Suppliers as Partners
26 March 2015
How Procurement can generate
better results; More value-for-money
and enhanced economic growth
Consultation Paper
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INDEX
1. EXECUTIVE SUMMARY
1.1 STATEMENT FROM THE INDUSTRY PARTICIPATION ADVOCATE (IPA)
1.2 PURPOSE OF EDB REVIEW
3-8
3-5
5-8
2. BUSINESS EXPERIENCE OF PROCUREMENT
9-14
3. A BETTER EXPERIENCE FOR BUSINESS WITH PROCUREMENT
14-17
4. WHAT NEW CAPABILITY IN PROCUREMENT IS REQUIRED
17-21
5. HOW TO DELIVER MORE VALUE-FOR-MONEY
21-23
6. INCREASING THE ECONOMIC CONTRIBUTION FROM
PROCUREMENT
24-26
7. CONCLUSION
27
ATTACHMENT 1 – IPA POLICY RECOMMENDATIONS APPROVED
ATTACHMENT 2 – LIST OF ADVISORY PANEL MEMBERS
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1.
EXECUTIVE SUMMARY
1.1
STATEMENT FROM THE INDUSTRY PARTICIPATION ADVOCATE (IPA)
The IPA was tasked by the State Government to provide recommendations on how
procurement spending can deliver maximum economic benefit to the State while at the
same time supporting local businesses, increasing local employment and improving
opportunities for local suppliers.
The importance of government expenditure in stimulating economic growth has often been
recognised because of its ability to create an environment which is growth-friendly.
However, the potential for procurement to be a policy tool to increase long term economic
growth in South Australia has not been addressed adequately in key spend areas of the
economy.
The purpose of this paper is to trigger discussion on whether optimal economic benefit to
the State such as industry development and innovation, are being achieved as a result of
current government procurement practices, and if not, exactly what those practices ought to
address.
There is evidence to suggest that some procurement strategies and practices are not
delivering the best value-for-money outcome for the State overall. This could be because
there is not an adequate mechanism to determine which tender might be the most
economically advantageous to the State.
On many occasions cost and the allocation of risk are considered to be the primary drivers
of procurement decisions and in doing so simply creates a “race to the bottom” where other
qualifications are not given due consideration. This can result in more contract defaults,
poor performance and an overall decrease in the quality of goods and services provided.
Value-for-money is one of the primary objectives of procurement under the State
Procurement Act. The State Government is responsible for achieving the best possible
outcome in both financial and non-financial terms in a timely and efficient manner,
commensurate with the nature of the purchase.
Best value-for-money is achieved by applying cost-effective purchasing approaches to
deliver the best overall result for money spent – not merely the selection of the lowest price.
Assessment of value-for-money should include the cost of tendering, the initial cost of
purchase, fitness for purpose, service, support, warranty, operating costs, anticipated
maintenance and repair and disposal or removal of the product at the end of its useful life.
Value-for-money means considering a range of factors in making a procurement decision,
and entails a shift away from price as the critical or major factor driving decision making.
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Value-for-money must include measures of broader benefit to the State, such as
employment, investment and industry development. There must also be a broader measure
of value when spending is measured across the total spend of the State Government.
For example, tender costs, compliance burdens and risk shifting onto business will be
ultimately borne through higher tender prices. This must be minimised to increase the value
and improve the experience for business.
Where a head contractor bids a tender price below market rate there is also a risk that this
loss of profit will be recouped by underpaying or not paying subcontractors. This may even
place some sub-contractors at financial risk and it can also raise potential for contract
variations to head contracts that may have been avoided with a prudent review of tender
pricing.
Creating a better value-for-money environment often involves an open communication with
current or potential suppliers with purchasing decisions based on strong partnerships and
by developing long-term healthy relationships with reputable contractors and suppliers.
Ian Nightingale | Industry Participation Advocate
Office of the Industry Advocate
Level 13, 99 Gawler Place, Adelaide SA 5001
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The feedback from business can be summarised as follows:
1. The cost of tendering needs to be better understood by State Government and
minimised on low to middle value tenders in particular
2. The process compliance and form filling in tendering is significant and this creates
impediments to participation for SMEs in particular
3. State Government acquisition planning can lack contact with suppliers and
knowledge of markets
4. There are significant commercial barriers to participation in tendering such as
unlimited liability, high insurance requirements and payment schedules that affect
cash flow
5. There are practical barriers to participating business such as specifications
requiring fixed sometimes obsolete technology solutions
6. There are process barriers such as product approval methodologies and
committees which can cause delay to involvement in tenders, and
7. Head-contractors may exploit sub-contractors by requiring onerous and unfair
contract conditions.
Sample used for drawing conclusions
The paper has been developed using the following formal consultation:





completed surveys by business for an Ernst & Young (EY) report 1
nearly 1200 completed capability surveys by business 2
the Tender Ready report completed by Business SA analysing the detailed experience of 12 businesses
with procurement 3
in depth case studies,4 and
detailed feedback on a preliminary paper. 5
There has also been informal consultation such as regular advice to the IPA by his Advisory Panels (see
Attachment 2 for list of members) and over 1000 recorded meetings with businesses and Government officials in
the State on procurement.
EY, a sample of 12 surveys based on 13 questions.
Capability profiles from nearly 1200 businesses who attended Meet the Buyer events.
3 12 detailed assessments of the experience of businesses with State Government procurement.
4 In depth cases studies with 5 businesses by OIA in 2013.
5 13 in depth responses from Advisory Panel members to OIA paper, Performance Based Tendering – Preliminary Discussion
Paper, 23 April 2014.
1
2
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1.2
PURPOSE OF THE PAPER
The paper seeks comments on the following recommendations that can be implemented
simply and immediately to benefit business suppliers to State Government.
Quick Wins for SMEs
1. Payment Schedules in contracts should be more responsive to completion of work.
2. There is a lower compliance burden for business responding to Simple
Procurements (those conducted from $22,000 to $220,000) and this regime has
potential to be applied further by raising the threshold above the current $220,000.
3. The Commonwealth Government has recently made changes that apply to
contracts valued at up to $200,000. 6 On these contracts, the length of the contract
terms has been reduced to only 4 pages, there are no insurance levels set in the
tender or contract and the indemnity is for breaches of contract only. This should be
considered against existing practice for implementation here.
4. The Commonwealth Government has recently taken steps to reduce the length of
tender response documents, in particular with regard to purchases below
$200,000.7 The approach taken by the Commonwealth to streamline responses
should be considered in this State and compared to current practice.
5. The IPA will be working with the South Australian Government Finance Authority to
consider if the Commonwealth approach to low value contract insurance settings as
well as further reform to liability settings can be implemented here.
6. Setting benchmarks for the timeliness of decision making in tendering.
7. Business and industry groups should be invited to provide comment on the suite of
contracts to enable policy makers to make evidence based decisions on the value
of including certain terms in these standard contracts, particularly those that involve
a transaction cost which is invariably passed on to the government.
6
7
The Commonwealth Contracting Suite.
The Commonwealth Contracting Suite.
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In addition the paper also sets out the justification for 6 Recommendations which are
designed to consider how revised procurement policy and practices can generate better
value-for-money outcomes for the State and at the same time enhanced economic growth.
