2017-18 Annual Report (HTML)

Section A: Reporting required under the Public Sector Act 2009, the Public Sector Regulations 2010 and the Public Finance and Audit Act 1987

Purpose

The State Procurement Act 2004 (the Act) establishes the State Procurement Board (Board) to provide the Government of South Australia with independent oversight of public sector procurement. 
The Act regulates the procurement operations of public authorities, and defines the Board’s scope to include goods and services procurement with the State Procurement Regulations 2005 excluding:

• construction procurements exceeding $150 000 ($165,000 GST inclusive); and
• certain public authorities where Government has recognised a need for these bodies to operate outside the procurement framework established under the Act.

The Board provides comprehensive policies and guidelines to support effective procurement operations across government. These policies have been designed to provide a balance between process rigour and efficiency in accordance with the objective of ensuring value for money, the fair treatment of all bidders, and probity and transparency.
The Board also provides a range of capability development initiatives to help improve the procurement and contract management capability of the South Australian Government workforce. Information on the Board’s policy framework and capability development program are available on the Board’s website: www.spb.sa.gov.au

The Board’s ongoing business activities include the review of public authority submissions to the Board, the development and review of the procurement policy framework, capability development and training, secretariat support, complaint investigation and resolution, issuing a procurement authority to newly established public authorities, and reviewing compliance with the procurement framework.

The Board undertakes a strategic role in overseeing the Government’s system of procurement, focusing on fostering efficient and effective procurement practices across government. The Board reviews public authority acquisition plans where the value exceeds the procurement authority issued to public authority Chief Executives by the Board through its Accreditation Program. Data on the number and value of public authority submissions to the Board for 2017-2018 is available on the Board’s website:
http://www.spb.sa.gov.au/content/annual-board-attendances-and-approvals.

Objectives

The Board is committed to playing a proactive role in ensuring the procurement activities of public authorities are directed towards:

• obtaining value in the expenditure of government funds on goods and services;
• providing for ethical and fair treatment of participants; and
• ensuring probity, accountability and transparency in procurement operations.

The primary functions of the Board are to:

• facilitate strategic procurement by public authorities by setting the strategic direction of procurement practices across government;
• develop, issue and keep under review policies, principles and guidelines relating to the procurement operations of public authorities;
• develop, issue and keep under review standards for procurement by public authorities using electronic procurement systems;
• investigate and keep under review levels of compliance with the Board’s procurement policy framework;
• issue policies, principles, guidelines, standards and directions; and
• assist in the development and delivery of training and development courses.

The Board establishes its Strategic Plan every three-years. The following outcomes underpinned the Board’s Strategic Plan for 2016-18:

• procurement underpins State objectives;
• public authorities achieve value for money;
• public sector procurement is recognised as leading practice;
• suppliers proactively engage with Government and offer innovative solutions and savings; and
• procurement is a key enabler for effective government business operations.

The Board will shortly commence setting objectives for the next three years that align with the Government’s priorities.

Key strategies and their relationship to SA Government objectives

Key strategy SA Government objective

1. Confirm and monitor an accreditation

program to ensure that public authorities have the capability to appropriately exercise their delegation.

The accreditation of public authorities provides greater accountability to Chief Executive Officers (CEOs) and enables strong governance and decision making at the local level. In accrediting CEOs to undertake procurements up to a specified dollar value, the Board can focus on strategic matters, recognising that public authorities are to manage their risk and deliver value for money.

2. Confirm and improve public authority

procurement compliance and practice against Board policies and procedures through an assurance process.

The effective implementation of procurement policies, procedures and operational practices by public authorities improves services and reduces unnecessary administrative costs, procurement and contracting risks to Government. 
Supports:

• the achievement of value for money;
• ethical and fair treatment of suppliers;
• probity, accountability and transparency.

3. Support and develop public authority

procurement capacity and capability through targeted training and other capability development activities.

Deliver sustainable improvements and enhanced procurement practices and capability to support public authorities to deliver better services and value for money.
Develop the procurement and contract management skills of staff that contribute to value for public money and improved government services.

4. Provide an improved and consistent

approach to procurement in the Not for Profit (NFP) sector.

Support and strengthen collaborative partnerships between government and the NFP sector. Provide a consistent approach to government procurement from the NFP sector that sets clear requirements and lowers administrative costs.

Agency programs and initiatives and their effectiveness and efficiency

Program name Indicators of
performance/effectiveness/efficiency
Outcome for South Australia
Public Authority Accreditation Program

The objective of the program is to confirm that public authorities have the capacity and capability to perform procurement in an effective manner.

 
Through a process of self- assessment and independent validation, public authorities are required to demonstrate that their procurement function has the capacity and capability to successfully manage its authorised procurement expenditure up to a pre-determined value threshold. Above the threshold, the public authority is required to seek the Board’s approval to proceed with a procurement. 

