Procurement governance and collaboration –a Local Government case study

A multi‐Award winning case study that explores the reasons for establishing a shared collaborative platform for Council staff to access 

nationwide, statewide and local approved suppliers

Brian O’MaraGeneral Manager

Local Government Procurement

About me

Brian O’Mara

Background in Local Government & Private sector

GM, Local Government Procurement (LGP) NSW

NSW Representative, National Procurement Network (NPN)

NPN made up of 6 Procurement AggregatorsThese aggregators are LGA “owned” LGA’s manage Statewide Panels and ContractsNPN combines buying power of the LGA’s for National Contracts

Local Government National Procurement Network (NPN)

Local Government in Australia• 560 (??) Local Government Entities• Average 28,400 residents per Councils• Employ ~180,000 people (almost 10% of public sector)• Manage 85% of National roads network• Spend >$20 billion each year infrastructure, economic and community services

Is Governance an issue?Here are a few examples of “non governance” I encountered:Carpet layers

Where did my stuff go?The missing plastic mesh fence barrier

The missing quotes

What tendering threshold? We know about it, bit no one checks.

The supplier incentive programThe hose fitter

Lastly - the lowest paid council employee

Purchasing from Panels of SuppliersNationwide panels managed by National Procurement Network (NPN)

Historically limited as difficult to manageIncreased significantly last two yearsExamples include Fuel, Corporate Wardrobe, Trucks, MGB’s

Statewide panels managed by Local Government Associations (LGA’s)Statewide categories

Trucks, buses, commercial vehicles, heavy plant and equipmentProfessional & Consulting Services – Engineering, ITC, Planning & Environment etcHigh volume items – bins, energy, telecommunications, IT hardware

Local supplier lists managed by CouncilsLocally specific categories

Civil & Trade related services, legal services, securityPlant hire, asphalt, bitumen

May not be tendered Panels, often pre‐qualified suppliers or pools of local suppliers

The Problems with getting quotes!Very high volume of lower value quotes required – because council policies dictate as such

Yet aggregated value of quote based purchasing is very high

Quotation processes have been inconsistent, inefficient and lack transparency

Panels of suppliers are housed in different places, difficult to find and poorly utilized

Council Policies, Legislation breached!

So staff are……..

Confused ‐ Hard to find contract / know what existsAnnoyed ‐ Processes differentWorried ‐ Difficult to demonstrating probityStressed – Short on time

Tend to go with the same suppliers they know

Suppliers are…….

Frustrated ‐ Poor visibility of opportunitiesDisgruntled – Perceive poor equity of accessAnnoyed ‐ duplicate administration

Question the benefits of being a preferred supplier

And the Procurement Department…….

1. Limited visibility & transparency of quotes2. Limited reporting of panel activity3. Staff quoting processes are inconsistent4. Limited competition during term of panel5. Poor utilisation of panels6. Duplication of panels7. Difficult to demonstrate Governance & Probity in how 

panels are being accessed

Can you relate to the problem?This is not a Local Government issue but a 

Procurement issue.

The solution?

July 2010:Pilot launched 100 NSW Councils (LGP)

January 2011: Extended to other States (NPN)

Governance tools

July 2011:Local Engagement ToolsCouncil Transparency & Governance tools

July 2012 –Total Collaboration Tools ‐National, State & Local supplier management & collaboration)

January 2010: Initiated by Local Govt Procurement 

The 4 DriversReduce duplication  Suppliers could be on local, state and national arrangements in five States!

Provide benefits to suppliersReduce administration, Greater equity of access to opportunities, Competition, deliver demonstrable benefit to preferred suppliers

Maximize Value of supplier arrangementsDrive competitive savings, Increase usage, Increase supplier management and future negotiations with better data and Reduce costs

#4 The BIG one –improve governance!• Simplify process compliance

• Make it easier to demonstrate Governance & Probity 

• Simplify insurance and accreditation management of suppliers

• Simplify access to contracts and relevant documentation

• Ensure structured, transparent consistent processes• Oh, one final one – MAKE IT ALL SIMPLE!!

Here is the system that bought it all together

How it works… eQuotes (powered by VendorPanel)

(NPN)

National Preferred SupplierArrangements

(NPN) (LGA)

StatewidePreferred SupplierArrangements

(LGA)(Council)

LocalSuppliers

(Council)

My Suppliers

Keeping it simple ‐ Everything in 1 place

Examples of use across Australia

• Secure web based SaaS technology• Off the shelf product developed in partnership with NPN

Technology & Procurement AwardsFINALIST : Most Effective Use of Innovation – CIPSA 2013FINALIST : Best Process Improvement Initiative – CIPSA 2013WINNER: Best Process Improvement – CIPSA 2011WINNER: e‐Government – 2011 Victorian iAwardsWINNER: e‐Logistics and Supply Chain – 2011 Victorian iAwardsWINNER:  Most innovative Application – 2011 East Coast Web AwardsFINALIST: Excellence in e‐Government – Dept. of Finance & Deregulation 2011FINALIST: Excellence in Supply Chain Innovation in NSW – Smart 2011 AwardsSHORTLIST:  X‐Factor Award & Innovation Award ‐ Cool Company Awards 2012

The ResultsReduce / Eliminate Duplication

Increase Governance & ProbityConsistent quotation processesUnprecedented Transparency, Governance & Probity

Provide benefits to SuppliersGreater equity of access for SuppliersReduced administration

Maximise value of supplier arrangementsSignificant savings delivered $$Better data for supplier management & negotiationsIncreased usage of approved suppliers

Simple

More ResultsWhat started as an idea in NSW has now been embraced by all members of the NPN

Spend on Vendor Panel exceeded $400m in first two yearsFrom zero to a lot in a very short time!Unprecedented interest from councils wanting demonstrated governance

~20+ councils have purchased the software to manage their own supply baseGreater equity of access for SuppliersReduced administration

Not just a Local Government story Embraced by the Private sector  Universities, Utility companies on boardSignificant savings delivered $$

Simple

Thoughts

Simple easy to use tools that greatly improve efficiency, value and governance”

Julie Taylor, Procurement Officer, Moreton Bay Regional Council

“We now have the capacity to add higher levels of transparency, governance and compliance... if simplicity is the key then VendorPanel is the locksmith."

Michael MacLean, Senior Manager Procurement & Risk, Parramatta City

“Easily the best procurement tool I have seen in 20 years of procurement”

Me

The future?More of the same I think.

Increased growth.Higher uptake of aggregated supply.

Less criticism of the LG Sector!

More?If you would like a further insight into the technology’s simplicity, it’s benefits and it’s relevance in any procurement space where use of supplier panels, calling of quotes and supplier management is your business ‐(I think that means where you work!)

I strongly suggest you see the team from VendorPanel in the exhibitor section. 

Thanks for your timeHappy to take any questions…….

Further enquiries: Brian O’Mara bomara@lgp.org.auJames Leathem james@magnetizedmarkets.com