Recommendation 1
•
Raise the Economic Contribution from procurement even further
•
Policy change is already well advanced based on advice from Deloitte Access Economics but
can be developed further
•
Increased Industry Participation weighting for major projects are already incentivising use of
South Australian labour, capital investment and supply inputs this can apply to other sectors.
•
Policy is working and is strong it now requires thorough implementation by agency staff
•
Enhancements to policy in areas of high specialisation is needed (eg Health Industries)
•
There is a proposed 90 Day Change Project to address this
•
State Procurement Board consider adopting the Most Economically Advantageous Tender test
will assist the outcome
Recommendation 2
•
Establish outcome based acquisition strategies, then plan procurement systems
and processes on that basis
•
Investment in Government staff is required to raise procurement expertise
•
Centres of Excellence were advised by Deloitte Access Economics as required
•
Roles in procurement must promote specialisation of skills and market knowledge
•
Better contract management skills and contract negotiation skills are needed
•
Outcome Based Tenders should be adopted to promote innovative bids
•
Contract specifications should allow for new technology solutions
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Recommendation 3
•
Establish partnerships with business; i.e. how business will respond best to the
needs of the State Government as a delivery partner
•
Implement the Quick Wins to make contracts more appealing for business
•
e.g. Unlimited liability, above market level insurance, and payment schedules causing cash
flow delays are critical to shift
•
Government staff should build stronger relationships with suppliers
•
Risk analysis should be applied better
Recommendation 4
•
Ensure contract management and measuring results are more important than
the process of tendering when assessing success
•
A Benefits Realisation Framework must be adopted (see NSW model)
•
Data quality must be improved to achieve Benefits Realisation
•
Agencies should be able to compare better across State Government their relative
performance
Recommendation 5
•
Invest in staff so they can assess the market better and understand what it has
to offer in a specific case – becoming informed purchaser
•
Good contract outcomes start with strong commercial advice
•
Procurement professionals must become experts in key markets of responsibility
•
Budget holders and project officers are currently required in most cases to conduct market
analysis – this needs deeper support from skilled procurement staff
•
New solutions should be promoted by using Outcome Based Tendering
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Recommendation 6
•
Focus procurement away from process compliance, to long term impacts and
strategy
•
Appropriate probity and scrutiny of process required
•
Benefits Realisation to be monitored and assured post contract
•
Contract management needs to be improved across State Government
•
Deloitte advised that capacity and capability of procurement professionals needs to align to the
strategic goals of the State Government
•
Data quality is vital to Benefits Realisation tracked
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2.
BUSINESS EXPERIENCE OF PROCUREMENT
The cost of procurement on business
The purpose of State Government tendering processes is to ensure transparency,
accountability and equity for participants in the expenditure of public money. The burden of
such processes is that the cost of participating can be very high for both government and
bidders. 8
For example, the cost of tendering in Britain has been evaluated by the National Audit
Office at an average of over $60,000 per business (converted 2008 prices). 9 But to date
there has been no independent analysis done in this State of the cost of tendering so it is
unclear as to the impact that this has on business and industry.
Anecdotally, the cost recovery profile for a tender is significant, at least 15 per cent and as
high as 40 per cent in one-off purchases. 10
The challenge for government is to strike a balance between the two competing interests;
general public interest in the expenditure of public moneys versus more efficient and cost
effective procurement processes.
The State Government has made some progress in addressing this, when it increased the
threshold for Simple Procurements to $220,000 (during the Red Tape Challenge). 11
There is a lower compliance burden for business responding to Simple Procurements
(those conducted from $22,000 to $220,000) and this regime has potential to be applied
further by raising the threshold again. 12 This threshold should be regularly set at a level
that considers the process cost for business.
The IPA has also received briefings from industry that online technology solutions can
reduce the cost of procurement for business and raise the efficiency at the same time. For
example, some eTendering systems can remember repeat users and store their core
financial and technical data to be used time and again.
Process compliance and form filling
Business experience with procurement is often that processes can dominate the tender,
rather than the strategic goals of a purchase being clear and then pursued through the best
Business SA, Tender Ready Report, 2014.
National Audit Office (UK) 2010, “A review pf collaborative procurement across the public sector”. Based on 10 surveys, the
average cost of tendering was £36,000 (range £5,000 to £100,000)
10 Meetings conducted by IPA with businesses in a range of fields.
11 Reducing Red Tape for Business in South Australia – Final Report, threshold increased from $110,000 to $220,000. Savings
of nearly $11 million identified.
12 Ibid.
8
9
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process designed to achieve them. 13 This is the case in other states and other comparable
countries as well, so is not an unusual experience for this State. 14
The IPA has also identified in feedback a disjointed approach to market by different parts of
the State Government. 15 And where this applies, these compliance costs were greater than
they could otherwise have been because of this. 16
The Commonwealth Government has recently taken steps to reduce the length of tender
response documents, in particular with regard to purchases below $200,000. 17 The
approach taken by the Commonwealth to streamline responses should be considered in
this State and compared to current practice.
This compliance burden of supplying tender information on a repeat basis can also be
minimised by eTendering systems.
Acquisition planning can lack market or commercial knowledge
In many public authorities, acquisition plans are mostly written by the budget holders,
project officers and others who are responsible for the project outputs. 18 They are part time
participants in procurement.
The acquisition plan can often have little involvement with procurement teams until it is too
late to affect the commercial decisions. Examples are how to canvas the market and how to
create an effective tender process, these being crucial to achieve the outcomes needed. 19
The experience of business with procurement for some parts of government is that a
market analysis is often conducted by people who are not full time practitioners in
procurement. This can mean that options to best find value in the market are not adopted. It
can also mean that commercial skills, such as contract negotiation and contract
management, are not held by the person writing the acquisition plan. 20 (See PART 4 for
more)
Commercial barriers to participation in tendering
The barriers to participation extend beyond compliance cost factors. They include
commercial barriers as well, such as:
 unlimited liability
 above market level insurance levels being required
 payment in arrears
Loader, K 2012, “Is public procurement a successful small business support policy? A review of the evidence”, Environment
and Planning C: Government and Policy, vol. 31, pp 39-55.
14 Loader is confirmed by supplier surveys for OIA and in case studies.
15 EY 2014, “Procurement Efficiency Review”, report completed for the Office of the Industry Advocate.
16 Ibid.
17 The Commonwealth Contracting Suite.
18 Regular feedback from procurement staff confirms this.
19 Feedback from consultant working for key procurement body.
20 EY 2014.
13
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 one-sided termination and variation clauses
 the length of contracts more generally, and
 refusal of State Government agencies to negotiate or change contract terms.
The Commonwealth Government has recently made changes that apply to contracts
valued at up to $200,000. 21 On these contracts, the length of the contract terms has been
reduced to only 4 pages, there are no insurance levels set in the tender or contract and the
indemnity is for breaches of contract only.
The IPA has already worked closely with the South Australian Government Finance
Authority (SAFA) to set a default liability cap on low risk contracts valued at up to $1
million.22 The IPA will be working with SAFA to consider if further reform to liability settings
can be implemented here.
More generally, the suite of contracts used by the State Government would benefit from
regular consultation with affected business industry groups.
Timeliness of tender decision results
One of the consistent pieces of feedback from business is that tenders can be conducted
and then not awarded in a timely manner.23 There are cases where this is unavoidable but
that should be communicated to business.
