Government Procurement Reform IT Sector Briefing 1
Jan 19, 2016
Government ProcurementReform
IT Sector Briefing
1
Agenda• Background• Machinery of government• Procurement reform• Business participation• All of Government contracts• Sector specific data• Conclusion
2
Background
3
Why reform procurement?• 30 – 70% of operating costs
• Business feedback
• Economic downturn
• Unacceptable risk profile
• Lost efficiency opportunities
• Build strategic capacity
4
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
5
Governance
• Expenditure Control Committee
• Chief Executive VfM Group
– Government Procurement Reform (MED)
– Administrative Services Review (The Treasury)
– Cross cutting Value for Money initiatives
6
Machinery of Government
7
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
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
9
Procurement Reform
10
Procurement Reform
1. Cost Savings
2. Capability and Capacity Building
3. Enhanced Business Participation
4. Governance, Oversight and Accountability
11
Key Reform aspects
• 4 Year programme
• Supports other VFM initiatives
• Transform procurement thinking
• Strategic procurement capability
12
Enhanced Business Participation
• Cutting red tape
• Improving transparency
• Increasing opportunities
• Sustainable markets
13
Business feedback• Procurement capability
• Conditions of contract
• Standard documentation
• Evaluation method
• Futile bidding enquiries
• IP risk
• Engagement
14
All-of-GovernmentContracts
15
Target Areas
Value
Ris
k
Tactical Sourcing
Strategic CriticalSecure Supply
Streamline
16
All-of-Government Contracts
• National/international market dominated
• Common needs
• Lower supply risk
• Reflect other jurisdictional experience
• Not syndicated contracts
17
Key Drivers• Need for change
• Strong performance management
• Reduce overhead
• Total cost evaluation
• Meet diverse customer needs
• Maintain/enhance competition
18
Transition
• Managed transition
• Soon as practical
• Aim for 100% by 30 June 2012
• Current contracts:– Extend till transition period
– Re-tender
19
Centres of Expertise (CoE)• Additional resources
• Dedicated category managers
• Strong market knowledge
• Relationship management
• Key performance measures
• Supplier incentives
20
Centres of Expertise (CoE)
• Desktops/Laptops - DIA
• MFD’s - DIA
• Vehicles - MED
• Stationery - MED
21
Key Data
Craig Doherty
22
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
23
Spend & Units by Sector – IT Hardware
Note: Number are rounded to $1M
Average Annual Spend
Average Annual Units
Desktops Laptops Desktops Laptops
Public Service $11M $6M 8500 3100
State Services $20M $7M 14600 3600
State Sector $10M $4M 6900 1800
24
Desktops: Total Spend over 4 Years
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
80% of total spend
2.0
4.0
6.0
8.0
10.0
12.0
$M
14.0
16.0
Pareto – Significant Procurers Desktops
25
Laptops: Total Spend over 4 Years
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,00080% of total spend
2.0
4.0
6.0
8.0
5.0
7.0
$M
3.0
1.0
Pareto – Significant Procurers Laptops
26
Desktop suppliers:
23%
14%
11%11%
10%
7%
4%
4%
3%
2%
11%
Dell
HP
Axon
Datacom
Gen-i
Cyclone Computers
Fujitsu
Silicon Systems
Acer
IBM / Lenovo*
Other
27
Laptop suppliers:
13%
13%
12%
12%6%
6%
5%3%
2%
1%
27%
Axon
HP
Gen-i
Dell
Datacom
Fujitsu
The Laptop Company
Cyclone Computers
Advantage Computers
Lenovo
Other
28
Timelines
• Establish CoE team now
• Market engagement
• Firm up demand by Christmas
• Out to Market quarter 3
• Contract award by June
• Mobilisation from July
29
Challenges
• Minister expectations
• Diverse client base
• Change management
• Undermining activities
• Sabotaging behaviour
30
Summary
• Change management project
• Strong agency support
• Ministers will remove barriers to progress
• Dedicated category management
• Supplier incentives
• Transition as soon as practical
31
Conclusion
32
Conclusion
• Open dialogue
• Centre of Expertise
• Improve efficiency
• Market sustainability
• Better value for tax-payers
33
Contacts:
CoE Manager:Craig Doherty – 04 495 7267 [email protected]
Reform Project Manager:Christopher Browne – 04 470 [email protected]
34