State Procurement Board 2016-2017 Annual Report
Section A: Reporting required under the Public Sector Act 2009, the Public Sector Regulations 2010 and the Public Finance and Audit Act 1987
Nil return. In accordance with the State Procurement Act 2004, in 2016-17 the Department of Treasury and Finance had administrative responsibility for providing support to the State Procurement Board. Refer to the Department of Treasury and Finance's 2016-17 Annual Report.
Section B: Reporting required under any other act or regulation
Name and date of act or regulation
State Procurement Act 2004
(1) The Board must, on or before 30 September in each year, deliver to the Minister a report on the administration of this Act and the work of the Board during the financial year ending on the preceding 30 June.
(2) The report must incorporate the audited accounts of the Board for the relevant financial year.
ADMINISTRATION OF THE ACT AND THE WORK OF THE BOARD
The State Procurement Board (Board) provides the Government of South Australia with independent oversight of public sector procurement. The following report details the Board’s activities undertaken during 2016/17 in key functional areas relating to its legislative and policy framework.
The Board supported the delivery of a major procurement reform strategy to:
Many of the required outcomes are also reflected in the Board’s three-year Strategic Plan 2016-18, which recognises the legislative and governance framework that underpins the Board’s role and aligns Board activities with broader government objectives including achieving value for money and building procurement capability across government. There has been strong achievement in procurement reform and many of the initiatives are now embedded and subject to regular review and improvement.
The five strategic outcomes of the plan are:
The Board’s achievements in 2016-17 include:
The Board has introduced the Procurement Governance Policy, which requires that major agency procurement governance committees include at least one external commercial advisory representative with relevant experience, and the Industry Participation Advocate (or delegate).
As part of the procurement reform agenda, the Department of Premier and Cabinet (DPC) has appointed an across-Government Chief Procurement Officer (CPO), reporting to the Chief Executive, DPC. The CPO has been appointed to the Board, to ensure alignment in across government procurement governance and reform co-ordination. The Board has commenced delegation of some of its operational functions to the CPO. The CPO has begun working closely with agencies to improve productivity and efficiency through performance monitoring, benchmarking and the use of data analytics. Under the procurement reform strategy, the CPO will also increase oversight of agency procurement savings targets.
The Board undertakes an Accreditation Program designed to assess the quality and appropriateness of the goods and services procurement operations of public authorities.
Public authorities are required to demonstrate clearly defined and implemented procurement strategies, governance, processes and systems in order for the Board to provide a procurement authority to the public authority’s principal officer. This authority allows the public authority to undertake and approve procurements, up to a designated dollar value, without reference to the Board.
The Accreditation Program applies to all public authorities with a procurement authority greater than $220,000 and has a focus on the following performance categories:
All public authorities with a procurement authority greater than $220,000 have been reviewed by an independent lead reviewer between 2013 and 2016.
In 2016/17, two additional reviews of public authorities were completed due to significant organisational changes in their procurement functions. These reviews were for the Department of Planning, Transport and Infrastructure, which has recently undergone significant changes in its procurement function, and the Department of the Premier and Cabinet, which consolidated its three procurement functions (ICT procurement, across-government contracts and DPC specific procurement) into one procurement function.
Findings from the Accreditation Reviews have assisted the Board to identify common issues across public authorities and provide additional policy guidance and training, such as improved contract management guidance as well as developing a range of Better Practice Guides to assist public authorities with their procurement operations.
The current program is now complete. A review of the program is under way, with a view to commencing the next four year cycle in 2018.
Assurance Review Program
The Assurance Review Program enables the Board to meet its statutory obligations under section 12, (1)(e) of the Act, that is “to investigate and keep under review levels of compliance with the Board’s procurement policies, principles, guidelines, standards and directions”.
The objective of the Assurance Program is to assess the performance of each public authority in complying with the Act and the Board’s procurement policies, principles, guidelines and directions, and applies to all public authorities.
The program focuses on how public authorities manage their procurement risks through reviewing and validating the following areas:
The 2012-2016 reviews undertaken conclude the cycle of the assurance program, in which 16 large public authorities and 26 base level public authorities (i.e public authorities with a procurement authority of $220,000) were reviewed. In late 2016, the Board conducted five base level public authority reviews and exempted four base level public authorities from an assurance review due to the low procurement spend profile of these entities.