The IPA considers that benchmarks for timeliness should be set to make award decisions.
Better contract management and relationship building needed
One of the areas for major improvement identified by EY is in the area of better contract
management. 24 At present, the survey responses from business indicate that procurement
has a focus on compliance process with little follow up on the results of the contract post
award.
This is covered in detail in Part 4 below.
Practical barriers to business participating
When a business has a market leading technology this can be ahead of the State
Government’s market expectations. 25 Where a specification for a contract is set and is
based on a technology that may be superseded or could become so, then it can operate as
a barrier to effective participation in that tender. 26
The Commonwealth Contracting Suite.
Guidelines for the Limitation of Liability for Suppliers, Consultants and Contractors, approved 16 December 2013.
23 Consistent feedback from surveys and meetings from all sectors but especially in health.
24 EY 2014.
25 Detailed case studies of two air conditioner companies and a manufacturer of pipe products.
26 Ibid.
21
22
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For example, OIA case studies in this State have identified that a lack of market intelligence
and setting an inappropriate requirement has operated to the detriment of local suppliers
with new technology solutions.27 In those case studies, the business has cited the
specification as a ‘cut and paste’ exercise which has not kept pace with market offerings.
New technology solutions may also suffer from their benefits being long term and the costs
being higher up front. 28 For example, where a new technology has a long term energy
efficiency benefit, this may not be fully considered in a whole of life costing if the
engineering has not contemplated the technology. 29 This has been the experience for two
separate South Australian suppliers in the air conditioning market.
To minimise these barriers to innovation the IPA has been considering ways to introduce
more Outcome Based Tendering approaches.
The characteristics of an Outcome Based Tender are:
 a focus on outcomes, outputs and quality, rather than how the work is performed
 use of measurable performance standards that are indicators of the required
outcomes
 a clear accountability for contract outcomes (ie, the contractor should have control
over the processes to deliver the required goods and/or services)
 monetary and non–monetary rewards and remedies that vary in response to
performance, and which are specifically designed to motivate the contractor to the
achieve better results
 an appropriate governance framework applicable to contractor processes (e.g.
regarding quality and safety), and
 a performance-based management framework. 30
Process barriers to participation
Many areas of contracting will have process barriers. For example, prequalification systems
can streamline tendering overall, but businesses that are not prequalified will often find that
they cannot bid for Government work. 31 This has been a critical reason why IPA has made
recommendations for the State Government to have a single system for prequalification
across the whole of government, which is now adopted. 32 The OIA has published a helpful
guide to assist business to identify which panels and prequalified lists it should join and
also consequently, how the State Government can better use the panels and
prequalification lists. IPA recommendations have also seen the removal of fees applying
when businesses prequalify in the area of construction, onto DPTI prequalified lists. 33
Those solutions have either been viewed as non-compliant with specifications or considered higher risk.
Ibid.
29 Ibid.
30 Various, cited in OIA paper, Performance Based Tendering – Preliminary Discussion Paper, 23 April 2014.
31 Regular feedback from agencies and business.
32 Cabinet approved on 13 January 2014, now implemented.
33 Fees of $62,000 per annum across registrants were removed on 1 July 2014.
27
28
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Through its informal consultations the IPA has identified other less known process barriers.
SA Health has a product standards committee that will consider products and is required to
approve them before they can be supplied to the public health system of the State. 34 Most
other jurisdictions within Australia will have similar committees. What is most interesting is
that some suppliers can be approved in one jurisdiction but then refused approval within
another. There is also an issue of process delay and cost from multiple approvals being
sought. 35
Accordingly, there may be scope for SA Health to mutually recognise the approvals of other
equivalent state systems on the basis that states like NSW, Victoria, Qld, WA and
Tasmania are going to take a similar level of diligence as here.
The experience of sub-contractors
The IPA has been made aware through supplier contact that there are cases where the
sub-contracting terms passed on by a head contractor to a sub-contracted supplier do not
mirror the model practice. 36
There are also cases where sub-contractors have experienced payment delays on State
Government projects.
In addition, these experiences may reflect a broader problem, when a tender is successfully
won by a head contractor at a price below a profitable level. In those cases head
contractors may recoup some of those losses through their supply-chain.
It may also reflect cases where a contract variation could be more likely as a head
contractor seek price changes to improve their profit.
How these experiences can reduce the value-for-money of a contract
Competition is an effective constraint on the cost of supply contracts. Ensuring effective
competition is one of the reasons that tendering has been adopted by governments. Where
costs, barriers and impediments reduce the number or quality of bids, this can also reduce
the effective competition. 37
In addition, costs are ultimately shared with the State Government through a premium price
being needed to recoup the costs of tender and make the commercial terms an acceptable
risk. 38
This is addressed more fully in PART 5.
Two health suppliers have independently supplied detailed feedback without prompting.
Ibid.
36 DPTI has generally set requirements in Head Contracts for sub-contractors to receive contract terms that are consistent with
the head contract terms and conditions. And on contracts over $1.1 million, then AS2545 conditions are provided to subcontractors.
37 Caldwell, N, Walker, H, Harland, C, Knight, L & Zheng, J 2005, “Promoting competitive markets: the role of public
procurement”, Journal of Purchasing and Supply Management, vol. 11, pp. 242-251.
38 Confirmed in regular feedback from business operating in procurement markets.
34
35
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Recommendations
Quick Wins for SMEs
1. Payment Schedules in contracts should be more responsive to completion of work.
2. There is a lower compliance burden for business responding to Simple
Procurements (those conducted from $22,000 to $220,000) and this regime has
potential to be applied further by raising the threshold above the current $220,000.
3. The Commonwealth Government has recently made changes that apply to
contracts valued at up to $200,000. 39 On these contracts, the length of the contract
terms has been reduced to only 4 pages, there are no insurance levels set in the
tender or contract and the indemnity is for breaches of contract only. This should be
considered against existing practice for implementation here.
4. The Commonwealth Government has recently taken steps to reduce the length of
tender response documents, in particular with regard to purchases below
$200,000.40 The approach taken by the Commonwealth to streamline responses
should be considered in this State and compared to current practice.
5. The IPA will be working with the South Australian Government Finance Authority to
consider if the Commonwealth approach to low value contract insurance settings as
well as further reform to liability settings can be implemented here.
6. Setting benchmarks for the timeliness of decision making in tendering.
7. Business and industry groups should be invited to provide comment on the suite of
contracts to enable policy makers to make evidence based decisions on the value
of including certain terms in these standard contracts, particularly those that involve
a transaction cost which is invariably passed on to the government.
3.
A BETTER EXPERIENCE FOR BUSINESS WITH PROCUREMENT
Feedback from both formal and informal channels indicates that there is a significant
opportunity for improved satisfaction within this State with procurement.
The better practice in procurement is also very much aligned with improving the experience
of business with the State procurement system; that is to start from the basis of building
partnerships, strong relationships and regular contact between the public sector buyer and
the supplying business. 41
The Commonwealth Contracting Suite.
The Commonwealth Contracting Suite.
