Government
Procurement
Reform
Seize the opportunities
Agenda
• Introduction
• Reform Themes
• Cost Savings Workstream

Year One

Success Factors

Key activities to date

Governance
• All of Government Contracts
 Office Consumables, Passenger Vehicles, Desktops &
Laptops/Notebooks and Single & Multi-function Print Devices
• e-Market Place / e-Tools
• Questions
Four themes
• Cost savings
• Build capability and capacity of procurers
• Enhanced NZ business participation
• Improved governance, oversight & accountability
Cost Savings Workstream: Year One
• All of Government Contracts (x4)
• Savings Methodology
• Spend Analysis
• All of Government Supply Agreement and MOU
• e-Marketplace / e-Tools
Cost Savings Workstream: Success
Factors
• Calculable cost savings that are measurable
• Contract strategy and approach that:
• delivers government business needs
• meets the government procurement policy
• exercises a deterministic influence in the supply
market
Cost Savings Workstream: Success
Factors
(continued)
• Acceptable quality standards, fit for purpose
• Risks mitigated and managed appropriately
• Supplier relationships appropriately managed
• Effective measures of success (cost saving,
quality service, sustainability)
• Transparency
Cost Savings Workstream: Key
activities to date
• Establishment of Centres of Expertise
• Data gathering and validation
• Governance mechanisms established
• Stakeholder engagement
• Market analysis
• Tender documentation
• Establishment of AoG Supply Agreement and MoU
• Probity Assurance
Cost Savings Workstream:
Governance
• Ministerial Oversight
• Chief Executives
• GPDG Reform Programme Executive
• Cost Savings Technical Advisory Group
• Client Advisory Groups
Office Consumables
Procurement Strategy
Discussion Points
• Overview: New Zealand office consumables market
• Current Government procurement of office consumables
• What is the scope of the contract(s)?
• Where are the opportunities?
• What will this mean for you?
Overview: New Zealand office
consumables market
• New Zealand stationery market is approx. $1.2b p.a.
The market consists of:
• Manufacturer/suppliers - e.g. Croxley
• Import suppliers - e.g. HP, Croxley
• Wholesalers - e.g. Spicers Office Paper
• Value Added Resellers - e.g. OfficeMax, Corporate Express
• Retailers – e.g. Warehouse Stationery, Paper Plus, Supermarkets
Current Government procurement of
office consumables
Government spend is approx. $50m p.a. via a variety of
mechanisms:
•
Contracted integrated solutions with OfficeMax and Corporate Express
•
Purchasing via the GSB aggregated solution
•
Non-contracted arrangements
•
Ad hoc/retail purchasing
What is the scope of the AoG contract(s)?
Government Catalogue consisting of:
• Printer ink and toner cartridges
• Photocopier paper
• General stationery items
• Canteen products
• Computer accessories
• Health and hygiene
• IT media storage
Out of Scope:
• Furniture
• Business machines
• Print solutions
What is the scope of the contract/s? (continued)
Services to be provided:
• Sourcing of required product
• Mapping of supplier catalogue items to Government
e-marketplace catalogue
• Catalogue content management
• Invoicing services
• Comprehensive reporting
What is the scope of the contract/s?
(continued)
• Call centre support
• Product rationalisation
• Logistics, warehousing and distribution
• Packaging retrieval and recycling
• Amelioration of environmental impacts
Where are the opportunities?
• Lower prices through aggregation, increased competition, increased
automation
• Rationalised Government catalogue
• Standardised processes and products across Government
• Targeted reporting: comparing spend & practices of like agencies
• Reduced demand
• Reduced administrative burden for agencies
What will this mean for you?
Lower cost, less effort, accurate reporting:
• Reduced tendering effort
• E-Marketplace one-stop-shop
• Reduced administrative & contract management effort
• Increased automation: greater efficiencies and accuracy
• Accurate reporting on spend and practices
• Reduced cost
Timings
RFP issue date, clarification period
begins
Supplier briefing: Auckland
16 March
Clarification period ends
5 April
RFP closing date
Noon
12 April
Evaluation & negotiation
13 April to
31 May
Award/execution of Supply
Agreement
by 30 June
19 March
Passenger Vehicles
Procurement Strategy
Discussion Points
• Overview: New Zealand motor vehicle market
• What is the scope of the contract(s)?
• What does the government purchase?
• Where are the opportunities?
• What will this mean for you?
Overview: New Zealand motor vehicle
market
• 70,048 new vehicle sales in 2009, down 28%
• 2010 tipped for the start of recovery
• Approx 300 individual makes/models retailing under $50,000
• Focus: improve safety and environmental performance
• Motive power options: petrol, diesel, hybrid, LPG
• Most new passenger vehicles fitted with ESC (80%) and SCA (74%)
• Technology driving price increases
What is the scope of the contract(s)?
• Passenger and Light Commercial Vehicles
• Accessories
• Through life costs
• Distributor buy back
What does the government purchase?
• 6.2% of passenger vehicle market (3,372)
• 6.8% of light commercial vehicle market (1,059)
• 100+ different individual makes and models
• 70% purchase, 30% lease
• Most purchase new, but some agencies purchase used
• Lots of different ‘drivers’ influencing selection process
Where are the opportunities?
• Aggregation of makes and models
• Focus on the through life costs
• Forward planning
• Supplier performance management
What will this mean for you?
More buying power - less effort:
• Together, we’re a more attractive customer
• Strong distributor relationship & supplier management
• Reduced tendering effort
• E-Marketplace one-stop-shop
What will this mean for you? (continued)
Choice:
• A selection of vehicles
• Pick and choose service options
• Pick and choose accessories
• Mechanism to address genuine out-of-scope
requirements
Timings
RFP issue date, clarification period
begins
Supplier briefing: Auckland
16 March
Clarification period ends
12 April
RFP closing date
20 April
Evaluation & negotiation
21 April to
27 May
by 30 June
Award/execution of Supply
Agreement
24 March
Laptops/Notebooks &
Desktop P.C’s
Print: Multi & Single Function Devices
Discussion Points
• Overview: New Zealand IT Equipment market
• What is the scope of the contract(s)?
• Where are the opportunities?
• What will this mean for you?
Overview: New Zealand desktop &
laptop market
• NZ dominated by a handful of Desktop and laptop providers:

