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Drug and Alcohol Office
Procurement – responding
to reform
James Hunter
Director
Client Services and Development
DAO and the Alcohol and Drug Sector
• DAO – Statutory Authority under the Alcohol and Drug
Authority Act 1974, core functions:
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Treatment and Support
Prevention
Workforce Development
Policy and Strategy
Research
• AOD Sector – 38 Not-for Profit Organisations and 3
Government providers
Peak
• WA Network of Alcohol and other Drug Agencies (WANADA)
The Alcohol and Other Drug Sector
Main service types
• Integrated Metro Community Drug Services and
DAYS (5 services)
• Regional Community Drug Service Teams (7 services)
• Residential Rehabs (9 services)
• Sobering-up Centres (9 services)
• Detox (3 main services, plus some hospitals)
• Pharmacotherapy (e.g. Methadone, Buprenorphine,
Naltrexone) (numerous services)
• Other specialist services (numerous services)
The Alcohol and Other Drug Sector
DAO Funding
• Government providers – $17.6 million (35%)
• Not for Profit NGOs – $32.7 million (65%)
• Total of $50.3 million is approx 80% of DAO
budget
Other funding
• Commonwealth Government
• Fundraising / donations
2009/10 - Change is coming!
Component 1 Process
• Budget announcement – 15% in 2011/12, average of 10% in
13/14
• Decision to extend all DAO agreements to 30 June 2012
• Delivering Community Services in Partnership Policy
• All eligible DAO service agreements have received the 15%
($4.4 million in 11/12 for AOD sector) - this was the easy part!
• Initial information indicates salary boosts of 5% to 12% in the
AOD sector
• Some early reports of decreased staffing turnover
• An effective but blunt instrument
Component 2 - Preparing
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Average of 10% price adjustment, some will get more,
some less, and some none at all
Our focus has been on:
• Putting the Policy into immediate practice with request
processes
• Designing a process for expiring agreements – 30 June
2012
• Collecting material for DAO’s Agency Implementation
Plan and Component 2
• DAO and sector capacity building – including this forum
funded from the Government’s Fostering Partnership
grants process
Agency Implementation Plan
DAO is required to submit an AIP in June 2012, that covers:
– Our capacity to undertake reform
– What we have done so far
– What we plan to do
We are focusing on
• Demonstrating commitment and capability
• Partnership and collaboration with our sector and FaCS
Unit
• Positioning the sector to maximise the opportunity of
Component 2 funding
New Policy in Practice – New agreements Open
Request Processes
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Goldfields Community Drug Service Team
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Northwest Alcohol and Other Drug Support
Royalties for Regions initiative – Kimberley and
Pilbara
New Policy in Practice - Expiring Agreements
Two groups
1. Preferred Service Provider process for residential
rehab program services and a few specialist
services
2. Extensions for 2012/13 year for remaining
services (most services)
DAO’s – Preferred Service Provider Process
Delivering Community Services in Partnership Policy & State Supply
Commission policy on Open and Effective Competition
Community service
Commercial
Does need still exist and is there an existing service provider?
Yes - assess for Preferred Service Provider
status
PSP status  - Sole
Supplier Request process
No PSP status
No & funding > 150k
Request / tender process
(Restricted or Open process)
Consult to refine service requirement
Issue Request (tender)
Receive Offer, evaluate, Community Services Procurement Review Committee
Provide letter of acceptance to finalise service agreement or letter of preferred
respondent to clarify issues before finalising service agreement
Broader procurement strategy and 2013/14
process
• DAO has historically utilised PSP, with Open Requests
only used for new funding or for when
underperforming contracts expire.
• DAO’s strategy going forward is being finalised and
will be reflected in our Agency Implementation Plan.
• Delivering Community Services in Partnership Policy
supports a range or processes:
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Open Request
Restricted Processes
PSP
Direct Negotiation
Broader procurement strategy and 2013/14
process
• DAO’s strategy will be scrutinised independently via
our AIP
• Approach taken needs to demonstrate it will deliver
best outcomes and value for money for the
community
• Likely to be a mix of PSP and Open Request, with
some agreements extended for a further year
• Greater focus on agreeing outputs and outcomes in
Service Agreements (what services, how much
service, and what quality of service)
Reducing the administrative burden
• A key objective of Government is to reduce the
administrative burden on the NFP sector
• Strategies planned to be introduced by DAO include:
– Longer contract terms, with the norm being 3years + two 1
year options (5yr total)
– Reduced financial reporting
– Largely automated reporting (SIMS)
To make this work DAO’s challenge is to specify the right
outputs/outcomes in the beginning, and your challenge is
to price your services accurately
DAO perspective so far
• Opportunity to address sustainability issues in the
sector.
• Opportunity to clarify and more sharply define and
measure the outcomes we are purchasing on behalf
of the community
• Work for DAO has increased in the short term – but
has been coupled by increased support from FaCS
Unit
• Increased external scrutiny of processes and
decision making re purchasing services via CSPRC
and FaCS unit
DAO perspective so far
• A framework now exists for the development and
promotion of best practice in service procurement
• Relationships are critical in any complex change
process – we are focussed on collaboration with
WANADA and the sector, and the FaCS Unit
• The sustainability of reform appears secure due to
high level commitment and a central unit in place to
drive it (FaCS Unit)
Challenges remaining
• Procuring services on an outcomes basis is hard need to better define and measure outcomes
• Pricing services sustainably to deliver outcomes is
also hard
• Funding models are evolving e.g. self directed service
design
• Inputs (resources required) and outputs (products of
activity) are the way most people understand service
procurement and delivery
Challenges remaining
• Capacity of the Sector – the sector is diverse with a
range of organisations providing services
• Capacity of DAO – Capability assessment to occur in
May 2012
• Component 2 – the challenge is to use the
opportunity to address remaining sustainability
problems
• Relationships – how to maintain and strengthen
them while changing the way we do business
Challenges remaining
• Anxiety about the consequences, intended and
unintended, reform will have in the medium/long
term
• Increased external scrutiny of procurement
processes in our sector
• An evolving response to the DCSP Policy – how to
remain flexible but also provide stability and
certainty
• Commonwealth Government – a key player with a
different approach to service procurement
Questions?