41 Supplier Relationship Management models are now common place, with most consulting practices recommending them in
one form or another. (e.g. AT Kearney, EY, Deloitte etc)
39
40
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Building closer relationships between suppliers and the State Government (“Partnerships”)
The Premier, in his message to attendees of the IPA’s Meet the Buyer events describes
business as the State Government’s “principal partners for economic development in South
Australia.”
However, it is easier to talk globally about partnership building, than it is to apply it to
purchasing. But this is precisely how procurement can deliver on the Premier’s broader
vision of government and business working better together in this State.
Consistent feedback to the IPA from business is that contracting should be about
relationship building. 42 And, to achieve that outcome, the experience of business will need
to change so that business see the commercial terms of Government as reasonable, that
tender costs as minimised and impediments to participation removed. 43
Thinking about suppliers when designing commercial relationships
It may appear obvious that suppliers who have a strong direct relationship to an agency will
be more likely to perform strongly. Procurement and then contract management in this
State has not been good at designing processes to achieve this aim. 44
Part of this issue is that the State Government has an appropriate requirement to ensure
the probity of tender processes, but there are many instances, when further interactions
with business pre-tender and especially post-tender are essential to good outcomes from
purchasing. These can be managed within appropriate probity constraints.
We should be asking how business will want to perform a contract and what terms would
make that contract performance excel, 45 especially when compared to how often the risk of
contract failure is considered in procurement design.
If a business is to operate as a partner in delivery of government needs then it should have
a more equal commercial relationship. The satisfaction of business with contract terms will
help improve the experience of business with State Government tenders. 46
What is required is to ensure that the commercial terms are not overly punitive or
unnecessary to achieve the outcomes required or address the risks, of the contract. This is
a noted experience with regard to liability clauses in contracts.
Improving cash flow is critical
The Office of the Industry Advocate, partnered with Housing SA, to conduct a 90 Day
Change Project to design better housing contracts. Conducted through the industry
Both formal and informal responses to feedback surveys.
Loader 2012, also Braslavskiy, E, 2013, “An economic analysis of local participation in government procurement”. (internship
report for OIA)
44 EY, 2014.
45 Regular feedback from business surveys.
46 Direct feedback from meetings and surveys.
42
43
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workshop, most of the industry led contract changes, focussed on commercial terms such
as Payment Schedules.
Simply by making Payment Schedules more responsive to completion of work, the housing
contractor experience of the commercial terms was improved significantly. 47 These
businesses saw major benefit in reducing the size of final withholding payments at
completion, meaning that cash flow overall was improved and they were less out of pocket
at any stage.48
Further feedback from a company tendering for work with a major project in the Upper
Spencer Gulf has indicated that the payment terms on that private (but government
backed) project are often more optimal than in State Government contracts. The risk profile
for business conducting a contract under the payment profile is lower because the
withholding payment is lower. This is because the payment profile preserves the cash flow
of business better. It was communicated to the IPA that this alone can reduce the cost of a
contract by up to 15 per cent. Whilst there are some risks from such an approach to the
State Government this will need to be identified and balanced against the benefits of
reducing costs for business.
Thinking about suppliers when designing market offerings
Knowledge and awareness of the suppliers in this State and what they have to offer is
critical to local businesses if they are to win State Government contracts.
It is also critical that regular market analysis ensures that contract specifications keep pace
with technology options. One of the consistent criticisms of business with tendering are
cases where an inadvertent setting of standards or technology in the specification reduces
the ability of innovative bids to be compliant. 49
Pre-tender supplier workshops
Pre-tender supplier workshops (or information sessions) are very well regarded by
businesses. Many of the Meet the Buyer surveys received by the IPA indicate that these
sessions could be one of the most important things for raising the likelihood of a local
business having critical knowledge that it can apply to win the tender. 50
But more than this, pre-tender supplier workshops, can allow agencies to test their contract
model and approach to market and see how appealing that market offering is. An agency
can identify how the offering would be more appealing, but this level of co-design or input
has rarely been undertaken in the State Government in IPA’s knowledge.
Improving contract management and outcomes
An extra payment milestone made cash flow improvements, less periods of extended out of pocket effort.
This will need to consider Treasurer’s Instruction 11 and how that impacts on government payment milestones.
49 Case studies cited.
50 Regular advice from surveys.
47
48
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It should come as no surprise that the greater the level of market analysis and the level of
procurement skills and specialisation brought to bear, the greater the likelihood that
contracts will be established in a manner that gives projects the maximum chance of being
managed well. 51 There are plenty of anecdotal cases where a poor market analysis and
procurement model has led to an outcome of contract variation being needed. 52
PART 4 covers this in more detail.
4.
WHAT NEW CAPABILITY IN PROCUREMENT IS REQUIRED
A focus on markets and developing knowledge and skills in particular areas will be required
by procurement professionals to best act on the model of a partnership approach between
agency and business.
Skills development and training in procurement are coordinated by the State Procurement
Board in a coherent manner and the training is of a good quality.
However, the generalist nature of procurement teams in agencies can mean that
procurement professionals are not developing sufficient knowledge of product or service
markets, or how to extract value from those markets. 53 For example, in an agency with a
small procurement team, it will have to conduct procurement in almost all areas of buying
(outside of health and construction). It is an unreasonable expectation to become expert at
procurement in almost all areas of goods and services 54; so either the agency will need to
concentrate on particular areas of importance, or there needs to be broader reform of
procurement at a more macro-level to generate more specialisation.
Due to constraints in market and commercial knowledge in State Government there can
also be a deficiency in the quality of negotiation between State Government and those in
the commercial world. 55 This is in part due to a lack of skills, a lack of experience with the
issues being negotiated and a lack of familiarity and comfort by Government officials with
risk based decisions.56
There are also constraints on the ability of Government officials to pursue suitable
commercial terms due to overly rigid policies applying to risk and liability.
Often highly specific templates and limits on payment in arrears only can be a constraint on
more commercial payment milestones being placed in contracts. This has been the regular
experience of businesses in South Australia as identified in OIA’s industry advisory panels,
through the Business SA’s Tender Ready report and reports in other jurisdictions.
Most consultancy practices will now name category management as a source of benefit, especially for managing suppliers
well. See EY, 2014.
52 A point of regular feedback to IPA.
53 Feedback from consultant working for key procurement body.
54 Ibid. Also see EY, 2014.
55 Feedback on higher value tenders from business received.
56 EY, 2014.
51
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Perhaps the most required risk consideration is for State Government to actively
renegotiate contracts entered which are not effective or are found to be poor value over
time.
Clarifying the roles in procurement
In many public authorities, acquisition plans are written by budget holders (project owners)
with little involvement from procurement specialists. 57 Procurement teams can draft
acquisition plans, but this is not likely to occur on contracts which are within the delegation
of the Chief Executive to approve.
Procurement advice is focussed on process approvals and it is often too late for considered
commercial advice and strategy to be developed.
Project owners are therefore ‘part time practitioners’ who are not very well equipped at
market analysis and are not always commercially experienced.