HP, Lenovo, Dell, Acer, Toshiba (laptop space only) and Apple
• Routes to market via resellers and integrators:

Gen-I, Datacom, The Laptop Company
• Small presence of New Zealand based assemblers:

Cyclone, Silicon, Advantage
Scope: Desktops & Laptops
• A Multi-Supplier Panel Agreement
• Four Core Lots
• Desktops
• Laptops/Notebooks
• Tablet Notebooks
• Associated Services (mandatory for all those that bid on Lot
1,2 and/or 3) – not available as a separate lot.
What does the Government
purchase?
• Approximately $45 Million P/A In Desktops (next four
years) budgeted across all Sectors.
• Approximately $15 Million P/A (next four years) in
Laptops budgeted across all sectors.
Where are the opportunities?
• An opportunity to leverage against a standardised commodity.
• Currently some great deals in the marketplace. A chance to better
and make them visible to AoG.
• A chance to share best practise and collaborate.
• Common performance management.
• A chance to share supplier experience
Overview: New Zealand Single &
Multi-Function Print Device Market
• Dominated by four core manufacturers

HP, Konica Minolta, Ricoh and Fuji Xerox
• “bubbling up” suppliers such as Oki, Kyocera and Sharp.
• Most deals direct with these companies
• A movement to more mature print management
• Smaller NZ players in the single function print support business
Scope: Single & Multi-Function Print
Devices
• A Multi-Supplier Panel Agreement
• Four Core Lots
•
Single Function Devices
•
Multi-Function Devices
•
Optional Services that the respondent must be able to provide:
•
Optional Services that the respondent may be able to provide.
• Associated Services (mandatory for all those that bid on Lot 1 and 2) –
not available as a separate lot.
What does the Government purchase?
• Approximately $30 Million P/A on MFD’s
• Estimates on single function devices still currently
being evaluated.
Where are the opportunities?
• A chance to leverage AoG print volume.
• Establish greater transparency and common costs.
• A chance to compare and contrast deals.
• A chance to share best practise and collaborate.
• Common performance management.
• A chance to share supplier experience.
What will this mean for you?
• A single set of Terms & Conditions
• Less laborious tender procedures.
• Access to a transparent market.
• Access to a more consistent approach to transacting (the
E-Marketplace).
• More focussed and singular contract management
Timings
RFP issue date, clarification period
begins
Supplier briefings: Wellington
Clarification period ends
8 March
10 & 11
March
3.00 pm
25 March
RFP closing date
Noon
31 March
Evaluation & negotiation
1 April to
31 May
by 30 June
Award/execution of Supply
Agreement
e-Marketplace:
Online Catalogue &
Purchasing
Discussion Points
• Objectives
• What is the current situation?
• What we are implementing?
• What are the opportunities?
• What will this mean for you?
Objectives
• Provide an enabling platform
• Improve productivity
• Create efficient P2P processes for AoG Contracts
• Enable focus on value added activities
• Realise potential savings
• Reduced costs
• Reduced “rogue” buying
• Leverage collaborative buying opportunities
What is the current situation?
• Varying approaches – difficult for suppliers
• “Mandraulic” systems
• General lack of coherent spend analysis and transparency:
• By individual agencies
• All of government spend
• Divide and conquer tactics by supply market
• Supplier entrenchment
What we are implementing?
• Online electronic marketplace for AoG contracts
• Standardised buying portal
• Single “trading post” for buyers and sellers
• Platform independent solution
• Capacity to transition existing arrangements
What we are implementing? (continued)
Agency
ERP
SAP
Agency
ERP
Oracle
Agency access to AOG
online catalogue
Generic Catalogue
Covering multiple categories
(Initially Stationery, IT & MFDs, Light Vehicles)
Tracking
Supplier catalogue mapping
to Generic AOG Catalogue
Contract Management
Reporting
Supplier
System
and
Catalogue
Supplier
System
and
Catalogue
Supplier
System
and
Catalogue
Supplier
System
and
Catalogue
Advantages
• Standard product ranges
• Standard processes
• Purchasing control / visibility
• Reporting: agency, overall spend analysis,
benchmarking
Where are the opportunities?
• Flexible integration solutions
• Analysis of buying patterns
• Benchmarking comparisons
• Collaborative buying
• Level the playing field
• Broader benefits realisation
What will this mean for you?
• Reduced procurement effort
• E-Marketplace one-stop-shop
• Solution flexibility
• Re-energise existing relationships
• Improved access to purchasing information
• Opportunity to focus on core activities
Questions
Conclusion
Success will mean:
• Delivery of calculable, measurable cost savings – while:

Meeting government business needs

Making it easier for suppliers to do business with government

Meeting government procurement policy

Exercising a deterministic influence in the supply market
Contacts:
John Ivil
Tel: 04 495 1266
E-mail: john.ivil@med.govt.nz
OR
procurement@med.govt.nz