advice, are we asking the specialists for advice, or are we actually trying to outsource the decision process? What do we do in procurement to make sure that the people who are allocated the responsibility for making decisions, who have the accountability for making decisions, who have the appropriate delegation, how do we make sure that the can be trusted to make the right decisions… sorry, how do we demonstrate that we trust them to make the right decisions, and they don’t have to try and outsource the decision to a lawyer?
Now I think there’s some work to do around that. You know when you get on the bus and there are all those signs that say, these seats are reserved for these people, don’t put your feet on the seats, don’t eat in the bus, don’t drink in the bus, don’t play your music loud in the bus, all those things are reasonable in themselves, but what they do is they tend to remove first of all the flexibility of bus users and that’s, you know, that’s a bit of a problem depending what it is that you’re going to do, but secondly they start to impose conditions that allow the people to think if I just obey all the rules I’ll be all right, and on the bus you will. You’ll get the destination if you obey all the rules and do those things, but it’s the question of how fast you’ll get to the destination, how effectively you’ll get to the destination, and whether or not there was a better way.
I often see or I have often seen in the last couple of years the growth of the use of probity advisors. Now in itself you couldn’t, you know, I’m not going to stand here, and please, don’t go back and report that John Sheridan thinks probity advice isn’t a good idea ’cause that’s not the case, but it’s a really good idea to get probity advice about probity matters. It’s not a good idea to get probity advice that essentially just provides a second set of legal advice, right. We don’t need a second legal opinion in order to do our work. We need some specific advice about probity matters and probity matters alone. And when we structure what we do in procurement, I think it’s useful to ask ourselves some pretty important questions about what it is we’re trying to do and what it is we’re trying to achieve, and to make sure when we seek specialist advice we get it from the right people and we get it to the right extent, and that can be I think something of a challenge that we need to look at carefully.
Now that obviously begs the question as to what do I think the perfect bus would look like. So first of all, do I think there’s a role for the big red bus? Obviously there is, and we need to deliver standard procurement in a way that makes it easy for people who unlike you are not necessarily procurement specialists. If we’ve done our work properly in setting up the procurement rules and setting up the conditions wrapped around them, and setting up the whole bus network if you like, then people can come and get on the bus, do their little bit of procurement and get off at the next stop and they’ll be properly looked after and delivered safely to their destination.
But we also have to look at what we can do to make sure that people who don’t have that relatively stock standard ride that we can do things to help them. Now I think we’ve done some of that stuff effectively already. The standard contract sweep below $80,000 I think considerably improves the way that we do those procurements. I think, and some of you will have heard me speak before about the things we’ve put in place in, for example, the Data Centre as a Service Multi Use List where we’ve added things like compulsory arbitration. We’ve put in risk mitigation measures to make those sorts of simple procurements simpler if you like, and we need to do those things.
We need to look at a way of addressing how we get to… if we’ve got to go one stop on this journey and we need to go there very quickly, what do we do in order to support the people who can do those things? Now sometimes that’s through a panel approach with piggy backing so a lot of the work is taken out for them, and they can just use something else. Now there is a lot of piggy backing going on across the Commonwealth in both I.C.T and non I.C.T panel arrangements, and I very strongly support that and I think we need to encourage it. But how do we fix the situation in accordance with the Commonwealth Procurement Rules that says an agency decides that I’ve bought something before, today I need to buy wider seats on the bus.? I’ve never bought those before but this other department buys them all the time. But because I didn’t foresee the need to do that at the outset when they were setting up their seat buying panel a long time ago, I wasn’t included and now it’s too late to be included.
How do we fix that? What it is that we do to create some all inclusive clause without creating mandatory arrangements or huge collaborations or something, what simple thing could we do to mean that we could buy from those standard offerings, those panel arrangements without having to have thought that we might need to do so two years earlier. What can we do to fix that up to make it better?
