 One of the things that Sue talked about is our relationship with you as community sector organisations and how we very frequently fund you to deliver services on our behalf and that might apply to many if not all of the organisations here today. We're also conscious that that process, the process by which funding that flows through either our own or from the Commonwealth flows through to purchase services delivered by you was considered to be one of the blackest of the blackest boxes that exists in the government. So we thought we needed to do something about that one as well and that's why we invited Dave Persa to talk along. As I said at the start Dave Persa is the Director of Goods and Services Procurement from the Public Works Directorate, Commerce and Works Directorate and he's going to just open the lid of that really dark box, shine a torch in for a little bit so that you can see what's inside. Following that I think we'll just slam it shut again because I think it's best to be just a bit dark in there. Okay, thank you Dave. Thanks Robert. Hi everyone. I think one of the toughest challenges you could put to a debating team is to ask them to argue in the affirmative why procurement is sexy. I know this is true because I see the look on people's faces whenever they ask me what I do for a living. But while I don't really have an expectation that procurement is ever going to be sexy, it does have a problem with its image and how it's been characterised. I think government procurement in particular has tended to be viewed as risk averse process driven closed and I think that's really stemmed from a perspective that it's really looked at the risk in procurement on the basis of probity. So what can go wrong is embarrassment. What can go wrong is that a tenor evaluation outcome is contested and there's a liability that arises from that. Not really a look at what is the opportunity lost when a procurement is not done well. What's the loss to the community when we pay out over the odds for things when we haven't really managed that relationship well. Fortunately, I think we're starting to shift there and by necessity, perhaps with money running out, reduction in revenue, that's really driving the focus the other way. So it's really a time for procurement to reform and move on. And we need to do better and we need to build better relationships with different parts of government, but most particularly with our different providers. Next please. So first of all, I was just going to briefly, it might be a little bit difficult to see down the back, but just about where my organisation sits, it's in the central arm of government, so the newly amalgamated Chief Minister, Treasury and Economic Directorate. What we do is that we do procure and manage a number of whole of government arrangements for services such as travel, flights, utilities, banking, that sort of nature, but the vast array of procurements are actually managed by the different directorates. So for you, generally community services, they conduct the evaluation, they own the budget and they'll be the contract manager and we provide an advisory sort of service to them to facilitate the process. About a billion dollars of the four billion dollars of the ACT budget is spent on goods and services each year. About a third of that, or 350 million, is really internal payments, payments grants, payments to individuals, to corporate entities, those sorts of things, or government corporate entities, and 650 million goes out to our suppliers, so it's not insignificant. So I belong to the procurement capital works organisation that used to be called Shared Services Procurement and before that was called Procurement Solutions, which might be familiar to you. Next please. Before I sort of got into some of the sort of administrative arrangements around procurement, what I did want to sort of discuss was what I saw as some of the sort of the biggest issues that create angst around procurement. And I have sort of titled it Conundrums and that's perhaps not really the right word. But I think in discussing them it might give you a bit of a sense of the mentality or the issues within government around procurement and the things that we really need to work on. The first one, which is sort of the procurement dilemma, the probity versus open communication, I sort of touched on. And it's really that sort of perspective and balance. You know, I think the way things tend to operate at the moment is a business area works to develop its specification or its requirement about what it needs. It sort of does that in isolation, then it sends it out openly to market. There's an opportunity for you to have a look at that document only at that point. You know, you might be able to ask a few clarification questions through a formal process. You'll get a fairly sort of stiff and limited response. Tenders come in, our response has come in, they're evaluated again in a very sort of closed, isolated process. And quite often in looking at those, we're sort of sitting there scratching their heads, sort of going, well, this isn't quite what we want at all. Jesus, it's a lot more money than we thought. Jesus, we would have done this differently if we'd sort of known. And, you know, it's that reducing the risk of procurement really is in making sure that you understand our need, that we've communicated that. Otherwise, you know, costs, other requirements get built into it. And it's really a sort of a loss for everyone. So that's a real sort of challenge that we need to try and manage and get the balance right. The process contracts, so for procurement people, the sort of the one case you do understand is this Hughes Aircraft case, which really enshrined the obligation that when we set out a tender process, that we have to follow the guidelines, follow the process that we set out in the evaluation. So we can't bring in other information that we didn't say we would into that assessment. And while I don't think any would argue that's not the right thing, it does really mean that if we get that process wrong, we're sort of stuck. And