Government Procurement Reform

Government Procurement ReformSeize the opportunities

Agenda

• Introduction

• Reform Themes

• Cost Savings Workstream

Year One

Success Factors

Key activities to date

Governance

• All of Government Contracts

Office Consumables, Passenger Vehicles, Desktops &

Laptops/Notebooks and Single & Multi-function Print Devices

• e-Market Place / e-Tools

• Questions

Four themes

• Cost savings

• Build capability and capacity of procurers

• Enhanced NZ business participation

• Improved governance, oversight & accountability

Cost Savings Workstream: Year One

• All of Government Contracts (x4)

• Savings Methodology

• Spend Analysis

• All of Government Supply Agreement and MOU

• e-Marketplace / e-Tools

Cost Savings Workstream: Success Factors

• Calculable cost savings that are measurable

• Contract strategy and approach that:

• delivers government business needs

• meets the government procurement policy

• exercises a deterministic influence in the supply

market

• Acceptable quality standards, fit for purpose

• Risks mitigated and managed appropriately

• Supplier relationships appropriately managed

• Effective measures of success (cost saving,

quality service, sustainability)

• Transparency

Cost Savings Workstream: Success Factors (continued)

Cost Savings Workstream: Key activities to date• Establishment of Centres of Expertise

• Data gathering and validation

• Governance mechanisms established

• Stakeholder engagement

• Market analysis

• Tender documentation

• Establishment of AoG Supply Agreement and MoU

• Probity Assurance

Cost Savings Workstream: Governance

• Ministerial Oversight

• Chief Executives

• GPDG Reform Programme Executive

• Cost Savings Technical Advisory Group

• Client Advisory Groups

Office Consumables Procurement Strategy

Discussion Points

• Overview: New Zealand office consumables market

• Current Government procurement of office consumables

• What is the scope of the contract(s)?

• Where are the opportunities?

• What will this mean for you?

Overview: New Zealand office consumables market

• New Zealand stationery market is approx. $1.2b p.a.

The market consists of:

• Manufacturer/suppliers - e.g. Croxley

• Import suppliers - e.g. HP, Croxley

• Wholesalers - e.g. Spicers Office Paper

• Value Added Resellers - e.g. OfficeMax, Corporate Express

• Retailers – e.g. Warehouse Stationery, Paper Plus, Supermarkets

Current Government procurement of office consumables

Government spend is approx. $50m p.a. via a variety of

mechanisms:

• Contracted integrated solutions with OfficeMax and Corporate Express

• Purchasing via the GSB aggregated solution

• Non-contracted arrangements

• Ad hoc/retail purchasing

What is the scope of the AoG contract(s)?

Government Catalogue consisting of:

• Printer ink and toner cartridges

• Photocopier paper

• General stationery items

• Canteen products

• Computer accessories

• Health and hygiene

• IT media storage

Out of Scope:

• Furniture

• Business machines

• Print solutions

What is the scope of the contract/s? (continued)

Services to be provided:

• Sourcing of required product

• Mapping of supplier catalogue items to Government

e-marketplace catalogue

• Catalogue content management

• Invoicing services

• Comprehensive reporting

What is the scope of the contract/s? (continued)

• Call centre support

• Product rationalisation

• Logistics, warehousing and distribution

• Packaging retrieval and recycling

• Amelioration of environmental impacts

Where are the opportunities?

• Lower prices through aggregation, increased competition, increased automation

• Rationalised Government catalogue

• Standardised processes and products across Government

• Targeted reporting: comparing spend & practices of like agencies

• Reduced demand

• Reduced administrative burden for agencies

What will this mean for you?

Lower cost, less effort, accurate reporting:

• Reduced tendering effort

• E-Marketplace one-stop-shop

• Reduced administrative & contract management effort

• Increased automation: greater efficiencies and accuracy

• Accurate reporting on spend and practices

• Reduced cost

Timings

RFP issue date, clarification period begins

16 March

Supplier briefing: Auckland 19 March

Clarification period ends 5 April

RFP closing date Noon 12 April

Evaluation & negotiation 13 April to 31 May

Award/execution of Supply Agreement

by 30 June

Passenger Vehicles Procurement Strategy

• Overview: New Zealand motor vehicle market

• What is the scope of the contract(s)?

• What does the government purchase?

• Where are the opportunities?

• What will this mean for you?

Discussion Points

Overview: New Zealand motor vehicle market

• 70,048 new vehicle sales in 2009, down 28%

• 2010 tipped for the start of recovery

• Approx 300 individual makes/models retailing under $50,000

• Focus: improve safety and environmental performance

• Motive power options: petrol, diesel, hybrid, LPG

• Most new passenger vehicles fitted with ESC (80%) and SCA (74%)

• Technology driving price increases

What is the scope of the contract(s)?

• Passenger and Light Commercial Vehicles

• Accessories

• Through life costs

• Distributor buy back

What does the government purchase?

• 6.2% of passenger vehicle market (3,372)

• 6.8% of light commercial vehicle market (1,059)

• 100+ different individual makes and models

• 70% purchase, 30% lease

• Most purchase new, but some agencies purchase used

• Lots of different ‘drivers’ influencing selection process

Where are the opportunities?

• Aggregation of makes and models

• Focus on the through life costs

• Forward planning

• Supplier performance management

What will this mean for you?

