Procurement

Structural reform delivers the opportunity for the procurement function to be elevated from its transactional focus to a key and integral strategic function. Broad objectives specific to local government procurement reform include:

  • Ease of doing business (creating procurement process efficiencies)
  • Value for money determination (a greater focus on measured savings)
  • Local government enablement of Small to Medium Enterprise (SME) and local business communities
  • Achieving sustainability objectives through green purchasing
  • Building Local government capacity (through continuous improvement).

The reputation of the sector not only relates to the procurement process itself, but also the contract management and fostering of supplier relationships, which will become even more critical in the post-reform environment due to the potential for greater levels of functional outsourcing. Better outcomes for staff and the community are achieved through improved services from suppliers and increased transparency of the procurement function. The steps that follow are a summary of what will be required to guide the merged entities towards delivering Value from a successful merge of procurement functions.

The steps and an accompanying Procurement Toolkit worksheet (EXCEL, 14KB) have been prepared by Local Government Procurement (LGP). Before accessing the Worksheet, please open the Procurement Toolkit introduction (PDF, 124KB) prepared by LGP. Any enquiries on this initiative should be directed to Local Government Procurement (02) 8270 8700, or info@lgp.org.au.

Stage 1 - Review

Procurement structure

  • Study volumes, spend, staff, contracts and workflow.

Policy and Procedures

  • Review policy priorities.

Governance

  • Review delegations register, GIPA and reporting requirements.

Probity

  • Review all statements of business ethics, codes of conduct, declarations of interests and disclosures.

Contract Management

  • Assess rigour of contract registers.

Annual Procurement Plan

  • Determine current coverage of procurement plans.

Resources Library and Templates

  • Assess current models (RFT, EOI contracts T's and C's).

Current Contract Activity

  • Establish contract expiry, supplier names, priorities, dollar value, complexity. Determine transition barriers.

Due Diligence and Compliance

  • Assess the process for supplier financial viability.

Supplier Insurances

  • Confirm status of supplier insurance coverage as per their contract.

Property Contracts and Capital Assets

  • Establish status rigour of asset register and system.

ICT Contracts

  • Determine current systems, technology and number of suppliers/contracts.

Service Contracts

  • Establish contract expiry, supplier names, priorities, dollar value, complexity. Determine transition barriers.

Goods Contracts

  • Establish contract expiry, supplier names, priorities, dollar value, complexity. Determine transition barriers.

Stage 2 - Plan

Procurement structure

  • Plan roles & responsibilities, Organisational structures and thresholds.

Policy and Procedures

  • Draft new thresholds, controls, audits, policy omissions, local buy status.

Governance

  • Develop principles of procurement governance and integrate into corporate planning.

Probity

  • Identify gaps against requirements and best practice. Consider future legislation changes.

Contract Management

  • Archive, determine new content & category classification using NPN codes.

Annual Procurement Plan

  • Identify gaps against best practice.

Resources Library and Templates

  • Assess future requirements to standardise.

Current Contract Activity

  • Determine risk analysis and negotiation strategy on each priority contract.

Due Diligence and Compliance

  • Understand service provider offerings. Consider thresholds, risk profiles, product range and alert services.

Supplier Insurances

  • Create risk allocation framework at different insurance levels. Grade suppliers by spend and risk.

Property Contracts and Capital Assets

  • Identify gaps in asset profiling, maintenance, lease contracts and current service provider. Define procurement relationship to asset management.

ICT Contracts

  • Identify contract overlaps, expiries and telco service providers.

Service Contracts

  • Determine risk analysis and negotiation strategy on each priority contract.

Goods Contracts

  • Determine risk analysis and negotiation strategy on each priority contract.

Stage 3 - Mobilise

Procurement structure

  • Develop a plan for skills development and skills needed.

Policy and Procedures

  • Draft new policy, check probity.

Governance

  • Assess future legislative impact.

Probity

  • Develop new standards and roll out plan.

Contract Management

  • Roll out Contract Management.

Annual Procurement Plan

  • Enhance the plan for comprehensive future coverage with targets and KPI's.

Resources Library and Templates

  • Create new library, commence training.

Current Contract Activity

  • Prepare documentation and risk controls.

Due Diligence and Compliance

  • Refresh due diligence on new suppliers. Flag gaps.

Supplier Insurances

  • Prepare supplier and products data base for coverage and currency.

Property Contracts and Capital Assets

  • Determine solutions for each property asset.

ICT Contracts

  • Prepare ICT procurement plan, timetable for sourcing and development of business requirements.

Service Contracts

  • Prepare documentation and risk controls.

Goods Contracts

  • Prepare documentation and risk controls.

Stage 4 - Implement

Procurement structure

  • Recruit, set Position Descriptions, set Annual Procurement Plan.

Policy and Procedures

  • Roll out and communicate to council executives. Monitor.

Governance

  • Implement new process and run audit on controls.

Probity

  • Implement, conduct training, audit, monitor and review.

Contract Management

  • Develop future version and monitor.

Annual Procurement Plan

  • Launch and roll out. Monitor and review.

Resources Library and Templates

  • Launch and roll out. Run supplier sessions. Monitor and review.

Current Contract Activity

  • Meet with suppliers and execute new contracts. Monitor and review. Audit.

Due Diligence and Compliance

  • Imbed due diligence into supplier selection process. Incorporate due diligence into tenders and quotes.

Supplier Insurances

  • Implement contract changes through transition. Meet with non-compliant suppliers. Monitor and review ongoing compliance.

Property Contracts and Capital Assets

  • Execute new leases, service provider and divest excess properties.

ICT Contracts

  • Meet with suppliers and execute new contracts. Monitor and review. Audit.

Service Contracts

  • Meet with suppliers and execute new contracts. Monitor and review. Audit.

Goods Contracts

  • Meet with suppliers and execute new contracts. Monitor and review. Audit.