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Estimates: Department of Finance and Deregulation (Procurement)

Estimates & Committees
Lee Rhiannon 18 Oct 2011

Finance and Public Administration Legislation Committee

Estimates hearings, 18 October 2011

Department of Finance and Deregulation

  • Senator Penny Wong, Minister for Finance and Deregulation
  • Mr David Tune, Secretary
  • Mr Stein Helgeby, Deputy Secretary, Financial Management Group
  • Mr John Grant, First Assistant Secretary, Procurement Division

Full transcript available here

Senator RHIANNON: This is about procurement. I understand the Australian Procurement and Construction Council has developed the Australian and New Zealand government framework for sustainable procurement that consists of the four overarching principles for sustainable procurement.

Senator Wong: Senator, if you could wait until we get the officers to the table, thank you.

Senator RHIANNON: I was asking about the Australian and New Zealand government framework for sustainable procurement. I cannot find any evidence that the principles have been incorporated into procurement policy and practice; is that the case? If that is the case, is there a reason for the delay in implementation of the sustainability principles into government procurement policy?

Mr Grant: The Commonwealth is a member of the APCC, and we worked with them in the preparation of that particular booklet. In broad terms it fits within the more general procurement guidelines we already have. It is actually quite a high-level document, as you have probably seen, so we have not seen any need to formulate it as a policy of the government. We already take those sorts of matters into account.

Senator RHIANNON: So you do not think that you need to do like New Zealand does where it is incorporated into the actual guide itself?

Mr Grant: It is an informative document, and that is how it is used. We have circulated it around to departments and agencies. I would have to check but I think that we have a reference to it on our website. It is informative; it is not a specific policy.

Senator RHIANNON: So it is informative but not official; is that how you would describe it?

Mr Grant: It is informative but not mandated.

Senator RHIANNON: There was a decision made that you did not want to mandate those four principles?

Mr Grant: I think that they reflect basically the approach that most departments and agencies would take anyway when you undertake a value for money consideration and you take into account the policies we already have in relation to, for example, the environment and other things.

Senator RHIANNON: Thank you. How many different departmental procurement policies do exist?

Mr Grant: There is one procurement policy, which is the Commonwealth Procurement Guidelines. Each department and agency may then have a chief executive instruction about procurement and potentially a process. The Commonwealth procurement guidelines, or CPGs, provide a policy document with some eight rules that departments and agencies have to follow. When it comes to processes, and that can come to delegations and other things, each department or agency may have its own.

Senator RHIANNON: So it is really as many departments as we have, we could have that number of variations actually.

Mr Grant: Variations in process, not in terms of policy.

Senator RHIANNON: Thank you. Would you agree that this duplication and highly decentralised way of taking procurement forward does result in inefficiencies?

Mr Grant: It is an area that we are working on at present. There is a project that is looking at having model chief executive instructions. In addition, we have been working with departments and agencies across a range of levels. For example, we have produced a standard contract suite and we have started with procurements below $80,000 because they represent about 73 per cent of contracts awarded on AusTender. We also work on improving the capability and professionalism of procuring officers. We are working on those sorts of things.

Mr Helgeby: I might just add to that: there are a number of specific areas of procurement where we undertake what is called coordinated procurement, which is procurement on behalf of the whole of government through a central process. They cover things like airline travel and there is a number of other areas. The key point being that there is a number of areas of specific purchases of types of goods or service where the government takes a whole of government approach.

Senator RHIANNON: Thank you for that, because I did want to pick up on one example of an AusTender. I understand that recently AusTender undertook a tender process for a whole of government stationery supply contract. Who has been awarded that contract?

Mr Grant: That has not yet been awarded. Maybe I can just explain: AusTender is the whole of government system that publishes all approaches to market, tender offers, and then it publishes all contracts above $10,000. So it is a process mechanism and a transparency mechanism. The actual process for the stationery office supplies whole of government approach is being undertaken by the department, and that is still in progress.

Senator RHIANNON: If it is a multi-year contract, I was interested in whether the procurement tender and contract awarded make suppliers aware that by 2015 paper must be 100 per cent recycled?

Mr Grant: Yes, that is part—all government policies and timings are part of that approach to market.

Senator RHIANNON: Did the contract impose any intermediate targets or benchmarks in the years after 2011 in order to ensure that the 2015 target is met?

Mr Grant: Not that I am aware of. In essence, in terms of when the policy comes into place, we work with departments, agencies and suppliers in the lead-up. I do not think we have put an intended path; we have put a clear indication of what is required on the relevant policy dates.

Senator RHIANNON: It just sounds like the language is not so strong like 'required' means that it is preferable but it may not happen. Is that the interpretation?

Mr Grant: No, Senator, that is not right. If we put in that, by a certain date a certain policy must be met, that is required—it is a must.

