Signature Projects

Organisational Review

'Specialist Procurement Adviser' Procurement Review


THE ASSIGNMENT - Specialist Procurement Adviser

PSI was engaged to undertake a review of the procurement activities of a large multi-discipline Federal Government agency with procurement covering a wide spectrum including scientific and IT supplies, construction services, maintenance works, property management services, travel, and the purchase of stores and equipment. The assignment objectives were to:

  • Establish a long-term procurement strategy, including a plan covering aims and objectives, governance, and implementation activities. 
  • Investigate and recommend the establishment of national supplier arrangements and purchasing panels. 
  • Document and share experiences and findings, including reports, reusable documents and presentations, with other Commonwealth Agencies.

OUR SOLUTION AND THE OUTCOME

PSI advisers conducted a spend analysis to identify the priorities and opportunities for improvement of procurement strategies, followed by workshops designed to assess procurement expertise

  • The agency was assessed as not maximising its purchasing power, although leading procurement practice within the agency was identified.
  • A new procurement model was established to manage the consistent implementation of the revised procurement strategy and was characterised as 'a centralised system with decentralised access'.
  • The model was designed to be achieved via evolutionary rather that revolutionary change, building on existing strengths and utilising existing agency personnel where possible.
  •  The model would provide a range of procurement options to all staff across the agency; support the professionalisation of procurement; and improve corporate accountability and governance.
  • The model would improve management visibility of corporate expenditure; save money through efficiencies in the administration of procurement and improve the agency's relationship with suppliers and marketplace. 

In implementation the recommendations of PSI's report, the Agency achieved:

  • Improved management of the sourcing environment through better organisational arrangements that reflected a centralised expert procurement capability with decentralised access.
  • Better value-for-money in procurement through the use of standardised procedures and processes across the agency and the introduction of measures to professionalise procurement.
  • Reduced procurement overheads through a focus on outcomes rather than inputs.
  • Improved visibility of procurement management information and spend data for executive management supporting the communication and the implementation of corporate procurement strategies across the agency.

LEGACY VALUE OF PSI

  • The procurement process review was a successful strategy to reduce costs and improve the delivered value of goods and services.
  • PSI provided a framework for a comprehensive review of an organisation's current procurement process and assisted in identifying areas for improvement, and the execution of the right procurement strategies in order to significantly reduce cost ,
  • The findings of the procurement review included purchasing and acquisition strategies, logistics, tendering practices, contract management, and improved strategic relationships with related agencies.
  • PSI successfully brought together all procurement - related issues by adopting a procurement lifecycle model as the framework for developing and implementing procurement policies and processes.

Procurement and Grants Management

'Specialist Procurement Adviser' Hughes Case


THE ASSIGNMENT - Specialist Procurement Adviser

 

PSI provided expert procurement and evaluation advice to the complainant in the benchmark tendering Federal Court case - Hughes Aircraft Systems International v Air Services Australia (Hughes) - acquisition of an Air Traffic Control System:

  • The tender process was assessed to determine the intention of the evaluation methodology, in the light of the expenditure of public funds.
  • The decisions taken by Air Services Australia (CAA) were reviewed for compliance, consistency and fairness.
  • Expert analysis was provided to the Federal Court in support of the claim of unfairness in the conduct of the procurement.
  • A forensic audit was conducted of selected procurement materials to define and provide an opinion on the decision-trial and the defensibility of decisions.

OUR SOLUTION AND THE OUTCOME

  • Specialist PSI advisers reviewed the evaluation methodology of the procurement, and the intention of the supporting documentation. 
  • A report was provided to the complainant, the findings of which contributed to the evidence provided to the Federal Court.
  • Actions in the tender process by Air Services Australia were considered to create a preliminary and binding contract.
  • Certain unwritten terms were implied in the contract, in that CAA had an obligation to deal fairly with all tenderers, and to conduct the tender evaluation fairly.
  • CAA breached the contract in Hughes in that it failed to evaluate the tenders in accordance with the evaluation criteria it had set out in its documentation; and breached confidentiality provision.
  • As a result of CAA's conduct, Hughes claimed to have suffered loss and damage set out in the RFT. www.ags.gov.au/publications/agspubs/legalpubs/legalbriefings/br33.htm

LEGACY VALUE OF PSI

  • Complicated tenders require consideration of the establishment of contractual obligations.
  • Tenderers must be treated fairly from the outset of the procurement process. Procurers must adhere to proper procedures, conduct evaluations in accordance with the evaluation criteria, and conduct tender-type process with care and thoroughness.
  • Even when there is no written contract, formal notice of acceptance, nor award of the tender, a preliminary contract can be created if certain representations regarding the award of a tender have been made to the tenderer, or the tenderer has been encouraged to partly perform the contract in anticipation of its award.
  • Court found that during the tender process, the CAA had contravened section 52 (s.52) of the Trade Practices Act 1974, by engaging in conduct that was misleading and deceptive.
  • The Commonwealth developed guidelines for its Departments and agencies for the conduct of procurements involving public funds, addressing representations, conduct, disclosure, and debriefing. www.finance.gov.au/pulications/fmg-series/procurement-guidelines/index.html.

 


 

 

 

 

PSI Asia Pacific - Advisers to Government