Briefing for Approved Organisations on the new procurement environment

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Briefing for Approved Organisations on the new
procurement environment

• August 2009 Foundation Workshops

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Topics

• Aim for today
• Rollout of the new procurement environment
• The principles behind the new procurement
  environment
• The Procurement manual
• Introducing the procurement procedures
• Procurement Strategies
• Strategy exercises
• Where to from here?

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Aim for today

• Approved organisations ready to develop their
  Procurement Strategies
• Approved organisations thinking strategically
  about procurement

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• Questions?
• Issues?
• A parking lot

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Procurement legislative framework

• NZTA must approve (under LTMA s25) procurement
  procedures that are designed to obtain best value
  for money spent, having regard to the
  desirability of
• Enabling fair competition
• Encouraging competitive and efficient markets
• Approved organisations (and the NZTA) must use
  approved procurement procedures

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The new procurement environment

• Strategic approach
• Informed decision-making
• Increased flexibility
• Closer working relationships
• Opportunities for innovation
• Monitoring by the NZTA
• Assistance and advice from the NZTA
• A change in culture

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The new procurement environment (cont.)

• NZTA approval is required for
• Advanced components
• Rule variations
• To undertake professional services in-house
• Customised procurement procedures

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The new procurement environment is principle based

• Rules follow principles the four key principles
  are
• Best value for money
• Enabling competition (that is fair) is desirable
• Encouraging competitive and efficient markets is
  desirable
• Best value for money long term demands a
  strategic approach

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Procurement manual

• Foundations
• Legislation
• Government procurement policy
• Delivering value for money
• Strategic understanding
• Procurement procedures
• Approved procurement procedures
• Rules and guidance
• Performance measurement and monitoring
• Tools and resources

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• Questions?

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Procurement Strategies

• Strategic context
• An NZTA endorsed strategy is the key to the new
  procurement environment
• An approved organisation must assess and document
  the strategic context for every procurement
  activity (see section 10.4 Procurement strategies)

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Procurement Strategies

• Strategic context (cont.)
• The procurement strategy documents the long-term
  integrated approach to procurement of transport
  activities
• It assists approved organisations to comply with
  the procurement procedures in the manual

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Writing a procurement Strategy

• Chapter 4 Strategic approach to procurement
• Includes a step by step guide to writing a
  strategy (section 4.4 Writing a procurement
  strategy)
• Appendix A Procurement strategy checklist

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Writing a procurement strategy

• The steps in section 4.4 Writing a procurement
  strategy
• Step 1 - Document your procurement context
• Step 2 - Document the procurement programme
• Step 3 - Document the approved organisations
  understanding of the procurement environment
• Step 4 - Develop an approach to delivering the
  work programme
• Step 5 - Implement the procurement strategy

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Exercise 1 Markets in your region

• Considering the current state of the market(s) in
  your region
• What are the five most significant value for
  money issues you face?
• What actions should the purchasers in your region
  consider to address these issues?

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Exercise 2 Aggregation and bundling current
state / possible future state

• Considering current aggregation and bundling
  practices in your region
• Are there aggregation or bundling opportunities
  in your region which could improve value for
  money and if so what are they?
• What actions should purchasers consider to take
  advantage of these opportunities?

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Procurement procedures

• Procurement procedures four components Rules
• Strategic context
• Delivery models
• Supplier selection methods
• Contractual arrangements

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Procurement procedures

• Four procurement procedures defined by activity
  type
• Infrastructure
• Planning and advice
• Public transport services
• Public transport fare subsidy schemes
• Advanced components
• Design of customised procurement procedures

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Strategic context

• Link to procurement strategy the value for
  money rationale
• What do we want to buy clear specification
• Why do we want to buy it strategic alignment
• Can the market supply it market
  capability/capacity
• Are we capable of managing the purchase
  capability
• How will it affect the market market impact
• Risks and opportunities

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Delivery models

• Commences at first interaction with the market
• Determines how price is set
• Allocates and manages risk
• Manages complexity and uncertainty
• Matches scale
• Provides opportunities for innovation
• Completed at end of all contractual arrangements

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Categories of delivery models

• Staged
• Activity delivered through series of separate
  contracts
• Design and build (design and implement for PT)
• Single supplier completes design and construction
• Shared risk (advanced)
• Integrated team working collaborativelyto
  deliver activity interests aligned
• Supplier panel (advanced)
• Extended relationship with a group of suppliers
  who are main source of required goods and
  services
• Not an exclusive arrangement

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Supplier selection methods

• Price quality continuum
• Lowest price conforming method
• Purchaser nominated price method
• Price quality method
• Quality based method (advanced where the output
  being purchased is anything other than
  professional services)
• Direct appointment

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Contractual arrangements

• Framework for delivering the activity
• Sets the terms of relationship between purchaser
  and supplier
• Processes for variation, disputes, reviews
• Incentives
• Several different types of contract AOs choose
  most appropriate

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Rules

• Permit, constrain and limit
• Referenced in each relevant procurement procedure
• Supported by guidance
• Some are applicable to all
• Some are public transport specific

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• Questions?

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• Parking lot issues

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Information sources

• The Manual
• Website

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Using the new procurement procedures

• Many rules have changed - including
• Price weight used with the price quality method
  (see section 10.15 Price and price weight)
• Non price attributes (see section 10.14 Non-price
  proposal evaluation attributes)
• Wider use of direct appointment (see section
  10.11 Direct appointment where competition
  reduces value for money)
• Term of term service contracts (see 10.21 and
  10.24 Max term of etc)

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Transition process

• Complete by October 2010
• Strategy development can begin now
• Procurement procedures in the Procurement manual
  can be used once your strategy has NZTA
  endorsement
• From October 2009 procurement procedures in the
  manual can be used - with NZTA agreement
  providing activity strategic context is
  documented

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Developing your strategy

• The NZTA will assist approved organisations
  develop procurement strategies
• Strategies are funded under work category 003
  Activity management plans
• Approved organisation need to own their
  procurement strategies
• NZTA endorsement process
• Will you need to use a procurement procedure in
  the Procurement manual before you have completed
  your strategy?

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How to meet further needs?

• How can the NZTA help you access the
  newprocurement environment?

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• Feedback sheet