I think sometimes, you know, where that is sort of the outcome and we can't really change it. On the supplier side, and I think this is probably where the biggest sort of misconception happens is often there's a view that I'm already doing work for the government, they know me, and that's going to somehow be pulled into it. Each tender is evaluated by itself. So only the information that's provided in response to the questions asked is assessed. And this particularly arises when we're renewing a service, so someone that's already a provider, when we're establishing panel contracts or get our rate suppliers coming in saying, how can these turkeys get on this panel? We do this great job already, just ask these guys. And they've just assumed we know that. Whereas in fact, there is an evaluation team that receives all the documents, sits down, looks at the response and scores it on that basis. And you know, despite there might be that other merit there, you know, you really need to sort of keep piece of advice is when you're responding to these requests from government, look at them in isolation, look at the questions and make sure you respond sort of thoroughly to those. And we're locked into that because of the huge... Yes, yes, that's right. So, you know, we have to evaluate what we said we're going to evaluate from the start. And there is a bit of a job for us to, you know, improve the way we do that, so that we should be collecting, you know, performance information. So people who are doing a good job are getting rewarded next time. But that's something I'll probably touch on again as well. Next, please. The overarching legislation around procurement is the Government Procurement Act. It defines what procurement is, the Valley for Money principle, which is sort of the core driver for procurement decisions. I'll touch on that. And also, you might be familiar with the requirement to publish contracts. So all notifiable contracts, broadly contracts over 25,000 must within 21 days of contract execution be put up on our website. Within that, and that's the contract in entirety, there is provision for confidential text to be exempted or excluded, but things such as the value, the broad scope, don't fall within that exemption. But sort of specific items around methodologies or commercial rates and so on can be removed. So those contracts are always up there and publicly accessible. Next, please. So, value for money. That is, as it says, what must be pursued or evaluated in each assessment. And for those who can't see from down the back, the four criteria that are assessed in that are probian ethical behaviour, risk management, open and effective competition and optimising whole of life costs. So it isn't just the lowest price. In practice I think we need to be more mature in the way we assess some of those, particularly the last one. Optimising whole of life costs. That's really where considerations, social benefits, sustainability, those sorts of things really need to be considered and where we need to sort of mature in our evaluations. But that's in each assessment, that's what the delegate must sign off on to say that this outcome is the best value for money, considering those four points. Next, please. So how does the process work? Well, as I said, my organisation, the central organisation, facilitates sort of centre leads procurement. We support the procurement process, the development of documentation, but that evaluation is undertaken by the business area that manages the work. An isolation team is established, generally just from that business area. Occasionally they'll be subject matter experts that will be brought into advice on technical matters. And they will just sit in isolation, reviewing the tender submissions that come in and only the information that we've asked for and the responses that have replied to those questions. Generally there are a series of questions around sort of technical criteria and they tend to be weighted. So they'll ask things around experience, capability, capacity, personnel, those sorts of things. They'll do an assessment, they'll give you a score, each of the members, they'll come to a consensus score on each of those, and that'll develop your total weighted technical score. So you'll have an assessment for that. And then you'll have price, which will be assessed separately. Occasionally that will get rolled into the weighted evaluation, but only really for items which are fairly simple, fairly simple sort of items that have a high price component. So we're talking about something like pencils or something like that, there's not a lot of differentiation in the nature of the product, price is really key. So as for community services it would be separate and then the other thing that we pull into there is risk and risk gets assessed. And so those items really get pulled together and form the basis of the value for money decision. There's been times previously where sort of formulas have tried to be applied. You get the weighted technical assessment and then you get your price and you sort of roll one over the other. We really try and sort of move away from that because they tend to be misleading. One of the reasons we have risk in there is that if someone puts in scores fairly poorly on their capability and capacity, but then has a very low price, if you just have a formula, you can get an outcome. They're the highest ranked and often perhaps the lowest prices because they don't understand the work and they haven't scoped it properly and that is apparent in the capacity but you sort of fix yourself into a process. So it is a subjective test. You've got these elements, the weighted criterion, price and risk and that really needs to be pulled together into a narrative arguing why is this outcome the best value for money. Supporting the procurement act is the government regulation. And sort of the important elements of that are that it stipulates the thresholds for procurement and how they are to be conducted. And that sort of breaks, there's sort of two thresholds that really breaks into three levels of