1. LGAP’s Initiatives to Support Procurement in Local Government
Mary-Alice Paton
LGA Procurement

2. Procurement is a Strategic Activity
Section 8(h) Local Government Act, 1999
‘fairly, efficiently, effectively’

3. Procurement in Local Government – the Current Landscape
PMMS Report
Section 49 has been beefed up, but essentially the same
Introduction of the ICAC
Procurement landscape still about fair, efficient and effective use of resources
Well recognized that procurement is a vital strategic tool to reduce costs and increase performance outcomes

4. Procurement in Local Government – the Commercial Environment and Community Expectations
Sustainability issues
Limited resources and increasing community expectations for service delivery
Councils have huge infrastructure and asset management challenges
Total rates growth has lagged behind CPI and revenue growth of other spheres of government

5. Procurement in Local Government – the Commercial Environment and Community Expectations
Australian economy faces challenges, South Australian economy struggling
Greater prescription and oversight of procurement activities likely – amendments to section 49, introduction of the ICAC
Plenty of scope within the current market and regulatory environment to achieve more with less
Remember that uncertainty drives cost, but certainty always drives competition

6. When We Distil the Objective…
What we are talking about is ensuring that the required deliverables are provided at the agreed time, for the agreed price at the agreed standard, while achieving identified outcomes and value, while all the time adhering to standards of good governance and appropriate standards of probity

7. PMMS Report
PMMS Report has validated what all of you will already know to be the case:
Procurement is a critical strategic tool for Local Government
Improvements in procurement practice will directly correlate to better community outcomes
Councils understand the importance of improving their procurement function, are interested in doing so and have positive drive to do so
Some Councils need leadership in this regard
There is benefit in sector wide approaches to improvements in procurement practice
There are things we can do which naturally drive benefits

8. The Good News…..
The LGA is committed to assisting Councils to achieve best procurement practice
What does this mean?
That the LGA has made a significant investment in this key area of Councils’ operations
The sector now has best practice tools to support its procurement function

9. LGA’s Objectives for 2012 The Year of Procurement
Providing the sector with appropriate tools to ensure that their procurement processes:
Achieve value for money, while delivering the desired outcome within acceptable risk parameters
Are accountable, transparent and robust
Instil supplier confidence in Councils’ procurement operations

10. Observations From the PMMS Report
Councils need to understand their spend (ie do a spend analysis and act on it)
Opportunities to achieve sustained improvements will come from a sector wide approach
Procurement practitioners need industry standard tools
Targeted training program required
Thorough planning and preparation of the procurement process and documentation a critical success factor
Contract management essential
Supplier relationship issues

11. Strategies for Excellence
Spend analysis and market understanding
Analyse spend and regularly review
Analyse market and regularly review
Consolidate spend to get best value
Drive efficiencies in procurement through a targeted and strategic approach to the market

12. Strategies for Excellence (cont)
Set the right framework – act on the spend analysis
Review procurement policy, procedures and systems
Refine as necessary to suit your needs within appropriate governance regime
Include flexibility with checks and balances
Ensure that officers are using and following the policy – documenting and auditing at key decision points
Lead by example – culture of excellence

13. Strategies for Excellence (cont)
Value for money achieved by flexibility with rigour
Be flexible as appropriate to respond to the commercial environment and drive value for money
Seek a commercial outcome
Follow policy, procedures and systems but exercise permitted flexibility as appropriate
Be accountable and transparent: document decisions and provide reasons for them throughout the procurement cycle

14. Strategies for Excellence (cont)
Negotiation
Appropriately skilled staff
Have a structure for negotiations
Establish Council’s baseline position prior to commencing
Must be conducted ethically and so that all participants are treated equally
During negotiations avoid any suggestions that the preferred tenderer will absolutely be selected as the contractor

15. Strategies for Excellence (cont)
Maximise the value achieved through every dollar spent
Planning
Understand contribution procurement needs to make the relevant outcome
Documentation of outcomes and reasons for relevant decisions
Equality of opportunity for all participants
Compare ‘apples with apples’

16. Strategies for Excellence (cont)
Robust contract management
Identify and manage risks
Identify and assign roles and responsibilities
Identify and access the skills required
Stakeholders
Relationship issues
Contract start up
Administration
Monitor and manage performance
Variations
Records

17. Access the LGAP Tools and Procurement Support
Baseline procurement policies and documents to cover common procurement scenarios
Handbook
Comprehensive training program
Advisory service
Invest in adapting these tools to suit your organisation

18. Access the LGAP Tools and Procurement Support (cont)
Use of these tools drives better confidence and understanding in the commercial sector
Drive industry access to templates to help minimise costs
Suppliers will do better when they understand the context and ‘rules’ subject to which they are bidding
Uncertainty drives cost, certainty drives competition

19. Impact of the ICAC
Critical questions are what does it mean and what does it mean for me?
Appointment of Independent Commissioner Against Corruption
Office of Public Integrity
OPI to receive complaints, ICAC to investigate complaints
‘Serious or systemic corruption’

20. Probity, Accountability and Transparency
The sector must ensure that its procurement processes are transparent
Adherence to Codes of Conduct
Generally speaking, a well planned, conducted and documented procurement is more likely to withstand external scrutiny or criticism and provide substantiation of a particular decision
Adherence to highest standards of probity essential

21. Accountability and Transparency are Related Concepts
Accountability means being responsible for decisions and actions and for resulting outcomes
Transparency means being able to give reasons for the decisions they make
Documentation is critical to accountability and transparency
Identification of and acting on conflicts of interest

22. Managing Corruption Risks
Policies and procedures to regulate commercial activities
Sanctions for breach
Regular review of policy
Reference to commercial activities in Code of Conduct
Staff awareness through training
Including commercial activities in the LGA’s internal audit process and corruption risk management process

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