Government Squibs Whole of Government Savings on Procurement

“For the Gillard Government, saving taxpayer dollars through whole-of-government contracts, is just too hard”,  Paul Fletcher MP, Federal Member for Bradfield said today.

“It is a no-brainer, that combining the purchasing power of the Commonwealth will deliver cost savings.  Today, the purchasing of most government services is disaggregated.

“In a document Reform of Government Scorecard (November 2007 to May 2010), the Government identified a range of areas that it was considering for whole of government procurement. 

“I asked a Question on Notice in the Parliament about the outcome in six areas that were identified for whole of government arrangements.

“The response indicates the Government is delivering whole of government services in only one of these areas – that of travel services.

“In one case, courier services, further investigation is being undertaken.

"In the other four areas – office removals and staff relocations; security guarding services; transactional banking services; and subscription services – it has been determined that these are ‘not a suitable candidate’ for whole of government arrangements.

“Ruling out whole of government arrangements for these four areas does not pass the common sense test. These are all services which clearly have the potential for purchasing on a more co-ordinated and therefore less costly basis.   The decision not to progress these areas more suggests turf protection by agencies and a lack of political will.   

“This is a Government unable to take the hard decisions, or implement meaningful reform”, Mr Fletcher said

The extract of the relevant Question on Notice and response:

Question No 358

MR FLETCHER asked the Minister representing the Minister for Finance and Deregulation, in writing, on 10 May 2011: In respect of the department's Reform of Government  Scorecard (November 2007 to May 2010):

…(15) What is the status of coordinated procurement contracts in each of the areas outlined on page 21: (a) courier services; (b) office removals and staff relocations; (c) travel services; (d) security guarding services; (e) transactional banking services, and (f) subscription services.

Mr SWAN - The Minister for Finance and Deregulation has supplied the following answer to the honourable member's question:

… (15) (a) Courier services—A preliminary investigation was undertaken in 2010. It identified that further investigation is required in order to determine whether courier services is a viable candidate for a coordinated arrangement. An agency survey will be undertaken to more accurately estimate expenditure and identify scope. The timing of the action is not yet finalised.

(b) Office removals and staff relocations—A preliminary investigation was completed in 2010. It identified that office removals and staff relocations is not a suitable candidate for a whole of  government arrangement as a large number of agencies would not benefit. As such, this area did not meet the coordinated procurement contracting arrangements criteria.

(c) Travel services—Phase 1 of the travel services coordinated procurement processes took effect from 1 July 2010. Under those arrangements, a panel of travel management companies was established through which all FMA Act agencies and relevant participating Commonwealth Authorities and Companies Act 1997 bodies must book air travel. A range of competitive discounted airfares was negotiated with airlines on domestic and international routes. These arrangements have delivered $160 million savings to the Budget over the period 2010-14.

Phase 2 has now commenced, involving the conduct of separate open tenders for travel and related card services, accommodation and short-term car hire services. The tenders for Phase 2 are expected to be released later in 2011, with contracts to be in place by mid 2012.

The Department of Finance and Deregulation has recently undertaken a Request for Information process for travel and related card services to provide industry the opportunity to contribute to considerations about the most appropriate strategy and business model. A similar Request for Information process is being undertaken in relation to accommodation.

(d) Security guarding services—A preliminary investigation was completed in 2010. It identified that security guarding services is not a suitable candidate for coordinated procurement as a minority of agencies had specific contracts and some agencies had these services tied in with other property management arrangements. As such, this area did not meet the coordinated procurement contracting arrangements criteria.

(e) Transactional banking services—A preliminary investigation was undertaken in 2010, which identified that transactional banking is not a suitable candidate for coordinated procurement as there is minimal potential for savings. As such, this area did not meet the coordinated procurement contracting arrangements criteria.

(f) Subscription services—A preliminary investigation was completed in the last quarter of 2010. It identified a wide diversity in subscription services and that many subscriptions were specific to one or a few agencies. Therefore it is not a suitable candidate for coordinated procurement when assessed against the criteria.