Government ProcurementReform
IT Sector Briefing
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Agenda• Background• Machinery of government• Procurement reform• Business participation• All of Government contracts• Sector specific data• Conclusion
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Background
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Why reform procurement?• 30 – 70% of operating costs
• Business feedback
• Economic downturn
• Unacceptable risk profile
• Lost efficiency opportunities
• Build strategic capacity
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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
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Governance
• Expenditure Control Committee
• Chief Executive VfM Group
– Government Procurement Reform (MED)
– Administrative Services Review (The Treasury)
– Cross cutting Value for Money initiatives
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Machinery of Government
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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
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Procurement Reform
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Procurement Reform
1. Cost Savings
2. Capability and Capacity Building
3. Enhanced Business Participation
4. Governance, Oversight and Accountability
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Key Reform aspects
• 4 Year programme
• Supports other VFM initiatives
• Transform procurement thinking
• Strategic procurement capability
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Enhanced Business Participation
• Cutting red tape
• Improving transparency
• Increasing opportunities
• Sustainable markets
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Business feedback• Procurement capability
• Conditions of contract
• Standard documentation
• Evaluation method
• Futile bidding enquiries
• IP risk
• Engagement
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All-of-GovernmentContracts
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Target Areas
Value
Ris
k
Tactical Sourcing
Strategic CriticalSecure Supply
Streamline
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All-of-Government Contracts
• National/international market dominated
• Common needs
• Lower supply risk
• Reflect other jurisdictional experience
• Not syndicated contracts
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Key Drivers• Need for change
• Strong performance management
• Reduce overhead
• Total cost evaluation
• Meet diverse customer needs
• Maintain/enhance competition
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Transition
• Managed transition
• Soon as practical
• Aim for 100% by 30 June 2012
• Current contracts:– Extend till transition period
– Re-tender
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Centres of Expertise (CoE)• Additional resources
• Dedicated category managers
• Strong market knowledge
• Relationship management
• Key performance measures
• Supplier incentives
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Centres of Expertise (CoE)
• Desktops/Laptops - DIA
• MFD’s - DIA
• Vehicles - MED
• Stationery - MED
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Key Data
Craig Doherty
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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
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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
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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
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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
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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
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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
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Timelines
• Establish CoE team now
• Market engagement
• Firm up demand by Christmas
• Out to Market quarter 3
• Contract award by June
• Mobilisation from July
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Challenges
• Minister expectations
• Diverse client base
• Change management
• Undermining activities
• Sabotaging behaviour
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Summary
• Change management project
• Strong agency support
• Ministers will remove barriers to progress
• Dedicated category management
• Supplier incentives
• Transition as soon as practical
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Conclusion
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Conclusion
• Open dialogue
• Centre of Expertise
• Improve efficiency
• Market sustainability
• Better value for tax-payers
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Contacts:
CoE Manager:Craig Doherty – 04 495 7267 [email protected]
Reform Project Manager:Christopher Browne – 04 470 [email protected]
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