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LGAP’s Initiatives to Support Procurement in Local Government. Mary-Alice Paton LGA Procurement. Procurement is a Strategic Activity Section 8(h) Local Government Act, 1999 ‘fairly, efficiently, effectively’. Procurement in Local Government – the Current Landscape PMMS Report

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lgap s initiatives to support procurement in local government

LGAP’s Initiatives to Support Procurementin Local Government

Mary-Alice Paton

LGA Procurement

Procurement is a Strategic Activity

Section 8(h) Local Government Act, 1999

‘fairly, efficiently, effectively’


Procurement in Local Government – the Current Landscape

PMMS Report

Section 49 has been beefed up, but essentially the same

Introduction of the ICAC

Procurement landscape still about fair, efficient and effective use of resources

Well recognized that procurement is a vital strategic tool to reduce costs and increase performance outcomes


Procurement in Local Government – the Commercial Environment and Community Expectations

Sustainability issues

Limited resources and increasing community expectations for service delivery

Councils have huge infrastructure and asset management challenges

Total rates growth has lagged behind CPI and revenue growth of other spheres of government


Procurement in Local Government – the Commercial Environment and Community Expectations

Australian economy faces challenges, South Australian economy struggling

Greater prescription and oversight of procurement activities likely – amendments to section 49, introduction of the ICAC

Plenty of scope within the current market and regulatory environment to achieve more with less

Remember that uncertainty drives cost, but certainty always drives competition


When We Distil the Objective…

What we are talking about is ensuring that the required deliverables are provided at the agreed time, for the agreed price at the agreed standard, while achieving identified outcomes and value, while all the time adhering to standards of good governance and appropriate standards of probity


PMMS Report

PMMS Report has validated what all of you will already know to be the case:

Procurement is a critical strategic tool for Local Government

Improvements in procurement practice will directly correlate to better community outcomes

Councils understand the importance of improving their procurement function, are interested in doing so and have positive drive to do so

Some Councils need leadership in this regard

There is benefit in sector wide approaches to improvements in procurement practice

There are things we can do which naturally drive benefits


The Good News…..

The LGA is committed to assisting Councils to achieve best procurement practice

What does this mean?

That the LGA has made a significant investment in this key area of Councils’ operations

The sector now has best practice tools to support its procurement function


LGA’s Objectives for 2012 The Year of Procurement

Providing the sector with appropriate tools to ensure that their procurement processes:

Achieve value for money, while delivering the desired outcome within acceptable risk parameters

Are accountable, transparent and robust

Instil supplier confidence in Councils’ procurement operations


Observations From the PMMS Report

Councils need to understand their spend (ie do a spend analysis and act on it)

Opportunities to achieve sustained improvements will come from a sector wide approach

Procurement practitioners need industry standard tools

Targeted training program required

Thorough planning and preparation of the procurement process and documentation a critical success factor

Contract management essential

Supplier relationship issues


Strategies for Excellence

Spend analysis and market understanding

Analyse spend and regularly review

Analyse market and regularly review

Consolidate spend to get best value

Drive efficiencies in procurement through a targeted and strategic approach to the market


Strategies for Excellence (cont)

Set the right framework – act on the spend analysis

Review procurement policy, procedures and systems

Refine as necessary to suit your needs within appropriate governance regime

Include flexibility with checks and balances

Ensure that officers are using and following the policy – documenting and auditing at key decision points

Lead by example – culture of excellence


Strategies for Excellence (cont)

Value for money achieved by flexibility with rigour

Be flexible as appropriate to respond to the commercial environment and drive value for money

Seek a commercial outcome

Follow policy, procedures and systems but exercise permitted flexibility as appropriate

Be accountable and transparent: document decisions and provide reasons for them throughout the procurement cycle


Strategies for Excellence (cont)


Appropriately skilled staff

Have a structure for negotiations

Establish Council’s baseline position prior to commencing

Must be conducted ethically and so that all participants are treated equally

During negotiations avoid any suggestions that the preferred tenderer will absolutely be selected as the contractor


Strategies for Excellence (cont)

Maximise the value achieved through every dollar spent


Understand contribution procurement needs to make the relevant outcome

Documentation of outcomes and reasons for relevant decisions

Equality of opportunity for all participants

Compare ‘apples with apples’


Strategies for Excellence (cont)

Robust contract management

Identify and manage risks

Identify and assign roles and responsibilities

Identify and access the skills required


Relationship issues

Contract start up


Monitor and manage performance




Access the LGAP Tools and Procurement Support

Baseline procurement policies and documents to cover common procurement scenarios


Comprehensive training program

Advisory service

Invest in adapting these tools to suit your organisation


Access the LGAP Tools and Procurement Support (cont)

Use of these tools drives better confidence and understanding in the commercial sector

Drive industry access to templates to help minimise costs

Suppliers will do better when they understand the context and ‘rules’ subject to which they are bidding

Uncertainty drives cost, certainty drives competition


Impact of the ICAC

Critical questions are what does it mean and what does it mean for me?

Appointment of Independent Commissioner Against Corruption

Office of Public Integrity

OPI to receive complaints, ICAC to investigate complaints

‘Serious or systemic corruption’


Probity, Accountability and Transparency

The sector must ensure that its procurement processes are transparent

Adherence to Codes of Conduct

Generally speaking, a well planned, conducted and documented procurement is more likely to withstand external scrutiny or criticism and provide substantiation of a particular decision

Adherence to highest standards of probity essential


Accountability and Transparency are Related Concepts

Accountability means being responsible for decisions and actions and for resulting outcomes

Transparency means being able to give reasons for the decisions they make

Documentation is critical to accountability and transparency

Identification of and acting on conflicts of interest


Managing Corruption Risks

Policies and procedures to regulate commercial activities

Sanctions for breach

Regular review of policy

Reference to commercial activities in Code of Conduct

Staff awareness through training

Including commercial activities in the LGA’s internal audit process and corruption risk management process



Thanks for your participation!