If procurement is to act on the strategic goals of the State Government, then greater
specialisation and guidance from procurement professionals to project owners will assist. 58
Deloitte Access Economics
Deloitte was engaged by IPA to advise on how to raise the economic contribution from
procurement. One of the critical findings included:
“Raising the standards of procurement activity to lift the economic contribution of
procurement activity in South Australia must be seen as a joint project with increasing
the SA Government’s procurement efficiency and effectiveness. … To assist these
goals, it is recommended that the State Government consider the implementation of
complementing procurement strategies; this could potentially include procurement
centres of excellence where a strong body of knowledge and experience can be
developed, focusing on thematic industries.” 59
This overall assessment was confirmed in other work for the IPA by Ernst and Young which
identified potential for major improvement in procurement outcomes through a category
based approach. 60
The key challenge for procurement in South Australia is to improve the capacity and
capability of procurement professionals to align to the strategic goals of the State
Government. 61
Better commissioning equals better outcomes when followed and measured
Feedback from consultant working for key procurement body.
Deloitte Access Economics 2014, “Economic contribution analysis of State Government procurement”, report for Office of the
Industry Advocate.
59 Ibid, pp 4-5.
60 EY, 2014.
61 Deloitte, 2014.
57
58
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Good procurement has to be built of a strong framework, as well as skills and capability of
the staff working in the profession for the State Government.
Good procurement outcomes start from the exercise to commercially plan well, they then
occur when those plans are informed by rigorous market analysis and a focus on building
relationships with business pre-tender. The procurement models need to ensure that
commissioning is central and that the outcomes identified as desirable are then measured,
followed up and monitored in better contract negotiation and management. 62
The process of identifying necessary skills, skills gaps and renewing key skills and
capability, needs to meet the objectives of the State Government. 63
5.
HOW TO DELIVER MORE VALUE-FOR-MONEY
The concept of value-for-money is one of the fundamental cornerstones of the State
procurement systems established by the State Procurement Board. The guidance on what
constitutes value-for-money is set in the Procurement Policy Framework and is broad
enough to include the benefit to the State economy from a procurement decision.
The guidance is then provided with examples on how to conduct assessments of value-formoney in the Supplier Selection Guideline. This includes examples on how whole of life
costing should be conducted well.
Comparing the State Government approach on value-for-money with international
methodologies, it is quite similar to the accepted framework in the European Union, the
Most Economically Advantageous Tender or (MEAT) test.
The MEAT test has a clearer terminology around including social and economic factors.
However in practice, the criteria are very similar and the State Procurement Board’s
incorporation of the Industry Participation Guideline and Sustainable Procurement
Guideline means that in this State, procurement processes can, and do include social or
economic outcomes.
Is the value-for-money framework being well applied?
Any framework is only as good as the way it is applied. There are cases where the
framework is well applied and cases where it could be applied better. Procurement value is
generally assessed on the basis of criteria (out of 100%), so it is critical that the criteria
reflect how the State Government can maximise the benefits of a contract.
For example, in areas of particular economic importance (also see Part 6 below) there is a
strong case for Industry Participation Policy to have a higher weighting than the minimum.
There are also cases where value-for-money may encompass broader economic
development objectives of the State, for example in the area of Health Industries (economic
priority 3).
62
63
Ibid.
Feedback from consultant working for key procurement body.
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Is value-for-money being achieved across a broader set of measures?
The barriers and impediments to business participating in tenders, or providing innovative
bids, can undermine value-for-money.
There are also process costs and inefficiencies in tendering that can leave significant value
left on the table. 64
Each one of the costs or compliance processes discussed above has an impact on
business and in turn on what the State Government can expect in terms of value.
Contract commissioning, negotiation and management most critical to value realisation
The State Procurement Board, in its 2013/14 Annual Report, stated that it is concerned
whether there is sufficient capacity and capability in public authorities. It considered that
there were also improvement opportunities identified in the areas of:
 contract management – ensuring contracts are being effectively managed by
skilled contract managers
 progressing the development of the procurement process in each public authority
 simplifying procurement governance, and
 focusing on the contribution of procurement in terms of value for money, and public
authority strategic goals.
The current approaches to market by agencies are not generally linked well and there is a
significant opportunity for improvement. That is, by not effectively coordinating the
purchasing of each agency, there are likely to be cases where different agencies are
obtaining divergent outcomes, whether on price, quality or through lower delivery of
broader economic benefits to the State.
The Benefits Realisation Framework developed in New South Wales covers quality
improvements as well as direct cost savings; process improvements and end-user
satisfaction. 65 The IPA is of the view that, there is a need for more demand management
tools and contract management skills across the South Australian Government.
Contract management requires a whole new level of skill and knowledge than some
existing procurement teams will hold. 66
Current procurement systems are centred on transactional processes. The modern best
practice for purchasing focuses on end-to-end advisory assistance and contract
management being monitored.
EY, 2014.
NSW procurement Board 2012, “Strategic Directions Statement”
66 Feedback from consultant working for key procurement body.
64
65
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Benefit Realisation should be focussed on the outcomes of contracts as well as forecasted
outcomes. All too often, the tracking of benefits does not occur after the forecast. This is an
experience across both public and private sectors, here and in other jurisdictions.
Gaining greater value from innovation and technology change
As demonstrated above in examples, the procurement process can miss value
opportunities when assessment criteria or contract requirements do not consider them. The
most obvious example are cases where technology advancement can make a product
deliver greater value over a longer term time scale.
Whilst the State Government has implemented whole of life costing, there is an experience
in the business community that it is not applied well enough. For example, when a new
technology has a return on investment which is significant but experienced over a long
period, this may be under-appreciated.
It may also be the case that where the project owners (often engineers or technical staff)
are not sufficiently across technology changes it then becomes difficult for that business to
compete from that position.
6.
INCREASING THE ECONOMIC CONTRIBUTION FROM PROCUREMENT
General
The IPA engaged Deloitte Access Economics (Deloitte) to report on which sectors of
purchasing provide the greatest opportunities for economic contribution and how this
should be measured and considered in evaluating tenders. Deloitte has prepared its
findings and report based on data supplied by the State Procurement Board covering
goods and services spending, SA Water, DPTI and Renewal SA. The data covers spending
of approximately $3.3 billion in 2012-13 and is based on contracts reported above
$110,000 (including GST) in value. 67
Deloitte have advised the Government that four key sectors of the economy provide
significant economic contribution from procurement spending (or the capacity to generate
substantially more economic contribution). These sectors are:
1. Heavy and civil engineering construction
2. Professional, scientific and technical services
3. Non-residential building construction
4. Electrical equipment manufacturing
67
Deloitte, 2014.
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Labour and capital are two key factors of production employed in virtually every production
process; these factors are what form the value that is added to an economy. Maximising
local labour and capital both in the direct procurement and in the supply chain feeding into
this procurement will boost the local economic contribution from procurement exercises. 68
Deloitte has prepared a series of potential questions for tenders to address which will allow
the Government to distinguish otherwise equal proposals on the basis of how much
economic contribution they generate in the State. Tenders that use local factors of
productions and invest in the State have the best chance of success in the award of the
contract when the tender is close on other criteria (such as price and quality measures).
Deloitte recognise that in addition to those economic drivers which can be quantitatively
analysed, there is also a range of unquantifiable benefits that governments can leverage
through its procurement activities. These include supporting innovation, socio-economic
objectives and training in the workforce.
For instance, the acquisition of human capital in this State is supported when local
businesses participate in Government contracts. There is substantial economic literature
that identifies business can build human capital through ‘learning by doing’. 69 This applies
to encouraging business to bid for and then to perform work for Government which then
builds up an expertise and a capacity for performance.
