It’s Time for Procurement Chris Newman Director ArcBlue Consulting Chris.newman@arcblue.com.au 0412 318 384

Our public sector experience QLD State Government Contract Management Assessment and training program Social Procurement Development VIC State Government Training Programs Review and Certification Programs VIC Local Government LEAP Spend Analysis and Procurement Development Contract Management Guidelines and Development Training Social Procurement Programs NZ Government Agency assessment Spend Analysis NSW State Government Accreditation process with 7 Departments Procurement Project delivery Capability Model Development State Government Local Government SA Local Government Roadmap Program Regional Opportunity Analysis Programs Procurement Capability Assessment / Development Federal Government Contract Management Training Queensland Local Government Local Buy Training Spend Analysis Pilot Gold Coast Contract Management Training and Capability Development WA Local Government Procurement and Contract Management training Procurement Handbook Development SA State Government Savings Programs New Royal Adelaide Hospital Procurment NSW Local Government Procurement Development Program across 30+ councils Procurement Leadership Program Regional Development Programs Social Procurement Guidelines

Implications of rate-capping Contents Implications of rate-capping Why procurement - what is the data telling us? How can strategic procurement be part of the solution?

Implications of rate-capping A burning platform for the next stage of professionalisation or A handbrake on sector capacity and development Opportunities for innovation What does it mean for regional and sector collaboration

Operating in a commercial world Delivering and Demonstrating savings, value and productivity improvements Data-based decision-making Taking a structured approach Building the right skills and capacity Balancing commercial and community

Procurement Trends and Insights MAV LEAP Program Procurement Trends and Insights

LEAP Background A continuous improvement program designed to assist councils, regions and the sector to: Achieve sustainable savings and value for money Support local and regional economic development Identify and pursue shared services opportunities Improve probity management and compliance Improve organisational and sector capability 23 councils currently participating in LEAP Data insights are based on first 15 councils

LEAP Program Statistics $1,300 million spent across 15 metropolitan councils in FY15 45 – 65% of total council spend >24,600 Active suppliers in single year ~467,000 Individual transactions (invoices) processed

17% - 37% 40% - 60% ~$52,000 quarter 4 Spend of spend in the local (Council) area. 40% - 60% of Councils spend is with top 20 suppliers ~$52,000 average spend per supplier, predominantly below tender threshold quarter 4 opex and capex spend spikes in key categories suggesting rushed end of budget cycle spend.

Efficiency 350,000 75% 28% $2,875 $25 million Up to $73 Per transaction cost of traditional PO process 350,000 75% of transactions <$1,000 value 28% of all suppliers were used only once during the financial year, ~7,000 single use suppliers $2,875 average value per transaction $25 million spent processing transactions with value of <$1,000

Low-value Procurement White Paper

Low-value Procurement White Paper

Capability and Maturity

Procurement in Local Government State Regional Local

Case Study: Barossa Regional Procurement Development Program Objectives & Process Make sustainable savings & create efficiencies Stimulate economic development Improve probity and reduce risk Build staff and organisational capability in procurement Strengthen regional collaboration Joint Council Kick-off Data Collection Individual Council Workshops Detailed Joint Spend Analysis Opportunity Analysis Workshop Regional Roadmap Develop-ment and Validation Final Roadmap Workshop Progress Reviews and Support

Barossa Regional Procurement Program Regional Collaborative Procurement Program – Start May 2014 Regional Governance MOU in place – October 2014 Regional Resource engaged – February 2015 Collaborative Projects Standardisation of process and documents Development of regional procurement website Agreed priority regional contracts delivered since February: Regional Building Maintenance/ Trade Services Panel Audit Services Road Re-Seal Program Stationery Line Marking Savings to date $800,000 – Target $2.5m/ year (5%) Increased regional spend and internal efficiencies

Barossa Region – Next Steps Expanding model to shared services investigations Correlating spend data against service, output and demographic data Using opportunity analysis to structure and prioritise opportunities South gippy 56 East gippy 80 Wellington 78 Bass 70 Latrobe 115 Baw 61 460

Strategic Procurement Procurement represents our most tangible area to deliver and demonstrate savings: External and internal efficiencies Continuing to move from administrative to strategic Structured programs Targets and measurement Commercial focus Building capability – council, region, sector Demonstrating ‘value’ while maintaining our commitment to community