Government ProcurementReform
Vehicle 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
Phil Weir
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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 – Vehicles
Note: Number are rounded to $1M
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Average Annual Spend (Millions)
Passenger Cars
4x4 Ute's Vans Total
Public Service $19 $2 $8 $3 $31
State Service $31 $3 $2 $5 $40
State Sector $5 $3 $4 $2 $14
Average Annual Units
Passenger Cars
4x4 Ute's Vans Total
Public Service 1000 100 200 100 1300
State Service 1600 100 200 200 2100
State Sector 300 100 200 100 700
Pareto – Significant Procurers Vehicles
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$0
$10M
$20M
$30M
$40M
$50M
$60M
$70M
Vehicle suppliers:
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18%
13%
11%
10%8%
6%
6%
5%
4%
4%
15%
Hyundai
GSB Supplycorp Ltd
Holden
Volkswagon
Toyota
Custom Fleet
FleetPartners
Local Car Dealers
Honda
Ford
Other
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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