The Procurement Reform Toolkit

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The Procurement Reform Toolkit

• An Overview
• November 2005

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Procurement Reform Toolkit is

• a collection of resource materials
• constructed around eight smarter buying
  principles
• recommends various strategies and techniques that
  agencies can use to
• implement an on-going program of procurement
  reform
• identify potential costsaving opportunities

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Procurement Reform Toolkit Contains

• Introduction
• Toolkit Overview
• 8 Principles of Smarter Buying
• Reform Strategies
• Spend Analysis Methodology
• Overview
• User Guide
• Agency Forward Procurement Planning
• Buyer Awareness
• Self Assessment Template

• Fact Sheets
• Buying What You Need
• Optimising Use of CUAs
• Standardisation
• Minimising Piecemeal Buying
• Consistent Policies Processes
• Contract Management Practices

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Self Assessment Template

• Purpose
• A tool to assist agencies assess and monitor
  their progress in implementing reform strategies
  and achieving savings targets
• Features
• structured around the eight smarter buying
  principles
• poses a series of questions under each principle
• collectively, the questions provide agencies
  with
• an indication of areas requiring attention
• suggestions on where to look for savings
• a means of recording progress and achievements

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Procurement Reform Toolkit
Overview
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Reform Strategies/Guidelines

• There are three inter-related strategies that
  are central to an agencys efforts to reform
  its procurement practices and achieve genuine
  savings
• Spend Analysis
• Procurement Planning
• Buyer Awareness
• These form the basis of the Toolkit logo

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Reform Strategies Spend Analysis

• Analyse past procurement and gain a detailed
  picture of the agencys spend profile so as to
  identify savings opportunities and areas
  requiring process improvement
• For example, research indicates that 80 (by
  value) of most agencies purchasing is conducted
  with less than 20 of their total suppliers list.
  Focus on this group to find significant contract
  opportunities and look to the remaining 80 of
  suppliers to find efficiency improvements and
  reduced piecemeal buying

Total Purchasing
80 of purchasingwith 20 of suppliers Look for
contract opportunities
20 of purchasingwith 80 of suppliers Look
forefficiency improvements
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Reform Strategies Procurement Planning

• Analyse future procurement (at the branch or cost
  centre level) so as to adopt a better planned,
  coordinated and aggregated approach to intended
  future procurement. This planning should extend
  across the entire agency and potentially include
  other agencies with similar contracting
  intentions.

Many Purchasers, Many Suppliers
Many Purchasers, One Supplier
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Reform Strategies Buyer Awareness

• Educate agency staff about approved procurement
  policies, standards and processes as well as how
  to implement procurement plans and actions
  stemming from the Spend Analysis and Procurement
  Planning

DTF Training Sessions Seminars
Buyer Awareness
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Continual Cycle

• Procurement Reform is not a once-off exercise
  but rather a continual rotation of analysis,
  planning and awareness and benchmarking your
  agencys progress with the Self Assessment
  Template

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Procurement Reform Steering Committee

• Agencies are strongly advised to establish a
  Procurement Reform Steering Committee to oversee
  the implementation of reform initiatives and to
  monitor progress against agreed milestones and
  targets. A member of the Corporate Executive or
  Senior Officer should be appointed to lead this
  group.
• It is critical that the agencys senior
  management champion the reform process and
  actively reinforce the importance of a
  consistent, well coordinated and strategic
  approach to procurement.

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Where to From Here?

