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NSW Government to dissolve SCCB in procurement shake-up

by Paris Cowan •
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The NSW Government is asking suppliers and business partners to share their experiences of selling into the State’s public sector, as part of a public procurement consultation launched on 25 January.

While the Government has already decided to go ahead with the scrapping of the State Contracts Control Board (SCCB), according to the Department of Finance and Services (DFS), a raft of other changes have also been floated for feedback, including the transferral of responsibility for State Contracts (otherwise known as whole-of-government panels) to the highest spending department in each category of procurement.

In fact, the very future of centralised State Contracts has been opened up for debate in the Discussion Paper, with the document acknowledging that the panel model can be inflexible and that some agencies can negotiate better prices by avoiding panel agreements altogether.

NSW Government data shows that in 2010-11 it spent $12.7 billion on goods and services, $3.8 billion of which was procured through State Contracts. It also says that this placed it ahead of the Federal, Queensland, Victorian, Western Australian and UK Governments in terms of the percentage and overall volume of procurement channelled through whole-of-government panels.

At present the SCCB is legally and operationally responsible for the nearly 70 State Contracts available in NSW, which includes 18 ICT contracts. It is also responsible for accrediting the procurement capability of NSW agencies, and determining the level of procurement autonomy that can be extended to them.

The five-person Board is chaired by former Sydney Water chief Kerry Schott, and also includes Department of Finance and Services (DFS) Director-General Michael Coutts-Trotter.

When the changes come into effect, Coutts-Trotter will become Chair of its replacement, the NSW Government Procurement Board. The remainder of the new Procurement Board would be made up of the Directors-General of the remaining eight principal departments.

According to the paper, the Procurement Board will assume an overarching strategic role in contrast to the direct responsibility for contracting that the SCCB currently holds.

The paper also suggests that those best suited to overseeing the running of State Contracts, some of which were worth more than $500 million in 2010-11, are those agencies with the highest spend in each category of procurement.

While conclusive ICT contract data for the NSW public sector is not available due to under-reporting on the eTendering NSW website, Intermedium’s analysis of annual agency Budget allocations suggests that NSW Health has the highest ICT spend of the nine principal departments.

NSW Health is currently implementing a ten-year ICT Strategy worth $1.5 billion dollars, and has had the highest operational ICT expenditure in each of the last three NSW Budgets, according to Intermedium’s estimates, making it an obvious choice to take charge of state-wide ICT contracting.

However, the Discussion Paper also suggests that some ICT procurement has been earmarked to remain under the management of the DFS.

“The Department of Finance and Services will be the category manager for those categories that will remain best managed by a central function, usual highly commoditised goods (examples include but are not limited to energy, motor vehicles, certain information and communications technology [ICT] purchases, and travel),” says the Paper.

The DFS has suggested that the final word on ICT procurement decisions will come from a recently established ICT Procurement and Technical Standards Working Group tasked with creating the specifications and methods of buying information communication technologies.

Finance Minister Greg Pearce announced the formation of the working group earlier this week. The group is to be made up of agency Chief Information Officers and one industry member selected from the ICT Advisory Board.

The Discussion Paper responds directly to several of the recommendations made by the Independent Commission Against Corruption (ICAC) in a report released in July 2011, which found that one-third of surveyed suppliers perceived the NSW Government market to be corrupt.

ICAC said that procurement regulation in NSW was complex and opaque, and recommended that a single entity with explicit responsibility for procurement policy and compliance be established.

Other procurement outcomes sought through the Discussion Paper include making government procurement more accessible for SMEs, nurturing innovation in procurement and simplifying non-ICT contracting templates, using the recently refreshed Procure IT as a model.

The consultation closes on 29 February 2012.


Related Articles:

Minister seeks “fundamental revision” of NSW Government Procurement

ICAC wants major changes made to NSW Government procurement

NSW ICT panels worth more than $670 million in 2010-11

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