The Local Government Act 2020: Changes Promote Accountability and Collaboration in Procurement

Imagine having a cool $100 million of someone else’s money to spend on goods, services and works for your local area. It may seem like a dream job, but when it’s public money the stakes are high. All decisions and processes need to be in line with policy and the consequences of non-compliance can range from an audit spotlight to criminal charges.

The weight of responsibility can be great, especially in these times of economic crisis. Local governments in Victoria spend more than $2.7 billion annually and now more than ever it is critical that procurement spend is tightly managed, controls and oversight in place across the source to contract process to ensure compliance and fairness. Equally important at a time when local economies are doing it tough is that the money continues to flow. Procurement can have a powerful impact and SMEs and local businesses are depending on Councils to play their part.

The new Victorian Local Government Act has arrived right on time for public procurement, requiring Councils to review their policies and to consider process improvements that increase efficiency, ensure fair and open competition and reduce risk of non-compliance.

In this article, I’ll look at the two main changes in the Act that will impact public procurement in Victoria. I’ll highlight how VendorPanel can help you to navigate those changes and drive increased value both to your own organisation and to your local community.

Inclusion of guidelines

As in the 1989 Act, the new Act recognises that no two local governments are the same so Councils have the responsibility to establish procurement policies that are suitable for their operation. The key difference is that in 1989 the guidelines were not included in the Act, in 2020 they are. It is clearly stated that policies should be designed to uphold principles of:

• embedded process
• clear evaluation criteria
• open and fair competition and
• value for money.

For Councils using manual processes, with documentation spread across multiple systems and hidden in email, proving compliance with these guidelines will be challenging.

Emphasis on collaboration

It’s long been understood that shared supplier arrangements drive significant value to the public sector by reducing duplication and generating savings. Recognising this, each state has a well-established body (MAV in Victoria, Local Buy in Queensland, LGP in NSW, and so on) dedicated to creating and managing contracts for local government use. These shared arrangements reduce the time spent on public procurement processes and achieve better value as lower prices can be negotiated with suppliers who, in return, benefit from the volume of aggregated requests.

The 2020 Act in Victoria goes beyond these LGA arrangements, encouraging the sharing of existing contracts between neighbouring local governments, and regional collaboration in the creation of new contracts.

Procurement policies must now include a description of how the Council will seek collaboration with other Councils and public bodies in the procurement of goods or services. In addition, the CEO will be held accountable for ensuring that opportunities for collaboration are detailed in all agreements prior to approval.

Now that it is essential for Councils to work collaboratively, the challenge will be to effectively implement new processes for staff to source from these shared arrangements.

How VendorPanel can help to embed policy in process

VendorPanel is designed to manage an organisation’s entire procurement spend, enabling Councils to standardise processes across all purchasing thresholds and supplier arrangements, including contracts managed by other organisations.

The platform is configured to align with the organisation’s policies and goals. Once these are established, buyers are prompted automatically with all the necessary checks and controls as they source suppliers, and request and manage proposals.

The procurement team has full visibility across all sourcing and the activity within each event and can create an audit-ready report at the click of a button.

“The safeguarding of staff against any breaches in compliance of Council policy or procedure is the key benefit for me and my staff.” - Mark Mills, Fleet Manager, Sutherland Shire Council

For collaboration on contracts, VendorPanel supports secure panel sharing, making it possible to both share (out) and access (in) supplier arrangements. This unique capability has seen VendorPanel pioneer sector-wide and cross-regional collaboration. Data has shown that having a centralised platform for regional contracts drives their use and increases value from the arrangements.

I’d be happy to explore how VendorPanel can help you to comply with the new requirements under the Act. If you’d like to talk, please get in touch.

You can access the full text of Victoria’s Local Government Act 2020 here.