• In order to implement an effective and
  comprehensive Procurement Reform program,
  agencies should -
• Ensure their program covers all procurement
  goods and services, corporate and operational,
  CUAs and agency specific contracts
• Form a steering or coordination group with
  teeth that regularly reports progress to the
  Corporate Executive
• Undertake a detailed analysis of their spend
  profile and develop an action plan to address
  findings
• Proactively educate agency buyers, mandate
  desired buying behaviours in key areas of
  procurement, and acknowledge reform achievements
• Develop a whole of agency forward procurement
  plan
• Regularly monitor performance against savings and
  efficiency targets use the Self Assessment
  Template to help with this

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8 Principles of Smarter Buying
8 Smarter Buying Principles
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8 Principles
This toolkit is built around 8 guiding principles
that have been identified as being central to a
well coordinated reform strategy  

• Analyse spend profile

• Procurement planning

• Policies and processes

• Optimise the use of CUAs

• Aggregate purchasing

• Standardise the range of items

• Staff awareness

• Contract management practices

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8 Principles -1. Analyse Spend Profile

• 1. Analyse spend profile and patterns, compare
  these to sector best practice, and look for
  savings opportunities
• Apply procurement analysis techniques to
  financial (FMIS) data
• Make use of DTFs Procurement Data Warehouse
  initiative
• Use DTF Buying Behaviour Reports to assess CUA
  spend
• Seek assistance from your DTF Cluster Manager

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8 Principles -2. Procurement Planning

• 2. Implement agency annual forward procurement
  planning (AFPP)
• For in-scope agencies, complete the 2005-06 AFPP
  return covering expenditure above the tender
  threshold of 100,000 potential for both
  in-house and multi-agency aggregation
• Apply the principles and tools of AFPP to a wider
  range of purchasing than that captured by the
  official return

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8 Principles -3. Policies and Processes

• 3. Consistently apply whole-of-government
  policies, processes and documentation
• Ensure existing purchasing policies reflect the
  new SSC thresholds e.g. no need for multiple
  quotations for goods or services valued under
  1,000
• Use the standardised sector procurement templates
  available from DTF
• Adopt the new General Conditions of Contract
  (GCoC) documentation for all non-ITT agency
  contracts
• Use waivers available to CEOs up to 100k
• A new standard request template for ICT goods
  contracting contracting will be available in
  early 2006

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8 Principles -4. Optimise the Use of CUAs

• 4. Optimise the use of CUAs and agency
  specific contracts
• Minimise leakage from mandatory CUAs and Agency
  Specific Contracts
• Use standing contracts for as much spend as
  possible
• Internally mandate and educate staff on the use
  of these contracts
• Promote easy access to CUA information via
  intranet links
• Utilise the new Government Contract Directory
  (CUA Guide) available as an e-Book in early 2006

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8 Principles -5. Aggregate Purchasing

• 5. Minimise piecemeal buying and aggregate
  purchasing wherever possible
• Move as much spend as possible under the scope of
  standing contracts
• Look for in-house and multi-agency aggregation
  opportunities with higher value purchases
• Consolidate more regular purchases into larger,
  less frequent orders
• Use Purchasing Cards to pay a single monthly
  account rather than numerous single invoices

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8 Principles -6. Standardise the Range of Items

• 6. Standardise the range of items available for
  purchase and apply demand management practices
• Adopt agency-wide standards
• Limit the range of choices or options available
  to staff for purchase
• Consider the total cost of ownership when
  deciding on product options
• Only buy what is needed to do the job
  particularly when purchasing products with
  numerous options or graduated modules

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8 Principles -7. Staff Awareness

• 7. Invest in raising staff awareness of better
  buying principles and behaviours
• Undertake training on internal procurement
  policies and procedures make use of DTF agency
  based Procurement Practitioners
• Look for external training and awareness
  opportunities
• DTF run programs such as Better Buying Sessions
  or Procuring Professional Advisory Services
• SSC information sessions
• Encourage relevant staff to seek higher
  qualifications in procurement

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8 Principles -8. Contract Management Practices

• 8. Tighten contract management practices,
  particularly with service contracts
• Better scoping and performance measurement of
  service contracts
• Review procedures for contract extensions and
  variations
• Participation in available training courses
  focussing on service contracting
• A new whole-of-government Contract Development
  and Management System will be launched in mid
  2006 to replace Gem Contracting and various
  agency systems

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Further Information
If you have any queries with regard to the
Procurement Reform Toolkit, please either visit
the website at www.dtf.wa.gov.au/procurement or
send an email to OGP_at_dtf.wa.gov.au