The procurement authority threshold has been issued at $15 million for the following public authorities: Department of Human Services; Department for Education; SA Health; Department of Planning, Transport and Infrastructure; Department of Treasury and Finance; and South Australia Police. Other large public authorities have a procurement authority threshold value of $1.5 million, and small public authorities have a procurement authority threshold of
$220,000.

In 2017-18, the Board reviewed the Accreditation Program in consultation with public authorities. It was agreed that a revised Accreditation Program would focus on the six largest public authorities that account for approximately 80% of goods and services procurement expenditure across government. For smaller public authorities, a streamlined review process would be undertaken. An independent and external Lead Reviewer has been engaged to undertake the revised Accreditation Program which will commence in late 2018.

The 2017-2018 review of the Accreditation Program has streamlined the process for smaller public authorities by enabling operational requirements to be assessed together with assurance requirements and by focusing on the largest six public authorities that account for the largest spend. 

The program verifies that public authorities have the capability to appropriately exercise their procurement authority. This supports the government’s objectives to improve services and reduce costs, providing Chief Executives accountability, improving governance and decision making at the local level.

 

Program name Indicators of
performance/effectiveness/efficiency
Outcome for South Australia
Public Authority Assurance Program

The objective the Assurance Program is to assess each public authority’s compliance with the Act and the Board’s procurement policy framework. The program also identifies specific improvements that need to be implemented by public authorities to ensure compliance. The Assurance Program applies to all public authorities under the Act. 
Mandated requirements of Board procurement policies, principles, guidelines, standards or directions against which the Board seeks assurance are published on the Board’s website. The Board obtains assurance of the compliance of each public authority with the mandated requirements through a formal independent review program where public authorities must demonstrate compliance through documentation and practice. The Assurance Program is undertaken over a four year cycle and quarterly reports are provided to the Board on the reviews and on the status of outstanding action items that are required to be implemented within agencies to ensure compliance. 

During 2017-2018, the Board monitored the completion of 204 action items assigned from the assurance review of 38 agencies included in the previous review cycle. 

In 2017-2018, the Board reviewed the Assurance Program prior to commencing the next four-year cycle of public authority reviews in late 2018.

The program ensures that the fundamental organisational requirements regarding procurement are maintained and improved for effective procurement operations. 

The 2017-2018 review improvements included streamlining policies to reduce duplication, simplifying the review process for smaller public authorities, and implementing an exemption allowance (under certain circumstances) for small public authorities with minimal procurement spend.

Program name Indicators of
performance/effectiveness/efficiency
Outcome for South Australia
Procurement Capability - Targeted Training Program

An analysis of the procurement skills gaps for practitioners was undertaken in late 2016 to assess procurement and contract management capability in the SA Government. Individuals received a customised report including training recommendations.

A range of targeted training courses were piloted in the second half of 2017 and an expanded range of training products and solutions implemented in 2018 to assist in uplifting capability in the identified areas. This includes training in the following new workshops:

• Development specifications;
• Strategic sourcing;
• Finance for procurement;
• Business acumen and commercial skills;
• Engaging and influencing stakeholders;
• Service level agreements (SLA) and key performance indicators (KPIs);
• Benefits realisation;
• Category management essentials;
• Negotiation masterclass;
• Supplier performance management; and
• Supplier relationship management in a government context.

Online training has been included as an option for some targeted training topics.

n early 2018 the assessment was undertaken again to measure progress. The comparative results showed an overall increase in knowledge across the various dimensions of procurement and contract management. For example, procurement personnel knowledge of contract implementation increased by 30%, and contract manager knowledge of measuring and reviewing performance improved by 22%.
The results compare favourably against interstate jurisdictional benchmarks.
Program name Indicators of
performance/effectiveness/efficiency
Outcome for South Australia
Improved and consistent approach to procurement in the Not for Profit (NFP) sector Following extensive consultation with the NFP sector and key public authorities, the Board has updated its policy framework to include the principles contained in the Department for the Premier and Cabinet’s Circular 044 – SA Funding Policy for the Not-for-Profit Sector. The Board has engaged the Crown Solicitor’s Office and developed a standard NFP funded services agreement that will be available in late 2018. The Board’s activities reflect the Department for the Premier and Cabinet’s Circular 044, supporting and strengthening the collaborative partnerships between government and the NFP sector. The Board’s standard NFP funded services agreement will simplify and standardise the contracting process for NFP funded services, reducing cost and administrative burden to government and NFP providers alike.

Legislation administered by the State Procurement Board

The State Procurement Act 2004 is administered by the Department of Treasury and Finance.  

