Go To Market
Evaluation & Award
Reporting & Analytics
Go To Market
Evaluation & Award
Reporting & Analytics
John Arnold | 15 Oct 2021 | 4 min read
A recent inquiry has heard that more than half of the Australian government’s procurement is conducted via limited tender.
According to the Australian National Audit Office (ANAO) in a Government News report, up to 60 per cent of Australian government procurement has not been open tender since 2010.
“There could be as little as one entity being invited to apply for the procurement opportunity,” said Brian Boyd, executive director of ANAO performance audit services.
One way the ANAO believes this is occurring is by people faking the need for emergency procurement in order to leverage exemptions to avoid open tender.
In these cases, entities would deliberately not plan in advance for procurement, then request to use these procurement rules.
The ANAO called this phenomenon “planned haste”.
Encouraging competition in procurement provides important benefits to both the buyer and supplier.
On the buyer’s end, it encourages suppliers to offer lower prices, better offerings, and more innovative solutions. Otherwise, they could easily lose out to a competitor. In short, the buyer gets more value-for-money.
For suppliers, it gives them more opportunity to participate in submitting bids or proposals on requirements for which they are qualified to deliver.
Another factor is reducing the chances of corruption or collusion. While this can happen during any form of procurement procedure - public or private - these sorts of activities can thrive in an uncompetitive environment.
According to the ANAO’s Mr Boyd, ethical procurement was getting less attention than value for money, even though cutting corners in ethics could often ironically lead to getting a bad deal.
If there are such clear benefits to competitive and ethical procurement, it begs the question why so many people try to avoid it.
The main reason is time. It’s not uncommon in some departments for a procurement process to take up to a year. For government employees, this can be an unacceptable wait, and they feel forced to cut corners.
Because of this, Mr Boyd said the ANAO had identified “a lot of expertise” in government employees who keep to the letter of the law when it comes to procurement, but not the spirit. They use loopholes and exemptions to avoid having an open, ethical and competitive procurement process.
The end result? Scenarios where a department may spend more money to purchase something than they would have otherwise.
There are many tools and techniques that can be used to make government procurement at every level more competitive, cost-effective and ethical.
Reduce Points of Friction
When a procurement journey feels onerous, that’s when people cut corners. This can occur when there are delays in things being signed off or an excess of manual handling.
Rather than punish them for trying to get things done, business processes and systems need to be set up to make things as frictionless as possible.
One reason a process can be slow is because of the tools being used. Many organisations are relying on a combination of ERP systems, spreadsheets, emails and tender portals. The resulting process is manual, inefficient and lost in people’s inboxes.
The solution to this is to keep everything in a single system that handles and tracks correspondence, like VendorPanel. Managing end-to-end procurement processes in one place drives high rates of user adoption and ensures everything remains in a single “source-of-truth”, audit-ready and with data available to provide insights and continuous improvement.
“Where systems and processes can be circumvented, it’s unlikely that the tools are in place to measure the impact, even after the fact,” said VendorPanel CRO Matt Clyne.
“Having the right tools in place makes it less likely that these undesirable behaviors will occur, but also makes it easier to spot them in real time and to quantify their impact.”
Provide Policy Guidance Before Procurement Starts
While some buyers are experts at finding loopholes, others genuinely don’t understand the rules. This can be because they can’t find the policy document or couldn’t fathom it.
A dedicated procurement platform can present them with a set of questions to answer before their procurement journey begins (such as VendorPanel’s Policy Guide).
Depending on their answers, they are then provided with a set of instructions specific to the procurement process they need to undertake. This interactive format is a lot easier for buyers to digest than a static document that covers every scenario.
Make It Easy to Source From Compliant, Ethical Suppliers
For your buyers, all your suppliers should be discoverable in a single supplier database. They should also be able to easily identify local, social and compliant suppliers.
There are tools that offer badging of these sorts of suppliers, as well as enriched supplier data like whose insurances are current or meet your sustainability standards.
Another useful feature some procurement solutions have is a built-in marketplace for if you don’t have prequalified vendors. These offer access to registered ABN-verified businesses organised by category.
By reducing friction and providing compliance information upfront, it makes it easy for buyers to go to market and therefore foster competition.
VendorPanel is the procurement platform of choice for state governments, councils and commercial businesses.
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