There are other interesting questions I think as well about what we do when the journey is somewhat more complicated. To what extent can we outsource the bus driving if you like? Is there an arrangement that we could have in place that says we could procure this from some other way, or use something to do a better job? We’ve got an interesting challenge I think at the moment, ’cause we’ve been concentrating a lot on the Commonwealth Procurement Rules, we haven’t necessarily caught up with some of the other changes that we could do. This isn’t a criticism, it’s a question of the road being blocked not through the fault of the bus driver but through the fault of all the other people on the road.
What it is it that we could do, for example, to ease the burden of disposals? Could be use eBay to do that? If we’re getting rid of things that don’t have any particular value, is there a means of getting rid of them somehow through eBay, taking the notion that if you come and pick those up they’re not very valuable? They won’t be very valuable to auction houses because auction houses won’t get much margin as a consequence of using them. Is there a simple way of doing that? Could we set up a Foxtel reality show and have sort of people buying garages full of unknown ex-Commonwealth goods? I think that might be going just a bit too far, although it might make for good television, I’m just a bit worried what you might discover in some of those sheds.
But is there something that we could do that would make that bit of procurement easier for people? What is it that we can do, I think, or what do we need to do in order to make procurement not simpler in the sense that we treat everything as if it were not important, but rather that we tailor what it is that we’re doing? Do we in fact need what I see as a fleet of transport vehicles? We still need the big red bus to get the bulk of people between places? But we need some smart cars and we need to some semi-trailers, we need some alternative means of fuelling things, maybe we need to let some people walk, maybe we need to move some people compulsory in different ways. What is it that we can do to make sure that we get this mix of procurement arrangements in place so that we can help people?
Now I don’t necessarily have all the answers to these things, that probably doesn’t come as any surprise to you, I don’t have the answers to all of these things, but I think we have to look at the way that we consult in order to get more answers and more consideration of these things. One of the things that I intend to do is to bring some of the consultation methodologies that we’ve used in I.C.T procurement to the broader procurement arena. I think there’s some value in having a procurement blog on which we post or indeed some of you might post various ideas or news things, and on which people, not just public servants, can comment, but suppliers can comment. Because we’ve focused, I think, so much on the people in the bus and so much on the drivers in the bus, we haven’t thought about the other things that re going around outside us quite as well.
What could we do to make Australian Government procurement more enhanced than it is already for the people who are selling things to us? We could ask them what they thought and I think that would be a useful way of doing it. Now you will have seen depending what social media websites you look at and things like that, you will have seen that occasionally on those sites you get comments that aren’t very helpful. Indeed, sometimes you get comments that aren’t actually very printable, and clearly we need to do something to make sure that we don’t end up hosting a procurement hate fest or something like that. But I do think we can get some consultation going with industry, and not just the big end of town but the other suppliers that we buy things from.
Now we’ll test my memory of contracts, 57% of the contracts by number that we signed in 11/12 were with small to medium enterprises, and 39% of the contracts by value were with small to medium enterprises. All those guys and girls have a lot of interesting things to say about how we buy things from government, and I think we need to give them a voice, a voice that often isn’t picked up in their industry associations or the way that they normally go around talking to us. Now that means I think that as a group we need to be out there more, do more consultation and provide them with more feedback about what it is that we’re doing. Not in any sort… and I don’t want you to think that this is sort of some revolution or anything else like that, or I’ve arrived as the, you know, with a new broom and intend to sweep all before me, for a start I don’t like housework very much, but realistically we’re doing some stuff really well. That bus keeps delivering day after day after day providing the things that the Commonwealth needs to run.
What I’m interested in doing, and with your help what I hope we’ll be able to do, is just look at how we can make it run a bit faster, fun a bit more to schedule and when someone doesn’t have to get in the bus, see if we can provide a way of getting them what they need in a way that’s suits their particular circumstances without letting a thousand procurement flowers bloom necessarily, but keeping the garden relatively tidy, keeping the buses running on time but providing a better option for people who need to travel on them.
That’s enough sort of metaphor torturing for now. Thank you all for paying attention. I look forward to interacting with you more over my time as the Fat Controller. I haven’t sort of outsourced the top hat yet but perhaps there’s a panel for that. Thanks very much.