Senator RHIANNON: That is a must?

Mr Grant: That is right.

Senator RHIANNON: Did the tender include any requirement that the paper products are manufactured in Australia?

Mr Grant: No, Senator.

Senator RHIANNON: Why was that please?

Mr Grant: There was no—in fact, it would be contrary to our free trade obligations to have a requirement for made in Australia in that area.

Senator RHIANNON: Considering that, did the tender include any requirements that suppliers of paper ascertain the legality of that paper?

Senator Wong: What do you mean by the 'legality'?

Senator RHIANNON: Well, paper sourced from wood, and there is a huge trade in illegal logging from where much of this paper is sourced.

Mr Grant: We would be very clear that paper must not be sourced from rainforests and things like that.

Senator RHIANNON: When you say 'very clear', what does that mean?

Mr Grant: I would have to check it and get back to you.

Senator RHIANNON: So you are happy to take that on notice?

Mr Grant: I will take that on notice.

Senator RHIANNON: Were there any other sustainability requirements for those tendering for this contract?

Mr Grant: I do not have the details. I will take that on notice as well.

Senator RHIANNON: In the event that the standards in the contract are not very strong, will departments that previously procured paper products with environment and sustainability requirements be able to continue to acquire those products with these criteria in place?

Mr Grant: When this whole of government contract comes into place and there is likely to be a panel of suppliers, not a single supplier, government policies must be complied with. So departments and agencies will not be able to step outside government policies and they will have to buy off the panel members.

Senator RHIANNON: I want to clarify although you have covered it to some extent: when there are whole of government contracts, are there any sustainability requirements?

Mr Grant: It is certainly one of the elements we take into account. It depends on the nature of the supply, but we certainly do take that into account.

Senator RHIANNON: That sort of language again sounds loose, could you specify what that means?

Mr Grant: I can do that in terms of major office machines, for example, which is a contract in place and stationery office supplies—so yes.

Senator RHIANNON: Do you mean you will take that on notice and supply more details?

Mr Grant: I will take that on notice.

Senator RHIANNON: I would appreciate those examples but also I would like to know how do you build sustainability into these whole of government contracts?

Mr Grant: First, when we have whole of government contracts we have a commitment to manage those contracts really well, so that means we work closely with departments and very closely with suppliers to ensure they are delivering the supplies as we have requested. Overlaying that in government procurement there are 24 policies that impact on procurement, which relate to a range of policies including environmental, Indigenous, business and things like that, that are built into our processes. So for any procurement process, and particularly for a whole of government one, we would make sure that we are complying with those 24 government policies.

Senator RHIANNON: Thank you for explaining that. I would like to move on to issues to do with VET service providers.

CHAIR: Can you start to wind up please.

Senator RHIANNON: Are there any plans to update the procurement guidelines for vocational education and training service providers?

Mr Grant: There are no procurement guidelines specifically for such providers. The CPGs relate to all procurements across the Commonwealth.

Senator RHIANNON: Did you say there are no guidelines?

Mr Grant: Not specifically for vocational and education suppliers, but the CPGs relate to all procurement across the Commonwealth.

Senator RHIANNON: Do you review the impact that the outcomes of the procurement process has on the quality of teaching and learning of private VET providers compared with TAFE?

Mr Grant: We would not do that. That would be up to the relevant departments. It is probably primarily the states, but I am not sure.

Senator Wong: That should be a question to the Department of Education, Employment and Workplace Relations.

Senator RHIANNON: So you are saying that, even though this is procurement based on public money, you have no role in that.

Senator Wong: No, we did not say that.

Senator RHIANNON: I am just trying to understand what the process is.

Senator Wong: We establish guidelines. We are responsible for some procurement. Other agencies are responsible for procurement within their own bailiwick in accordance with the guidelines.

Mr Tune: If a state were running, as part of the VET sector, a TAFE they would be doing their own procurement and they would be having regard to their own procurement guidelines within that particular state. So it is not us doing the direct purchasing; it is the state service.

Senator RHIANNON: But I have been in the situation of asking the state government and they always say to ask the federal one, so we do get that ping-pong so regularly. That is why I did want to know. But you are saying that it is not your responsibility; is that what you are saying?

Mr Tune: In terms of the question you asked, which was what impact procurement might have on the quality of teaching inside the VET sector, that is definitely for DEEWR at the Commonwealth level.

Mr Grant: Senator, perhaps I can explain. The Commonwealth's procurement framework is very devolved, so we have the procurement policy and then departments and agencies are generally responsible for their own procurement approaches. We have very little central purchasing, unlike most of the state jurisdictions. Our central purchasing is almost totally limited to coordinated procurement.

Senator RHIANNON: Thank you.

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