Reference no: EM133750

QUESTION 1

Procurement Reform in New Zealand

New Zealand has embarked on an ambitious reform of the public sector. In June 2008, the Government Procurement Reform Programme was unveiled. The project is just one cost-cutting measure imposed across the public sector, which includes the downsizing and restructuring of several government agencies and their services. Though less politically charged than some of the other measures, procurement reform has proved to be one of the most ambitious. The agenda sets out to tackle the NZ$30 billion (£14 billion) annual spend on goods and services

Reform plans

The four-year programme sets out 56 actions to cut costs across all areas of spend, as well as boost training for professional buyers. Year one, which comes to an end this summer, focuses on achieving just two of the 56 actions. The first is to create four government-wide contracts to tackle the most commonly bought items across the country's 197 public agencies. These are desktop and laptop computers; multifunctional devices (such as photocopiers and faxes); office stationery and passenger vehicles. The second is to start to address the country's acute shortage of skilled procurement professionals. The leading in charge, Briton Chris Browne, hopes to save at least 7 per cent through these deals, reducing the government's annual bill for these areas to about NZ$720 million (£335 million)

Much is riding on the group's achievements in the initial 12 months. "The first year is a pilot, a test, to see if we can deliver success," says Browne. Funding for the remaining three years will be granted only if the first year delivers results. Unlike in the UK, there are no strict Gershon-like savings targets for New Zealand's public sector, but it hopes to achieve minimum savings of between 5 and 10 per cent. Browne is optimistic of achieving more. "Similar programmes in Canada, Scotland, Wales and Australia have been able to save up to 30 per cent on comparable contracts," he says

The Challenges

With NZ$30 billion a year to spend, the government makes up 9 per cent of the total New Zealand marketplace. While there is a requirement to rationalise its supplier base, Browne says the group is also aware of the need to sustain a competitive marketplace. As such, government-wide contracts will be awarded to a "panel" of suppliers. Spend analysis across the entire public sector is currently under way to identify other opportunities for cross-government deals, but the aim is not to centralise purchasing. "Over the years New Zealand has gone from a very centralised procurement system to a very devolved one, and now we are trying to do some things centrally again, which can be difficult," says Babs Klyn, a senior procurement analyst with the MED's Procurement Reform Development Group

Browne says the biggest challenge is applying reform across the whole of the sector. There are 197 separate agencies within state services, including hospitals, so it is much wider-reaching

Klyn says having high-level support for change has been crucial. The Reform Development Group reports directly to the government's Expenditure Control Committee, which is chaired by the Finance Minister and involves the most senior 7cabinet ministers, including the Prime Minister

Skills Dearth

After the reform agenda was announced, Klyn's immediate task was to get qualified procurement professionals included on the country's skills shortage list. The procurement profession is still in its infancy. There is distinct shortage of specialists in areas like ICT spend and procurement analysts. While there are thousands of people in the public sector who do purchasing activities, there are only about 300 procurement professionals, most of whom do not have procurement qualification

Standardise and Simplify

Meanwhile, a lot of work is being done to make it easier for suppliers to do business with government. This includes reducing red tape for suppliers by introducing standard contracts. Previously, each agency may have had a different set of legal requirements with each vendor

Once in place, the Centres of Expertise will manage the government-wide contracts. So far, the MED is the hub for office stationery and passenger vehicles, while the Department of Internal Affairs concentrates on IT spend
The group hopes to establish 10 centres during the four-year programme, to cover areas including health, telecommunications, energy, air travel and banking. While the tangible cost savings of the programme are yet to be counted, the benefits to the procurement profession in the country are starting to be seen

Tasks

(a) Explain four strategies adopted by New Zealand in its Government Procurement
Reform Programme.

(b) Identify the main challenges faced by a government when implementing a Government Procurement Reform Programme. Propose three ways to address the challenges faced

QUESTION 2

(a) Explain the term 'Sustainable Public Procurement'

(b) Discuss the factors that a government should consider before embarking on sustainable procurement

QUESTION 3

(a) Distinguish between framework agreement and framework contract in the context of public procurement
(b) Discuss the potential benefits and drawbacks of implementing framework agreement in the public sector in Mauritius

QUESTION 4

(a) Enumerate five objectives of a public procurement system

(b) Explain the tensions that may exist between these objectives when a procuring entity has to choose a procurement method

(c) Explain the concept of value for money in the context of public procurement

QUESTION 5

(a) Explain the concept of Supplier Relationship Management

(b) Examine the extent to which it is possible and desirable to promote a collaborative approach with suppliers in the public sector