1. Financial Contestability
31st Governance Institute of Australia National Conference
Peter Lacey
Executive Director, Social Services Procurement Transformation
Department of Housing and Public Works
December 2014

2. Why we are transforming procurement
Renewal Procurement Review
Apr 2013
Dec 2013
2018
Oct-Dec 2012
June 2013
March 2014
PTP Wave 1
PTP Wave 2 and beyond

4. Renewal means our services will be contestable
The process of achieving contestability is:
Reviewing the delivery of services to ensure the best possible solution is provided at the best possible price.
Encouraging more efficient and more innovative service delivery, whether by the public, non-government organisation or private sector.
An ongoing process to challenge the status quo.
Ensuring service delivery outcomes remain contestable.

5. What we’re doing to make it happen
2014 – 2018
One Government transformation journey
Organisation
Detailed functional design and implementation strategy
Strategic governance
Procurement performance measurement
Delegations
Workforce strategy
Procurement capability strategy
Capability and capacity resourcing
Source to contract process
Procurement process framework
Contract register
Unsolicited proposals policy
Contract management framework
Standard contracts and tender documents
Procurement technology enablement
Contract Lifecycle Management system (e.g. QContracts)
RMS – ICT contingent labour
QTravel
Progression to category-based whole-of-government procurement
2013
Enabled early value
People
Developed and launch new principles-based Queensland Procurement Policy
Ran proof of concept: strategic sourcing
Modelled and base-lined transformational initiatives
Enabled $60-92m in benefits
Developed benefits realisation framework
Recommended: new way of working
Business case: funding to change how we work
Process
Technology
Mega Category Management
Baseline
Business Case
One Government approach to procurement
Outcome

7. Better managing investment for now and for the future
Demand for social services is increasing
Projected increase in spend to meet this need
Significant implications – unsustainable
Actions now for the future:
More strategically managing our investment to maximise value and outcomes

8. Market Stewardship: choice and competition
Co-creating markets that empower service users and incentivise outcomes
Monitoring service quality and price (including access)
Identifying and addressing supply gaps
Reducing barriers to market entry and increasing entrant capability
Reducing barriers to and impacts of market exits
Avoiding crowding out (investment and supply)
Fostering regional, small and medium enterprises, and hidden champions

9. Two models of market governance: 1) The control model governance chain
Shareholder environment
Independence and performance
Capital market liquidity
Corporate context
Institutional
context
Transparency and accountability
OECD
Principles
Concentrated ownership
Reliance on
family, bank and State finance
‘Insider boards’
Incentives aligned with core shareholders
Limited
takeover
market
Under-developed new issue
Inadequate minority protection
Limited disclosure
Source: McKinsey
010913AHO020MW-P1

10. Two models of market governance: 2) The market model governance chain
Shareholder environment
Independence and performance
Capital market liquidity
Corporate context
Institutional
context
Transparency and accountability
OECD
Principles
Dispersed ownership
Sophisticated
institutional investment
Non- executive majority boards
Aligned incentives
Active
takeover
market
Active private equity market (incl. IPOs)
Shareholder
equality
High disclosure
Source: McKinsey
010913AHO020MW-P1

11. What’s in it for Government and Service Users?
Better value for money
Stronger market
Government and community confidence that spend is effectively managed
What’s in it for Government and Service Users?
Coordinated and integrated approaches to managing investment
Clear, structured visibility of spend
Tap into industry ideas
Strategic relationships with providers Better understanding client need
Competitive solutions
Better services and outcomes with available resources

12. What’s in it for Providers?
Quicker and easier to do business with Government
Resources are directed to service delivery
Outcomes are recognised and rewarded
Easier to find contracting opportunities
Transparency of funding approach
Simpler contracting
More meaningful reporting
Improved productivity
Sustainable, client focussed outcomes through enabling innovative service delivery models
Value in service delivery is recognised
Strategic relationships