Organisation of the State Procurement Board

The Board meets monthly and comprises a Presiding Member and eight members; four drawn from the public sector and four from the private sector, appointed under section 7 of the Act. The Board’s membership brings a diversity of experience, skills and professional backgrounds. The Act requires that the Presiding Member of the Board be the Chief Executive of the public authority charged with the administration of the Act (currently the Department of Treasury and Finance), or their nominee.

In accordance with section 13 of the Act, the Board has established the Procurement Approvals Committee (PAC) as a sub-committee to assist the Board in undertaking its functions. Information on the membership of the PAC and delegate levels can be found at the Board website at: http://www.spb.sa.gov.au.

In 2017-2018 the Board was supported by nine (9) staff of the Department of the Premier and Cabinet (DPC) in accordance with section 11 of the Act. The key functions of the staff included:

• secretariat support;
• procurement advice;
• policy development and support;
• capability development; and
• audit and compliance.

Other agencies related to this agency (within the Minister’s area/s of responsibility)

In 2017-2018, the Board was supported by staff employed by the Department of the Premier and Cabinet. 

Employment opportunity, performance management, work health, safety and return to work

Reporting is included in the 2017-2018 Department of the Premier and Cabinet Annual Report.

Fraud detected in the State Procurement Board

There were no known instances of fraud detected in the activities undertaken by the Board in this reporting period.

Whistle-blowers’ disclosure

There were no occasions on which public interest information has been disclosed to a responsible officer of the agency under the Whistle-blowers Protection Act 1993.

Executive employment in the agency

Reporting on executive employment is included in the Department of the Premier and Cabinet’s Annual Report 2017-2018.
The Office of the Commissioner of Public Sector Employment has a data dashboard for further information on the breakdown of executive gender, salary and tenure by agency.

Consultants

The following is a summary of external consultants that have been engaged by the State Procurement Board, the nature of work undertaken and the total value of the work undertaken.

Consultant Purpose Value
Consultancies below $10,000 each    
Powell & Co P/L Independent investigation of a supplier complaint regarding a procurement $5,000
Powell & Co P/L Documentation review in relation to the above procurement  $7,500$7,500$7,500$7,500
  Subtotal $12,500
Consultancies above $10,000 each    
KPMG Independent review of the use of direct negotiations by public authorities $48,757
PSI Asia Pacific Pty Ltd Independent investigation of a supplier complaint regarding a procurement $13,222
CIPS Australia P/L Review of the State Procurement Board policies and procedures $70,560
  Subtotal $132,539
Total of all consultancies   $145,039

See also the Consolidated Financial Report of the Department of Treasury and Finance http://treasury.sa.gov.au/  for total value of consultancy contracts across the SA Public Sector.

Contractors

The following is a summary of external contractors that have been engaged by the State Procurement Board, the nature of work undertaken and the total value of the work undertaken.

Contractor Purpose Value
Comprara Pty Ltd Procurement capability assessment across government $24,373
Major Training Services Provision of targeted training courses $1,900
UNE Partnerships Pty Ltd Provision of targeted training courses $4,704
Procurement Partners Probity advice for capability development products and solutions $3,850
Total of all contractors   $34,827

The details of all South Australian Government-awarded contracts for goods, services, and works are displayed on the SA Tenders and Contracts website here.

The website also provides details of across government contracts here.

Financial performance of the agency
Full audited financial statements for 2017-2018 are attached to this report.

Section B: Reporting required under any other act or regulation

Name and date of act or regulation

State Procurement Act 2004

23 - Annual Report

(1) The Board must, on or before 30 September in each year, deliver to the Minister a report on the administration of this Act and the work of the Board during the financial year ending on the preceding 30 June.
(2) The report must incorporate the audited accounts of the Board for the relevant financial year.
(3) The Minister must, within 14 sitting days after receiving a report under this section, have copies of the report laid before both Houses of Parliament.

Reporting under Section A meets the requirements of the State Procurement Act 2004.

Section C: Reporting of public complaints as requested by the Ombudsman

Summary of complaints to the State Procurement Board

Public complaints received by the State Procurement Board

Category of complaints by subject Number of instances
Supplier procurement complaints 2

Data on formal supplier complaints about the procurement activity of public authorities for the past five years is available at: https://data.sa.gov.au/data/dataset/state-procurement-board-annual-repor...  

Complaint outcomes

Nature of complaint or suggestion Services improved or changes as a result of complaints or consumer suggestions
Claimed failure to comply with the policies of the State Procurement Board resulting in an alleged unreasonable procurement outcome. The Board appointed an external investigator to review the procurement process and the complaint was not upheld.
Claims of a flawed and biased procurement process undertaken. The Board appointed an external investigator to review the procurement complaint. The investigation is currently underway.