The inaugural meeting of the NSW Procurement Board has produced six directives to the State’s public sector which will see selected agencies put in charge of areas of government procurement, ICT contracting frameworks mandated and long-term supply deals subjected to greater scrutiny.
The Procurement Board, which is made up of Directors-General of the State’s nine principal departments, sat for the first time on 22 August 2012 after being established to replace the now dissolved State Contracts Control Board.
Its first set of directives will require NSW agencies to utilise the Procure IT suite of standard contracting frameworks for all ICT procurements, with any amendments to the terms and conditions to be subject to approval from the Department of Finance and Services (DFS).
The latest vendor-friendly version of Procure IT was launched by Labor Premier Kristina Keneally back in December 2010, and includes a number of concessions to the NSW Government’s industry partners including vendor retention of IP as default and capped liability. However up until this point there has been no top-down compulsion for agencies to use the templates.
The directive took effect on 1 September 2012.
The Board has also named the first four Government agencies to be accredited to procure goods and services on behalf of other public sector bodies, which is likely to prove to be the first step in a broader decentralisation of procurement authority.
At this stage DFS will retain responsibility for the majority of whole-of-government procurement. The Board has also moved to reaffirm existing lead agency procurement arrangements headed by the Health Administration Corporation (for health products) and NSW Police Force on behalf of the Attorney General and Justice agencies.
Prior comments on the subject suggest that a further devolution of procurement responsibility is on its way.
“Sourcing and procurement is more efficient and effective if it is devolved to agencies that have specialist knowledge of the category supply chain and supply sector,” suggested a procurement discussion paper released by the NSW Government earlier this year.
The Board’s directives have also sought the favour of the State’s SME community by prohibiting tendering clauses that make prior experience selling into government an mandatory criteria for selection, which would preclude many new and specialist businesses from competing for business.
They will also relax procurement regulations for suppliers and agencies outside of Sydney by allowing all non-metropolitan government operations to bypass otherwise mandatory State Contracts for purchases up to $3,000. Prior to this the concession had only applied to agency branches qualifying as ‘rural’.
The Sydney-centricity of the State Contract model has been a thorn in the side of Finance and Services Minister Greg Pearce for some time, and is one of the reasons he has moved to transform the whole-of-NSW-Government panel arrangements. Earlier in the year he highlighted the plight of Goulburn jail, which has to send its laundry to Sydney for cleaning because the local operators are unable to gain membership to the relevant panel.
Under the controversial Local Schools, Local Decisions policy, NSW Principals will also be allowed to make purchases outside State Contracts up to $5,000.
Across in the NSW Legislative Assembly procurement, and ICT procurement in particular, is also on the agenda.
On 23 August the Public Accounts Committee launched its own inquiry into the procurement of ICT Services, in response to a range of adverse findings by the NSW Auditor-General. They include a February 2012 report which uncovered cases of ICT suppliers being left in charge of their own performance evaluation and escalating contract values allowed to take place in the absence of proper value for money considerations.
The Committee will investigate the effectiveness of ICT contract and project management in the NSW public sector, how well risk and corruption are mitigated and the performance and strategies of centralised procurement authorities.
Submissions will close on 31 October 2012 with public hearings to commence shortly after that.