For many government agencies, getting aligned with the new VGPB goods and services policy is a daunting task. But nothing worth doing is easy, and what the new policy can do for your procurement processes is certainly worth pursuing. Traditionally – and this may sting – public procurement is done poorly. A report commissioned by Consult Australia back in 2015 found that poor procurement costs the Australian government $2.5 billion.
However, it’s not just the lost money that should be of concern; it’s the increase in your risk profile that poor procurement processes expose you to, as detailed in the the ibac special report on corruption risks associated with procurement in local government from 2019. The problem for most agencies, however, is identifying where in the procurement function they are erring and how to rectify it. The process of aligning with the new VGPB policy will help you get to the answers.
Vigilant category and contract management
Bringing your category and contract management in line with the new VGPB policies will have two positive impacts for your organisation. Firstly, it will save you money. Too often, and not only in governmental departments but in the wider business community as well, the person managing the contract hasn’t laid eyes on it in recent memory. Perhaps they came into the job when the contract was already in place and just let things keep rolling, perhaps the contract itself can’t be found (it happens more often than you think). Regardless, if you aren’t familiar with the contract, how can you be sure that the vendor is meeting the terms of the agreement?
Say, for instance, it’s a contract to service the department’s printers. The contract stipulates the vendor must turn up fortnightly to perform a service but, instead, they’re turning up monthly. The printers may be performing fine, but you’re obviously paying for a service that you aren’t getting.
The worst case scenario is, of course, the contract coming to an end without you realising. Needless to say, doing business with a supplier without the protection of a contract is a fantastic way to raise your risk profile. Not only can they change the agreement at whim, but to run a new tender may take months, leaving you in the lurch in the interim. This is the second positive impact of category and contract management under VGPB policies: it protects you from risk and falling foul of probity.
Keep knowledge from walking out the door
One of the biggest benefits of the VGPB policy is the potential to drive standardisation of processes within your organisation through the determination of category complexity, capability and category management. This saves you money and, again, protects you from risk. Here’s why.
We live in the age of the transient workforce. The make-up of your team today could very well be different tomorrow. The problem occurs when the person walking out the door takes with them relevant knowledge that exists nowhere else in the business. If a person responsible for managing a particular contract leaves, you don’t want all knowledge of that contract and how it was tendered walking out the door too. You also don’t want to find out only when the service provider stops turning up because the contract has run out.
Aligning with VGPB policy means creating and adopting a standardised approach to procurement processes. This keeps knowledge in house and guards against it leaving with any individual employee. And if the standardised processes put in place are ethical and fair (which they no doubt will be), it vastly reduces your risk profile across the procurement board.
Identify the skill gaps and close them
Comprara uses a four-step process to help you align with VGPB policy: policy gap analysis, spend analysis, complexity analysis and capability analysis. This last step provides an organisation with extremely useful information.
There’s no organisation in existence that doesn’t have skill gaps somewhere in the workforce, and the vast majority have little knowledge of where they lie. A capability assessment will uncover exactly what your workforce’s deficiencies are, allowing you to target and rectify them. Most of the time, probity issues arise due to a lack of knowledge and a lack of awareness of how particular processes should be carried out. This also increases your risk profile. Negotiation, for instance, is one of the most important aspects of the procurement process, but it’s a notoriously under-skilled area. Done poorly, the contract you finally agree on could be increasing your risk needlessly while leaving a fair chunk of change on the table.
Not only can we identify gaps, but we can also identify unacknowledged expertise; not infrequently, it transpires that certain individuals are better suited to a different role. Sometimes, a simple rearrangement of the deck chairs can bring a marked improvement in the procurement process, delivering savings and reducing the overall risk profile.
Get expert guidance with Comprara
Aligning with the new VGPB policy may seem like a daunting task, but there’s no doubting the benefits it can bring to your organisation, both in reducing cost and your risk profile. Comprara has experience and expertise at working with government departments and extension agencies to bring their procurement processes up to scratch within their unique operating environment. We can parse your data, run a complexity analysis to determine what you’re procuring and how the process should be run, and we can uncover and reduce your skill gaps. Talk to us today and take advantage of the massive opportunity that these new policies represent.