Findings from the current Program have assisted the Board to identify issues across public authorities and provide additional policy guidance and training, such as developing a Contract Register policy to ensure all contracts are recorded by public authorities, improved guidance on when it is appropriate to enter a direct negotiation with a supplier, clearer guidance on sustainable procurement and additional contract management guidance.
The current Program is now complete. The program is currently being reviewed with a view to commencing the next four year cycle in 2018.
Development of Not for Profit Funding Guidelines
Section 6 of the State Procurement Regulations 2005 excluded community welfare funding arrangements with non-profit bodies from the definition of procurement operations in the Act, thereby enabling public authorities to undertake those operations without overview by the Board. This exemption was removed, effective 1 July 2017, following Cabinet approval in June 2017 to support the implementation of the South Australian Not-for-profit Funding reforms.
The South Australian Government approved DPC Circular 044 - South Australian Funding Policy for the Not-for-Profit Sector which comes into effect from 1 July 2017. This Circular aims to support and strengthen collaborative partnerships between government and the not-for-profit (NFP) sector. It provides a consistent approach to all aspects of South Australian Government funding, sets clear requirements for public authorities, reduces the administrative burden on NFPs and maintains their independence. Government funding for NFPs is either via procurement or grants.
The DPC Circular is based on best practice principles for government and NFP funding relationships including:
The State Procurement Board has consulted with key public authorities that contract with the NFP sector and representatives from the NFP sector and has updated the following policies to incorporate NFP principles identified in the DPC Circular:
These policy updates will come into effect from 1 July 2017.
A standard not-for-profit funded services agreement is currently being developed to simplify the contracting process for NFP funded services.
Training and Capability Development
Under the Act, the Board is required “to assist in the development and delivery of training and development courses and activities relevant to the procurement operations of public authorities”. This is facilitated in a number of ways within the Board’s Capability Development Program:
i. Capability Assessment
An assessment of the capability of 270 procurement staff across government identified priority skills uplift opportunities in negotiation, contract implementation and contract management. Becoming more outcome focused and creating greater public value was also identified as an improvement opportunity. The data gathered has been used to recalibrate existing training workshops and will be used as a benchmark for future assessments. The report has been considered by the Board and the CPO and operational improvements and strategies to address skills gaps are being developed in conjunction with agency stakeholders.
ii. Vocational Qualifications
The Board continued to facilitate opportunities for employees to gain vocational qualifications in procurement. 12 participants from across Government undertook study towards an Advanced Diploma of Government (Procurement & Contracting) during the reporting period.
iii. Targeted Training Program
The Board’s Targeted Procurement Training Program hosted 378 attendees participating in 31 workshops during 2016-17. The program included topics that focussed on increasing understanding of specific Board policies and guidelines as well as broader aspects of good procurement practice.
The suite of workshops is delivered by Registered Training Organisations and caters for those new to, or with an interest in, procurement right through to experienced practitioners seeking to refresh their knowledge. Adjustments were made to some workshops in the second half of the financial year in response to the capability review. Mapping of training inventory has been undertaken to determine any gaps, and priority will be given to offering niche training moving forward that aligns with the priority skills improvement opportunities.
The Board continued to monitor participant feedback including a sample of participant/manager follow-up on the application of knowledge in the workplace. The quantitative rating for overall participant satisfaction during 2016-17 was 80%.
Networking and Professional Development
The Board continued to host a regular forum for agency heads of procurement, facilitated by the Presiding Member of the Board in the first half of the financial year and subsequently by the Chief Procurement Officer. The forum is an important communication mechanism for sharing ideas and discussion on procurement topics of interest.
The Board’s staff continued to represent South Australia on the Australasian Procurement and Construction Council’s Procurement Capability Development Working Group, which met regularly to develop and progress strategies aimed at building government procurement capability and enhancing the growth of the procurement profession.
The supplier survey, designed to elicit the experiences of suppliers that have tendered for government procurements on the SA Tenders and Contracts website, continued to provide useful feedback for integration into the policy framework and the capability development program.
Section C: Reporting of public complaints as requested by the Ombudsman
Summary of complaints by subject
Public complaints received by the State Procurement Board
Category of complaints by subject
Number of instances
Data for the past five years is available at: https://data.sa.gov.au/data/dataset/state-procurement-board-annual-report-data-public-complaints