Industry Participation Policy (IPP) reform
The evaluation criteria under the previous policy only accounted in most cases for 2% for
IPP plans and they were not generally graded for quality, only for a pass or fail. This was
increased to 5% on an interim basis and was reviewed following the outcome of the
economic contribution analysis work undertaken by Deloitte. In February 2014, Cabinet
approved an increase in the weighting to a minimum of 10% in the four key categories that
have significant procurement activity in the State and that activity has the potential to create
a significant impact on the South Australian economy through employment, investment
outcomes and use of local suppliers as sub-contractors.
During the market analysis stage of procurement, prior to the Government’s decision, a
determination can be made whether or not to lift the minimum weighting for an individual
procurement. This may be particularly relevant in regional areas to provide greater flow-on
benefits in the form of economic contributions to the specific region, rather than considering
the State as a whole.
The IPP plan template has been significantly enhanced utilising the advice of Deloitte with
measurable outcomes for employment, investment and use of local suppliers.
68
69
Ibid.
Braslavskiy, E, 2013, citing widespread examples.
23 | P a g e
IPP scorecard and Chief Executive accountability for IPP
Chief Executives are ultimately responsible for the implementation of the Industry
Participation Policy within their agency. Accordingly, the Premier has elected to include
reporting against the policy’s objectives as a Key Performance Indicator in his performance
agreement with each Chief Executive.
The Office of the Industry Advocate will use the data agencies report to prepare an Industry
Participation Scorecard for each agency. The scorecard will set out the economic benefit
to the state in terms of jobs, investment and supply inputs associated with the agency’s
expenditure.
The OIA will also provide an annual report to Cabinet on the outcomes of the South
Australian IPP.
Major projects
On major projects, those valued above $50 million, the Office of the Industry Advocate will
create a tailored IPP plan. In addition to measures of labour and investment, some of the
changes over a standard can involve:
 Detailed processes and procedures for ensuring that local suppliers have maximum
opportunities on sub-contracted work packages
 Embedding of OIA staff on projects to assist Tier 1 contractors70, and
 Use of ICN Gateway.
How IPP can be enhanced even further
The standard form IPP approach may benefit from some refinement in areas of purchasing
which are highly specialised.
For example, the OIA has identified that in health, the IPP will need a greater level of
sophistication to help achieve the Premier’s vision in economic priority 3 for the State to be
“a globally recognised leader in health research, ageing and related services and products.”
This is primarily due to health markets often being for very specific elaborate products and
services which may not be sourced easily from within the State (at least currently).
Commissioning of health procurement requires a high level of market knowledge to extract
both value and wider economic benefit.
Procurement as a lever to generate economic growth in Health Industries will require a
clearer focus on key spend sectors with potential and building category knowledge of
suppliers. New models of procurement and their assessment need to be considered in a
clearly defined set of target areas.
70
This is only post tender and is not an issue for probity pre-contract-award.
24 | P a g e
Procurement that focuses on innovation of the South Australian economy will need smart
targeting of opportunities to develop or create capability. This is the case in Health
Industries.
Attracting investment to Health Industries through procurement will also benefit from smart
targeting.
The IPA is proposing to address some of these constraints in a joint 90 Day Change project
co-led with Health Industries SA.
Potential use of the two stage approach
One option for enhancing the IPP is to consider an approach which demarcates the
economic development part of the tender from the remainder.
Typically, the process followed with this approach will dictate that the technical or
qualitative and pricing proposal is opened and evaluated first and in accordance with preestablished criteria and methodology. Only proponents who have achieved the preestablished minimum score will proceed to the economic development evaluation.
The final score and successful proponent are determined following the evaluation of both
the technical/pricing and economic development proposals and combination of both scores
according to the pre-established methodology.
This approach is usually applied to large scale procurements and invites proponents to
propose economic development opportunities that would otherwise not be offered.
In the IPA’s view the benefits of the approach will be significant but not across all major
contracts, so discretion should be applied. For example, some areas of contracting offer
larger potential under this approach than others, which, may be well addressed already by
Industry Participation Policy.
7.
CONCLUSION
The findings of the report have been based on widespread survey analysis of business in
the State and are held with strong confidence by the IPA.
The report is a road map for how procurement reform would be widely supported by
business associations and their members and has had significant input from them.
Business can help the State Government deliver on its’ twin objectives. The first is to
deliver better value-for-money from procurement. The second is bringing broader economic
benefit to the State when it does this.
The State Government has an opportunity to improve the experience of business with
procurement in the State. This can deliver a reduction in cost for both suppliers and then
the State Government.
The report is a pathway to a partnership approach with business on procurement.
25 | P a g e
Written feedback should be provided by email to:
Corin McCarthy
General Manager – Procurement Reform
Email: [email protected]
Telephone: (08) 8226 8956
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ATTACHEMNT 1
SUMMARY OF RECOMMENDATIONS MADE BY THE INDUSTRY PARTICIPATION
ADVOCATE
These recommendations have now been adopted by the State Government and are
required to be implemented by all Government Agencies. It is important to note this
document should be read in conjunction with the South Australian Industry Participation
Policy August 2014 and the Industry Participation Procedural Guidelines August 2014.
The threshold for when Basic Industry Participation Plans (IP Plan) forms part of a
tender has now been lowered from $10 million to $4 million in metropolitan Adelaide
and from $3 million to $1 million in regional areas.
When the position of Industry Participation Advocate was established it was widely
perceived the SA Industry Participation Policy (SAIPP) was underperforming in delivering
benefits back to the local economy for a number of reasons including:
 the thresholds for triggering the requirement for IPP’s were too high, given the size
and scale of our economy
 the 2% minimum weighting was too low; and
 there were no penalties or repercussions for failing to comply with commitments in
IP Plans.
The previous SAIPP applied a tiered approach with no specific requirements for contracts
with a value less than $5 million in metropolitan Adelaide or less than $3 million in regional
areas.
Contracts with a value between these thresholds and $10 million required tenderers to
complete a Statement of Intent only. It was not until contracts reached the $10 million
threshold that Basic IP Plans were required.
While it is important to recognise a desire not to increase the red tape burden for industry,
the SAIPP and IP Plans are currently one of the government’s best mechanisms for
ensuring its procurement spend achieves the greatest benefit for the state.
The weightings for Standard IP Plans and Basic IP Plans have now been increased
from 2% - 5% - 10%.
The evaluation criteria under the previous SA IPP only accounted in most cases for 2% for
IP Plans and they were not generally graded for quality, only for a pass or fail. This was
increased to 5% on an interim basis and was reviewed following the outcome of the
economic contribution analysis work undertaken by Deloitte Access Economics. In
February 2014, Cabinet approved an increase in the weighting to a minimum of 10% in
four key categories that have significant procurement activity in the State and that activity
27 | P a g e
has the potential to create a significant impact on the South Australian economy through
employment, investment outcomes and use of local suppliers as sub-contractors:




heavy and civil engineering construction
professional, scientific and technical services
non-residential building construction
electrical equipment manufacturing
During the market analysis stage of procurement, prior to the Government’s decision, a
determination can be made whether or not to lift the minimum weighting for an individual
procurement. This may be particularly relevant in regional areas to provide greater flow-on
benefits in the form of economic contributions to the specific region, rather than considering
the State as a whole.