procurement. The first is, procurement's for under 25,000. So the only requirement is that one oral quote is sought. So for any work under 25,000, the business officer is only required to seek that quote, record that and go from there. The next threshold is between 25,000 and 200,000. The requirement there is to seek three written quotes. So you generally receive that through an email, just might just be an email, just asking you with RFQ documentation. And we've sort of got a simplified system now so that procurements under that level don't come through my organisation. They come directly to you from the business area and the business area, which will attach a sort of simplified contract and basic RFQ information. The third threshold is above 200,000 and above that threshold, we are required to go to open tender. And so that will be advertised publicly. What's also associated or stipulated or provided for in the regulation is the capacity for an exemption from these thresholds. So you may have heard of restricted tenders or single select or select tenders. So that exemption provides for the director general, for any agency, to exempt from these thresholds where they swear the, and broadly is where the benefit of the exemption outweighs the compliance. And sorts of examples of that was when there's a true urgency to really get a service in where there's really only one or two providers rarely sort of makes common sense that an open tender really isn't going to be productive or beneficial. But all those exemptions or single select restricted tenders are reported in the annual report. Next, please. Are you able to click on that link? Okay, so this is our external website. It's still tied to the shared services procurement, so it was only really on sort of the 7th of July that we shifted over to procurement and capital works. What you can access through here is that contracts register that I spoke about. So all the, you can draw through all the contracts that have been in place. You can actually do that. So there's really sort of a search function there that you can step through. It's a set to find out whatever contracts have been let. Just go back to the other screen. You can... Oops. Can we go back to the website? Sorry. You can subscribe for tender notifications. So just sign up there and you'll be emailed out when tenders are being released to get a list of what's coming out. So you can always be aware of what's coming. And also, there's also a tab there which has good and services procurement forecast. At this stage, that only tells you really that the near-term future of procurements that are about to be released. So they're ones that have sort of reached my organisation we're working on and probably give you a sort of one or two or perhaps three-month advance warning that something's coming to market. So they're sort of some of the useful items you can find from the website that's there now. Next, please. So where to from here and some of the improvements. The first thing is e-tendering. So finally, we'll be doing away with the hard copy tender box. You'll be able to download your tender documentation. You'll be able to upload and respond to tenders electronically. Save all that hassle of printing out and running things over and popping in tender boxes. So that will be in for the next financial year. We'd hopefully, there's a tender process going on the moment for that service. Hopefully, we can get it started earlier than that as well. And that should sort of streamline the process and finally do away with the sort of the relic boxes that we have. The other thing is annual procurement plans which again isn't particularly novel. Quite common across other jurisdictions in the Commonwealth which is putting out a 12-month forecast of all the procurements that we foresee going forward. And so there's been general agreement that we will issue that for government and hopefully we'll have something in place by the end of this calendar year. Next please. Further on from that, really there are items that we're looking to really re-address that issue of communication. There's really a push for us to optimise the spend. For that $650 million of spend, if we do it, if we improve by a fraction, so much money that we can save, redirect, we can do business better. And it's really looking at utilisation of technology, changing our approaches so we can have those conversations about what the need is and how we respond. So yeah, e-procurement tools are things that we can do to support that. Things such as social media enable us to do that sort of broadcast where there's that concern about when we enter a tender process, we can't say anything because if one supplier finds out and another doesn't, then they're disadvantaged. The sort of broadcast comms that we can utilise to keep that sort of conversation going and increase the understanding and reduce the sort of level of risk. Better supplier and marketing engagement. And these are some of the things that we're sort of touching on, particularly in ICT, it's really moved to say don't come to market with this solution. Come to market with the problem and allow us to tell you what the solution is. And that's really dependent on us having sort of those pre-engagement discussions, talking about it before we release a tender, trying to get that sort of understanding so we can have that communication about what options exist so we can best shape and we can understand what capability is out there to serve those needs. And also measuring and maintaining sort of performance information. And one of the frustrating things is that you respond to tenders and requests and so on with the same information every single time and there hasn't been that capacity for us to hold that and reuse it. And I think in a simple sense we're not far away from through sort of any tendering system to hold core information about organisations but then stepping on from there it's issues about performance. So if people are doing a good job in the current work that we're doing that we're collecting that information we reutilise that. So we're