NSW agencies are squandering the advantages offered by e-procurement, says Auditor-General Peter Achterstraat, who has just released a report showing that only four out of 19 agencies surveyed fully comply with the NSW government’s e-procurement requirements.
“Electronic procurement offers significant savings to Government, but remains underutilised,” said Achterstraat in a statement. “I found the level of non-compliance concerning, particularly considering the NSW Procurement Reforms were effective since 2006, with intended changes announced as early as 2001.”
Premier’s Memorandum M2006-11, released in July 2006, launched reforms requiring all agencies with expenditure in excess of $400 million per annum to have electronic procurement systems in place by June 2007. Smartbuy was singled out as the default e-procurement system, and agencies would have to seek approval from the Government Chief Information Office (GCIO) to use an alternative system.
The Auditor General found that many agencies were using e-tendering systems other than Smartbuy, such as SAP and Oracle alternatives, some without GCIO approval.
Prior to report’s release, NSW Procurement, the office in charge of Smartbuy, had already embarked on a project to improve the unpopular system, releasing an invited RFT for the optimisation of the procure-to-pay system just days before the Auditor General’s published his findings. While the NSW Tender site lists the RFT, it provides no other details.
Information on the RFT is restricted to invited vendors, but an earlier EOI (October 2008) for the project revealed that NSW Procurement was looking to enhance Smartbuy by adding:
- Functionality which would allow suppliers to upload catalogue content directly to a centralised aggregator;
- Messaging functionality allowing users to interact directly with suppliers;
- Search and browse capability;
- Streamlined user processes; and
- Interconnectivity of systems, including those non-Smartbuy ERP systems used by several agencies.
In an unusual move, the Auditor General used his report to criticise the scope of proposed enhancements.
“A Smartbuy Optimisation project is currently underway to address some, but not all the remaining issues,” he said in his e-procurement report.
He went on to add, “there is potential for further improvements to functionality which may expand the range of agencies using the service. These include:
- hosting templates and business cards
- improving receipting functions
- user friendly website features and reduced complexity
- improved product information and links to supplier catalogues
- ensuring current and historical contract information is available and accurate
- improved search engine functionality
- order status enquiry features.“
Achterstraat expressed a concern that many of the finance systems used for procurement in NSW agencies failed to interface with NSW Procurement, meaning that they did not access the panel arrangements put in place by the State Contracts Control Board (SCCB) and their purchase data was not captured for use in deciding future procurement strategies.
In other instances, he found, agencies were using Smartbuy as a “look up service” for goods and services, and completing transactions manually.
He has recommended that NSW Procurement and the GCIO should work to ensure that all agencies have some sort of e-procurement system in operation, and that these systems provide access to SCCB contracts (such as the 2020 panel for IT Services), and interface with NSW Procurement and shared services providers to allow comprehensive data capture.
If these recommendations are acted upon by the government, the task of integrating all of the finance systems used by NSW agencies so that they all interface with the NSW Procurement system will almost certainly create opportunities for systems integrators working in NSW.
In his report Achterstraat acknowledges that one of the main reasons that the take-up rate of e-procurement had stalled is that government staff find the Smartbuy system unwieldy and difficult to use, and some find that they can source goods for cheaper elsewhere.
“Some agencies reported that they pursued manual purchasing because they were able to negotiate a price lower that the SCCB price listed in Smartbuy. This becomes a self-perpetuating problem because the supply fee is lost, the manual purchase is not captured in the system and the information is not available when the contract is renegotiated,” said the report.
This issues is likely to relate to the SCCB’s ‘best price’ clause, contained in version two of the Procure IT contracting framework, which remains in place until it will be replaced by Version 3 of Procure IT when it comes into operation on 1 June 2011. The clause obliges vendors to match their best ever price when trading with the government.
As Intermedium reported recently, this unenforceable rule has resulted in less discounting rather than more, and as a result will be dropped from the revised edition Procure IT which will be publically released on March 1, prior to its June adoption.