For contracts between $220,000 and up to $4 million in metropolitan Adelaide and
$1 million in regional South Australia, the employment contribution test receives a
minimum weighting of 5% of the overall assessment criteria.
There is now a requirement for Agencies to seek at least one local quote, including the
requirement to use the employment contribution test in the assessment criteria.
During the market analysis stage of procurement, prior to the Government’s decision, a
determination can be made whether or not to lift the minimum weighting for an individual
procurement. This may be particularly relevant in regional areas to provide greater flow-on
benefits in the form of economic contributions to the specific region, rather than considering
the State as a whole.
From 1 July 2014 an employment contribution test applies for all contracts between
$22,000 and up to $4 million in metropolitan Adelaide and $1 million in regional
South Australia will be required to determine the following:
a. For the primary contract; are the goods and/or services available within the State
or region? If so what is the number of FTE South Australian jobs associated with
the primary contract?
b. For any secondary contracts of significant value to the primary contract; are the
goods and/or services available within the State or region? If so what are the
number of FTE South Australian jobs associated with the secondary contract?
Approximately 96% of South Australian businesses are SMEs and many are seeking to
participate in a larger number of government contracts that fall within this range. The
Deloitte Access Economics report identifies employment as the primary driver of economic
contribution on contracts valued in this range. Employee location can also be a strong
proxy for the location of production or services. The acquisition of human capital in this
State and particularly local regional areas is supported when local businesses participate in
Government contracts.
28 | P a g e
By encouraging local businesses to bid for and then to perform work for Government builds
their expertise and capacity.
It should also be noted there a range of unquantifiable benefits the South Australian
Government can leverage through procurement activity. These include supporting
innovation, socio-economic objectives and training in the workforce. This is critical in public
procurement spending in regional supply chains, which provide important flow-on benefits
in the form of indirect economic contributions, knowledge spill over and clustering impacts,
as well as having the potential to support urban regeneration in these areas.
Prior performance of bidders against past IP Plans will form part of assessment
criteria for IP Plans submitted by bidders for future opportunities.
Previously there were little if any deterrents for non-compliance with IP Plans. In order to
address this, for all contracts above $4 million in metropolitan Adelaide and $1 million in
regional areas, prior performance against IP Plan commitments will form part of the
assessment criteria for future opportunities against that business.
The potential benefits of buying locally are now included in the value for money
guidance produced by the State Procurement Board and other agencies.
Recognising a similar approach taken by the Tasmanian Government, procurement
guidance material on assessing value for money should specifically take into account the
potential advantages of buying locally, such as:




shorter delivery times
local backup and service
availability of spare parts
contribution to the achievement of government policy objectives which support
local business such as employment creation and industry development; and
 potential for creating strategic partnerships and cooperative product development
The Industry Participation Advocate’s authority has been strengthened to ensure the
objectives of the role can be met:
It is expected the IPA will investigate why competitive South Australian suppliers miss out
on Government contracts.
This can be addressed in the following manner:
 request meetings with government buyers on behalf of local companies
 review acquisition plans and tender documentation in key contracts to assess any
unnecessary impediments to local companies
 review tender awards to evaluate if assessment criteria have been applied;
 review contracts and assess how well IPP Plans are being applied by the prime
contractor and
29 | P a g e
 review tenders post award and, when necessary, the make recommendations to
the relevant agency Chief Executive or Minister for improving industry participation
in future tendering processes
Employment, investment and supply-chain inputs are key drivers of economic
contribution from procurement.
For the first time jobs and investment have been given consideration in the allocation of
contracts from Government procurement. This reinforces the existing consideration of
supply-chain inputs for contracts of higher value. The report from Deloitte Access
Economics for OIA on how procurement can generate greater economic contribution
concluded that factors of production are broader than the supply-chain and policies to
promote economic contribution should be applicable on many contracting activities not
covered by previous Industry Participation Policy (IPP).
Agency CE's will now be accountable for the implementation of Industry
Participation policy directives and accordingly this will form part of the CE's
Performance Agreement with the Premier.
For the successful implementation of these reforms it will require a change in mindset and
capability with a shift in the willingness to adopt change within the Agencies. It is imperative
Chief Executives and leadership teams regard implementing these procurement reforms as
a strategic platform within their Agencies.
The Office of the Industry Advocate now has responsibility to oversee the
application of these policy directives and will implement a monitoring, evaluation
and review process to ensure the effective delivery of these policy objectives.
Without this requirement, there will be no incentive for agencies to meet these objectives.
The OIA is required to update Cabinet on how the policies have affected change and how
they have delivered on the goals of the Government to increase local employment, local
investment and use of local suppliers in procurement. A Score Card will be developed to
show the positive impact from each agency’s expenditure is having in supporting local jobs,
local investment and local supply inputs associated with Government contracts.
The Office of the Industry Advocate is investigating the benefits of the using
performance or outcome based tendering.
Currently, most tenders and contracts are too prescriptive and this stifles innovation and in
many cases does not deliver the best value for money proposition for the State.
Performance-based contracts encourage contractors to be more innovative and find cost
effective ways of delivering services. By shifting the focus from process to results it can
also deliver better outcomes for the State Government.
The Industry Participation Advocate will encourage Local Government and other
public institutions to adopt similar policy objectives.
30 | P a g e
Given the relatively small size of the South Australian economy, local SMEs can be heavily
reliant upon winning work let by state and local governments. This is especially evident in
regional South Australia, particularly when considering the value of procurement across our
68 council areas.
As such, the IPA believes it is necessary to develop a policy position applicable to all levels
of government purchasing, to ensure the use of competitive local businesses when
purchasing or contracting for goods, services, housing and works is maximised; whether by
State Government Agencies, Local Government or other public institutions.
There are now nine principles for maximising local participation:
1. The economic benefit to the State from procurement decisions is recognised in bid
evaluations
2. Agencies report on local participation in purchasing and contracting, and identify
strategies for improvement
3. Constructive feedback to improve chances of winning future work is provided to
unsuccessful local tenderers, linked to a program to improve tendering skills for local
businesses
4. A single web portal provides access to information on government tenders and
contracts and participating in government contracts as well as forecasting future
opportunities
5. Contract conditions and procurement requirements are removed where they form
unnecessary barriers to local participation
6. Procurement practices minimise the costs of tendering
7. Local businesses that wish to do business with Government are given the opportunity
to do so
8. The potential for local industry development and employment creation through
government buying is explored at the project design or concept stage
9. Procurement processes support local industry development by encouraging
collaborative industry partnerships
There is now a streamlined tender pre-qualification process for the whole-ofgovernment as a priority red tape reform.
The overwhelming sentiment from business groups and repeat tendering companies was
that prequalification should be simple and should cover all government agencies.
Prequalification existed for many departments, the Department of Planning, Transport and
Infrastructure (DPTI), Department of Environment, Water and Natural Resources
(DEWNR), SA Water, Forestry SA and others.
In January 2014, Cabinet approved that tender prequalification fees will be removed from 1
July 2014, ensuring that suppliers in the building and construction sector are no longer
collectively charged $62,000 in 2014-15.
Cabinet also approved the setting of lead agencies in four major categories of supply so
that repeat prequalification is minimised.