trying to minimise, streamline the process each time we go to market, reduce the cost of it for everyone, the burden of responding to these things reducing the process as much as we can so we can spend the money really where it's needed. So that's really, I think the sort of the task for me is to really focus on how we move this reform forward how we improve the communication we make sort of life simpler for everyone and get the best value for money. So for that I've only got some time for some questions. Thank you and just before you ask questions of Dave I'll just let you know that we are working with Dave and with others on the procurement system so recent changes that you will have seen so the translation of a number of service funding agreements to recurrent grants came out of work that Dave and a working group were involved in. Other things that are relevant for you as well is that the communication system that many of you will have signed up for is currently being reviewed and we're looking at how that can be made streamlined and as effective as possible and there's a number of other things that are going on to again to streamline the process. So I'd like to support the comments that Dave made and that we do take procurement very seriously and recognise the considerable impulse that it has on organisations. Exactly. Now, questions for Dave? Jenny. Thank you. I'm Jenny Kitchen from MDQ. I just wanted to ask about the length of time that tenders are out for and where that decision around that length of time comes from. If I think about the social compact between government and the community that's a minimum of six weeks consultation time and I've always thought that that could be a similar guide for procurement but invariably there will be tenders out in about four weeks if we're like a five and I guess for me the quality of what then comes to you is compromised and particularly if there are opportunities or requests for agencies to partner or form consortiums there's quite a lot of complaints to be involved in so I'm interested in who makes the decision around that. Is it the line agency that's doing the tender process? Is it from your area and is there a way extending that making that long as a general principal because I know within government you've taken many, many months to get to the point of putting the tender out and it just seems a real pity to then rush that last bit from us. Yes, so there's no time that tenders need to be released. There is a minimum time that's really set through free trade agreements and generally above about $600,000 it needs to be out for 30 days but the decision really to constrain it or limit the time is with the business area but there's no impediment for them to make that time out if not if it need to be so that's a really decision and often it's driven from a time frame because the service is running out generally we're asked to minimise that time because we're trying to get a new service in place and I think the real difficulty we often face is conversations just start too late people are busy working away providing a service and it's oh hell this contract is going to run out in six months we've got to start the process and it's not understanding that generally it's a six month process but the real benefit is in that conversation early getting understanding, seeing what the options are and that really reduces that sort of risk not in that three or four months okay let's again sort of define the requirement get it out, we'll give them 30 days we'll have two weeks to evaluate it and then we'll get a contract in place and we'll be okay it's that sort of shift and we've got to do it better so there's no yes it's really with the business area in terms of how long but part of the idea with the procurement forecast trying to sort of get a better mechanism for discussing things earlier is that we get the whole process moving earlier so we can have that discussion and this really needs to be out for this length of time so just to build on Dave's answer there, the procurement forecast for community services directorate is in the process of being put together now and as of a couple of months ago I acquired responsibility for that so I'm happy to talk to anyone about it but again in support of what Dave's saying it's certainly my view that the conversations about what we are trying to do should begin well before the time frame to actually put in the submission so I'll give you an example that right now there's a new out of home care strategy being developed I don't know for certain but I'm sure we've got providers for out of home care here now the it'll be quite some time before those that new strategy goes out for tender but we've already started working with the organisations that are involved now and with other organisations and other interested stakeholders to talk about what we're trying to achieve talk about the outcomes that we want out of the system at a stage where we haven't reached that probity line that Dave was talking about which gives us room to explore exactly what we're trying to achieve, how it might be done what are the indicators out there can they be collected and so on so that we are a better informed purchaser of the service and the organisations who then make a decision as they will or won't tender for it are better informed about what is trying to be achieved in a policy sense and we think doing that will give us a better outcome overall. Now on our procurement forecast there's two or three other major procurements coming up for 2015 and 16 and we're looking at again for those major procurements how we can get in early and start that conversation we accept of course that they might be the smaller ones where you'll get an email because you've all written down that you can get an electronic notification of procurements and you might get the procurement in 30 days there might still be some of those but certainly for the bigger ones we're looking at how we can stretch that conversation out more questions John, Richard from ANU this a question for both of you in a sense in some human