More buying power - less effort:• Together, we’re a more attractive customer

• Strong distributor relationship & supplier management

• Reduced tendering effort

• E-Marketplace one-stop-shop

What will this mean for you? (continued)

Choice:• A selection of vehicles

• Pick and choose service options

• Pick and choose accessories

• Mechanism to address genuine out-of-scope

requirements

TimingsRFP issue date, clarification period begins

16 March

Supplier briefing: Auckland 24 March

Clarification period ends 12 April

RFP closing date 20 April

Evaluation & negotiation 21 April to 27 May

Award/execution of Supply Agreement

by 30 June

Laptops/Notebooks & Desktop P.C’s

Print: Multi & Single - Function Devices

• Overview: New Zealand IT Equipment market

• What is the scope of the contract(s)?

• Where are the opportunities?

• What will this mean for you?

Discussion Points

Overview: New Zealand desktop & laptop market

• NZ dominated by a handful of Desktop and laptop providers:

HP, Lenovo, Dell, Acer, Toshiba (laptop space only) and Apple

• Routes to market via resellers and integrators:

Gen-I, Datacom, The Laptop Company

• Small presence of New Zealand based assemblers:

Cyclone, Silicon, Advantage

Scope: Desktops & Laptops

• A Multi-Supplier Panel Agreement

• Four Core Lots

• Desktops

• Laptops/Notebooks

• Tablet Notebooks

• Associated Services (mandatory for all those that bid on Lot

1,2 and/or 3) – not available as a separate lot.

What does the Government purchase?

• Approximately $45 Million P/A In Desktops (next four

years) budgeted across all Sectors.

• Approximately $15 Million P/A (next four years) in

Laptops budgeted across all sectors.

Where are the opportunities?

• An opportunity to leverage against a standardised commodity.

• Currently some great deals in the marketplace. A chance to better

and make them visible to AoG.

• A chance to share best practise and collaborate.

• Common performance management.

• A chance to share supplier experience

Overview: New Zealand Single & Multi-Function Print Device Market

• Dominated by four core manufacturers

HP, Konica Minolta, Ricoh and Fuji Xerox

• “bubbling up” suppliers such as Oki, Kyocera and Sharp.

• Most deals direct with these companies

• A movement to more mature print management

• Smaller NZ players in the single function print support business

Scope: Single & Multi-Function Print Devices

• A Multi-Supplier Panel Agreement

• Four Core Lots

• Single Function Devices

• Multi-Function Devices

• Optional Services that the respondent must be able to provide:

• Optional Services that the respondent may be able to provide.

• Associated Services (mandatory for all those that bid on Lot 1 and 2) –

not available as a separate lot.

• Approximately $30 Million P/A on MFD’s

• Estimates on single function devices still currently being evaluated.

What does the Government purchase?

Where are the opportunities?

• A chance to leverage AoG print volume.

• Establish greater transparency and common costs.

• A chance to compare and contrast deals.

• A chance to share best practise and collaborate.

• Common performance management.

• A chance to share supplier experience.

What will this mean for you?

• A single set of Terms & Conditions

• Less laborious tender procedures.

• Access to a transparent market.

• Access to a more consistent approach to transacting (the

E-Marketplace).

• More focussed and singular contract management

TimingsRFP issue date, clarification period begins

8 March

Supplier briefings: Wellington 10 & 11 March

Clarification period ends 3.00 pm 25 March

RFP closing date Noon 31 March

Evaluation & negotiation 1 April to 31 May

Award/execution of Supply Agreement

by 30 June

e-Marketplace:Online Catalogue & Purchasing

Discussion Points

• Objectives

• What is the current situation?

• What we are implementing?

• What are the opportunities?

• What will this mean for you?

Objectives

• Provide an enabling platform

• Improve productivity• Create efficient P2P processes for AoG Contracts• Enable focus on value added activities

• Realise potential savings• Reduced costs• Reduced “rogue” buying• Leverage collaborative buying opportunities

What is the current situation?

• Varying approaches – difficult for suppliers

• “Mandraulic” systems

• General lack of coherent spend analysis and transparency:

• By individual agencies

• All of government spend

• Divide and conquer tactics by supply market

• Supplier entrenchment

What we are implementing?

• Online electronic marketplace for AoG contracts

• Standardised buying portal

• Single “trading post” for buyers and sellers

• Platform independent solution

• Capacity to transition existing arrangements

What we are implementing? (continued)

Generic CatalogueCovering multiple categories

(Initially Stationery, IT & MFDs, Light Vehicles)

Supplier System

and Catalogue

Supplier System

and Catalogue

Supplier System

and Catalogue

Supplier System

and Catalogue

Agency access to AOG online catalogue

Supplier catalogue mapping to Generic AOG Catalogue

Agency ERPSAP

Agency ERP

Oracle

Tracking

Contract Management

Reporting

Advantages

• Standard product ranges

• Standard processes

• Purchasing control / visibility

• Reporting: agency, overall spend analysis,

benchmarking

Where are the opportunities?

• Flexible integration solutions

• Analysis of buying patterns

• Benchmarking comparisons

• Collaborative buying

• Level the playing field

• Broader benefits realisation

What will this mean for you?

• Reduced procurement effort

• E-Marketplace one-stop-shop

• Solution flexibility

• Re-energise existing relationships

• Improved access to purchasing information

• Opportunity to focus on core activities

Questions

Conclusion

Success will mean:

• Delivery of calculable, measurable cost savings – while:

Meeting government business needs

Making it easier for suppliers to do business with government

Meeting government procurement policy

Exercising a deterministic influence in the supply market

Contacts:

John IvilTel: 04 495 1266E-mail: john.ivil@med.govt.nz

ORprocurement@med.govt.nz