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ATTACHMENT 2
THE OFFICE OF THE INDUSTRY ADVOCATE ADVISORY PANELS
The role of Industry Participation Advocate (IPA) has been established to ensure local
businesses leverage maximum opportunities from the State Government’s $4 billion in
annual buying and through the Government’s portfolio of building and construction projects.
The IPA’s primary goal is to increase the number and diversity of local businesses securing
economic benefits from Government contracts.
The IPA has also been tasked with investigating and reporting on new ways to drive local
investment, develop strong value chains from the State’s portfolio of major projects, support
the development of an advanced services sector and leverage opportunities for innovation.
As such the Office of the Industry Advocate (OIA) has established 6 Advisory Panels which
cover the various industry sectors and an Innovation Think Tank.
 Advanced Technologies Advisory Panel
 Building and Construction Advisory Panel
 Creative Industries Advisory Panel
 Goods and Services Advisory Panel
 Professional Services Advisory Panel
 Major Projects Advisory Panel
 Innovation Think Tank
The purpose of the panels is to recommend to the IPA:
 Reforms to government practices and processes (including procurement) to ensure
local businesses are not disadvantaged and the benefits of buying locally are taken
into account when assessing the relative value of applications from local
businesses;
 Identify new ways to drive local investment, develop strong value chains from the
State’s annual procurement and contracting spend, support the various industry
sectors and better leverage opportunities for innovation;
 Opportunities to improve and build upon the objectives of the Industry Participation
Policy (IPP);
 Application of performance-based tendering and contracts to drive innovation,
increase opportunities for locally base and improve the value proposition for
Government.
Panel members are appointed by the IPA. Membership is attached to the individual rather
than their positions. Membership conditions vary based on the relevant industry sectors.
32 | P a g e
ADVANCED TECHNOLOGIES ADVISORY PANEL MEMBERS
Mr Goran Roos
DMITRE
Mr Rick Cairney
Business SA
Mr Andrew Downs
SAGE
Mr Marty Gauvin
Tier 5
Mr Taffy Horwood
SMAC Technologies
Mr Declan O’Callaghan
Voiteck
Mr Darrin Spinks
Precision Components
Mr Chris Penn
Hansen Yuncken and Leighton Contractors
Ms Sarah Andrews
Association of Professional Engineers, Scientists
and Managers Australia
Mr Stewart Cathie
Fujitsu Australia
Mr Steve Myatt
Australian Industry Group
Mr Tony Smith
Philmac
Mr Andrew Croft
Codan Limited
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BUILDING AND CONSTRUCTION ADVISORY PANEL MEMBERS
Mr Paul Tymukas
Sarah Group
Mr Lorne McClurg
Moto Projects Pty Ltd
Mr Phillip Sutherland
Civil Contractors Federation
Mr Michael Hickinbotham
Hickinbotham Homes
Mr Vince Manuele
Manuele Engineers Pty Ltd
Mr Andrew Marshall
Marshall & Brougham Constructions
Mr James Trezona
Aurecon
Mr Paul Williams
Comace
Mr Robert Harding
Housing Industry Association
Mr Jon Seeley
Seeley International
Mr Keith Daniels
WCK Pty Ltd
Mr Louis Visintin
Butterfields Services SA Pty Ltd
Mr Tim Margach
Supaloc
Mr Aaron Cartledge
Construction Forestry Mining
& Energy Union
Mr Jason Wilder
CEPU Electrical Plumbing SA
Mr Steve Grieve
Grieve Gillett & Dimitty
Andersen Architects
Mr David Cooke
Hames Sharley
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CREATIVE INDUSTRIES ADVISORY PANEL MEMBERS
Mr Andrew Killey
KWP Advertising
Mr David Grice
Music SA
Mr David Turrell
City Dub
Mr David Kingham
Icons Australia
Ms Kelly Breuer
Feelgood Folk
Mr Richard Harris
South Australian Film Corporation
Mr Mario Andreacchio
Ampco Films
Mr Dale Roberts
Kojo
35 | P a g e
MAJOR PROJECTS INDUSTRY ADVISORY PANEL MEMBERS
Mr Douglas Dally
Thiess
Mr Peter Salveson
Hansen Yuncken Pty Ltd
Mr Nick Abley
Badge Constructions Pty Ltd
Mr Darren Foster
Bardavcol
Mr Stephen Young
E&A Limited
Mr Michael Samaras
Samaras Structural Engineers
Mr Kyffin Thompson
BDO Australia
Mr John Held
Russell and Yelland Architects
Mr Brett Brown
Southern Quarries
Mr Aaron Cartledge
Construction Forestry Mining & Energy Union
Mr John Camillo
Australian Manufacturing Workers Union
Mr Mariano De Duonni
Hassell
Mr Phillip Sutherland
Civil Contractors Federation
Mr Todd Hacking
Cement Concrete & Aggregates Australia
Mr Wayne Hanson
Australian Workers Union
36 | P a g e
GOODS AND SERVICES ADVISORY PANEL MEMBERS
Mr Mark Beatton
Seasonair Pty Ltd
Mr Sam McCarthy
Tonkin Consulting
Mr Trent McInerney
RxSafety
Mr Neil Howells
Hudson Howells
Ms Karen Raffen
Advantage SA
Ms Catherine Barnett
Food SA
Mr Laurie Kozlovic
Veolia Environmental Services
Mr Daryl Stillwell
Stillwell Management Consultants
Mr Andrew Sarich
RPC Pipe Systems Pty Ltd
Mr Peter Lane
Lane Printing
Mr Steve Jones
Bedford Group
Mr Mark Robinson
2xeed Consulting
Mr Rick Cairney
Business SA
Mr Tony Evans
Australian Manufacturing Workers Union
Mr David Di Troia
United Voice
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PROFESSIONAL SERVICES ADVISORY PANEL MEMBERS
Ms Cathy Mayfield
Lynch Meyer
Mr David Martin
Finlaysons
Mr Adrian O’Dea
Deloitte
Mr Sean Keenihan
Norman Waterhouse
Ms Mary-Alice Paton
Norman Waterhouse
Ms Karina Cosoff
Cosoff, Cudmore, Knox
Mr Mark Stewart
Ernst & Young
Ms Rowan Roberts
KPMG
Mr Richard Pryor
Richard Pryor and Associates
Mr Robin Schuck
Consult Australia
Mr Tony Giannone
Tectvs Pty Ltd
Mr Monish Bhindi
Greenhill Engineers
Mr Adrian Swale
Minter Ellison Lawyers
Mr Peter Megaw
Commonwealth Bank
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INNOVATION THINK TANK
Mr Nigel McBride
Business SA
Ms Marina Pullin
Mantra Consulting
Mr Gooran Roos
DMITRE
Ms Erma Ranieri
Office of Public Sector Renewal
Mr Rob Chalmers
UNI Adelaide
Mr Stephen Rodda
UNI SA
Mr Anthony Francis
Flinders UNI
Mr Dean Littlefield
CEDL Services
Mr Andrew Leunig
Andrew Leunig & Associates Pty Ltd
Ms Sharon McKay
Office for Design & Architecture SA
Mr Ross Womersley
SACOSS
Mr John Laird
Construction Industry Training Board
Greg Parkinson
Xchanging
Marty Gauvin
Tier 5
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