services markets I think there's a perception part of community sector organisations and the preparation of tenders is something of a dark art and perhaps they don't have quite the grasp of what would like to happen in that space of a mini industry has grown up with consultants providing services to community sector organisations to assist them to respond to tenders and this of course means an additional impulse and a level financial risk for those organisations but I wonder whether it also has some implications for the purchaser in terms of what it might suggest about assurance in relation to the claims made by the tenderer being filtered through a consultant who's trying to guess what the right answer might be Yeah, I suppose one of the things we're trying to shift away from is a sort of a formulaic approach that in each instance we go through the same process we prepare tenders in the same way we really need to and I think that sort of breathes that I know how the process works I can tell you how to do it and shape it in each instance as to what sort of best fits and it takes more work but you're going to get a much better outcome I think the tenderer is really only one part also of the selection process you know there's also the contract negotiation there's contract management and all those and there's a pretty interesting consultation all those sort of mechanisms are there to try and select the most capable entity it's really shaping all those processes not just the tenders the same sort of document we'll just shift around a few criteria so how do we manage that process end to wind to get the best outcome and I think by having that sort of conversation the early start and shaping it in that way you're in the best position to respond to it you don't really need someone else to come tell you how the process works that's really I think the shift that we're trying to sort of effect just to build on Dave's answer for myself in procurements that I'm involved in I like to first of all ask questions in the procurement that will get behind the sorts of things that a professional tender writer will write and yes it is important to be good at writing tenders and yes it is easier if they are well written and get to the point but the things I'm looking for and I'll put questions in procurement processes if necessary are designed to get underneath that the other thing is that a procurement process doesn't just have to rely on the piece of paper so for example at the introductory marks at the start one of the earlier community sector development programs was the Governance and Financial Management Initiative which was provided by a panel of consultants in procuring that panel of consultants the thing that we took most account of was what was the most important thing in that and we decided that it was the individual capacity of the people who would be providing the consultancy service so you can read 30 pages this is an excellent organization and it does great stuff and it's got offices all around the world but what we wanted to see was to have the individuals who are going to be delivering that service sitting in front of us so that we could question them and see what they were like and did we think they had the ability as individuals to deliver that service so I think the important part for the procuring organization is not to just assume that it's a bit of paper yes there is a bit of paper but it doesn't just have to be that you can include demonstrations you can include other things that will get you what you're looking for and as Dave said then there's a contract negotiation and in my own personal experience not in CSD but in another organization then I've been in a situation where we've had to say to a preferred tenderer sorry we're not going to go ahead because it turns out that you can't do the things that you said you do so we'll stop that now thank you very much and try with someone else so there's it's I believe anyway the onus is on us as the procurer to get underneath the those sorts of professional bits of paper other question here could be a question for either of you Pigsmith from Code or ACT I was just interested in risk dimension what example at that time I think it's sort of in the example sort of a step through sorry yes the question was just about how risk was assessed as I mentioned in that tender process and can provide an example example of that it's really just bringing in you know I suppose in some respects it's a bit of a common sense assessment but in an example where you had a fairly low technical assessment and you've got a very low price you know a low price in itself it seems you know prides greater value it's really that inspection of what's the basis of that you know what's the true sort of capability sort of brings it really in that sort of moderation as to you know again to what the level of capacity is to really deliver the full service that you're expecting and it's a difficult question in a sense because it's very specific to whatever it is you're doing but as an example from a different field when I was doing IT procurement in the past then one of the things we would look at is for example thinking about risk is if we want to enter into a relationship with a provider then what is their development path for their technology and does it match where we want to go and if the two are going in different directions then that might be right for us now but it might not be in a couple of years or for example if there are multiple entities in the relationship then what mechanisms are in place to you know back up that relationship is it just a handshake or is it covered by a contract between those other two agencies you know things like that so it depends on what the situation is is if a provider is from another geographical location so they've responded excellently to their capability, they've got a good price but really what's their capacity to deliver locally that sort of thing that might get brought in international firms what's the ability to maintain information those sorts of things okay if there's no more questions