This presentation was given to the Transforming Procurement conference in Sydney on 26 August 2014. It reviews recent developments in Australian Government procurement.

The scope of the presentation is shown on this slide.

In an average year, the Australian Government procures some $40 billion worth of goods and services.

Analysis conducted by the ABS on data collected from AusTender, the Commonwealth Government’s central procurement web-based system, shows that in 2012-13 Australian suppliers were contracted to supply 82% of goods and services by value. This indicates that as much as $32 billion of the $39.3 billion contracts reported by entities are with Australian based suppliers.

SMEs represented 32% ($12.4 billion) of the $39.3 billion contracts reported in 2012‑13. By contract number, SMEs represented 60.5% (41,032) of approximately 68,000 contracts published during this period.

Details of these procurements can be found on AusTender (www.tenders.gov.au) and in machine readable format on data.gov.au.

Despite the open public data we provide about procurement, a range of myths abound. Public servants are accused of randomly abandoning procurements without consideration of the costs involved for vendors, of conducting approaches to the market by expressions of interest in order to cheaply acquire intellectual property and worse.

This isn't what happens, needless to say perhaps. Nevertheless, it's worth discussing a few facts.

One of May favourites is to explain that the Commonwealth Procurement Rules (http://www.finance.gov.au/sites/default/files/2014%20Commonwealth%20Procure...) are actually less than 40 pages long.

The guiding principle of the CPRs is value for money.

There are over 1000 panels used to procure a range of goods and services. Panels allow agencies to conduct an open approach to market to establish the panel and then use the panel to make ongoing purchases without undergoing the full tender process. Panels are a popular way of simplifying procurement.

Let's take ICT as an example. I do so because I am most familiar with it.

As at 1 July 2014 there were 156 active ICT panels reported on AusTender:

1,360 suppliers were engaged through those panels;
12,100 contracts were awarded valued at a total of $5.7 billion;
The average total contract value per panel was $37 million and the median was $2 million;
The average number of contracts per panel was 78;
Of the total suppliers, 57% had contracts reported;
The average number of contracts awarded per supplier was 9 and the median was 1; and
The average value per panel contract was $461,855 and the median was $102,960.

The figure of 1360 suppliers mentioned in the post is the sum of suppliers on all the panels. There are only about 650 unique suppliers on those panels. 63% are only on one panel. 18% are on two, 8% on three, 4% on four and 2% on five. That's 95% on five panels or less.

Of course, I don't have figures for companies that are unsuccessful in getting accepted for a panel. Certainly, on the panels for which I am responsible, we see a high proportion of applicants being selected. This evidence, if the extrapolation is reliable, suggests that if panels last three years (and most do), then the vast majority of these companies aren't involved in a panel RFT response or refresh more than once every two years.

As part of the government's drive to reduce red tape, we are undertaking a range of activities to make procurement easier for both buyers and sellers.

Prompt payment to suppliers is an important part of doing business. The Government's new on time payment policy (http://www.finance.gov.au/publications/RMGS/pay-on-time-policy.html) began on 1 July 2014. It requires:

Non-corporate Commonwealth entities are required to agree to payment terms that provide payment no later than 30 days after the date of receipt by the entity from the supplier for contracts valued up to and including A$1 million (GST inclusive).

Where payment is not made within the maximum payment terms, the non-corporate Commonwealth entity is to pay interest to the supplier where the amount accrued is more than A$10 (GST inclusive).

The matching credit card payment policy (http://www.finance.gov.au/publications/RMGS/credit-card-policy.html) makes it compulsory for agencies to pay using credit cards for amounts up to $10,000.

The new Commonwealth Contracting Suite (http://www.finance.gov.au/procurement/commonwealth-contracting-suite/) provides standard contracts for purchases up to $200,000, up from $80,000 previously. The contract templates are available on line and are colour coded to make it easier to understand which party is accountable for what.

As well as making AusTender data more easily available on line, we're undertaking a project to expand its functionality to cover panels and quotes and not just RFTs. This will make it easier for agencies to approach panels for quotes and easier for suppliers to respond.

The machine readable contract data up to June 2014 is here: http://data.gov.au/dataset/historical-australian-government-contract-data

We use our blogs to consult with stake holders about procurement matters (http://www.finance.gov.au/category/procurement-coordinator/ and http://www.finance.gov.au/category/agcto).

This helps to ensure we understand what is for sale, the cost drivers of procurement and the issues that could complicate particular procurements.

We're always looking for new ways to make procurement easier and to increase participation by suppliers, particularly SMEs.

Improving small business access to Commonwealth contracts

The Government will provide $2.8 million (including $0.5 million capital funding) over four years to assist small businesses to access the Commonwealth procurement market. The Department of Finance will work with small businesses and their representatives to develop procurement policy, guidance material, training and education programmes that make it easier for small business to do business with government.

We're currently exploring better liability arrangements, just in time insurance and similar measures as part of our cloud computing services panel (http://www.finance.gov.au/blog/2014/08/08/draft-head-agreement-for-whole-of...)

We're keen to receive new ideas and feedback. You can do so via the Procurement Coordinator's website (http://www.finance.gov.au/procurement/procurement-coordinator/complaints-ha...) or on the blog.

Questions