By Caroline Boot, Clever Buying.
Public sector organisations spend more than $99 billion of taxpayer and ratepayer money each year, which is more than 40 percent of the country’s GDP.
Of this expenditure, some $41 billion is spent on infrastructure, mostly through procurement via tendering. Procurement via tendering in other areas (such as IT, health, social services, justice, defence, education, etc) is estimated in the tens of billions of dollars.
Procurement activities (particularly via tendering) are ubiquitous in all public sector organisations, such as public service organisations, ministries and departments, state services organisations, district health boards, Crown agencies (such as the NZTA), educational institutions, local and regional councils, and many more government organisations.
A cursory review of the Government Electronic Tenders Service (GETS) website shows several hundred live tenders at any one time. Hundreds more tenders are advertised daily through other common channels such as Tenderlink, LG Tenders and websites of government organisations.
All of those tenders involve procurement using public moneys, for contracts ranging from physical works to social services, health services, facilities maintenance, public transport, training services, hospitality, information technologies and many more.
There are on average between five and 25 people involved in planning, developing RFT documents, processing and evaluating each of those tenders. Their responsibilities for prudent and cost-effective decision-making are core to the value that we taxpayers, ratepayers and wider communities receive for public funds invested on our behalf.
Within the 78 Local and Regional Authorities throughout New Zealand, it is estimated that between 4000 and 8000 of their 30,000 plus employees are involved in procurement activities as either a primary activity or a part of their jobs. They are supported by hundreds of specialist procurement professionals employed by consultants.
It is hard to estimate the overall number of public sector employees who are involved in procurement activities, since, for many, ‘procurement’ is not included in their title but may be a significant part of their job description within middle or senior management roles. Extrapolating the local government numbers involved in procurement would suggest that at least 20,000 people (and very likely, over 30,000 people) are regularly engaged in public sector procurement activity.
The implementation of the NZ Government’s Rules of Sourcing in 2013 and the establishment of NZ Government Procurement as a division of the Ministry of Business, Innovation and Employment are key recent initiatives that demonstrate the burgeoning importance of procurement to the government.
Over the past five to six years, the emergence and increase of distinct new job titles such as procurement specialist, procurement advisor and procurement manager in most government organisations, also demonstrates the growing recognition of procurement as a specialist skill and a key operational and management role within the public sector.
Procurement capability needs
Globally, in OECD countries, there are strong moves to ‘lift the capability of procurers to meet emerging challenges’. Work to ‘professionalise’ procurement was the subject of a presentation by government procurement manager John Ivil at an OECD meeting in October 2017.
Increasing procurement capability has been identified as a key issue by Government Procurement since 2009. Its most recent survey had 2095 respondents and represented companies that respond to government tenders from most sectors including central government, councils, schools, and DHBs.
Further feedback on frustrations of tenderers indicates that key areas of concern are compliance with Government Rules of Sourcing; cost-efficiency in tendering processes; unfair practices; lack of transparent and robust evaluation criteria; and inadequate management of conflicts of interest. These are key areas that can be addressed through qualification and training of practical skills in procurement.
Improvement in procurement capability was also identified as a critical need by a wide range of representatives of both suppliers and clients in the three surveys undertaken by Infrastructure NZ over the past 18 months.
A key initiative for Government Procurement this year has been development of the Procurement Capability Index – essentially a self-assessment tool for organisations that is focused on their strategic procurement capability. This is considered a first step towards encouraging public organisations to monitor (and then improve) their procurement skills.
Until 2017, our government supported (and provided subsidies for) many candidates to study towards qualifications available through the Chartered Institute of Procurement and Supply (CIPS).
This support has continued, but has changed to target new entrants to the procurement industry (mainly graduates), rather than existing practitioners.
While not official, the feedback from procurement specialists was that the CIPS training and the qualifications are not very relevant to New Zealand conditions and legislation; broad in reach (including covering private sector contexts); and academically focused rather than being accessible for ‘on-job’ qualification. These factors combined to result in a high rate of discontinuation by trainees.
NZ Government Procurement does not currently promote or endorse the NZQA procurement qualification.
The procurement qualification landscape
Since the early 1990s, a procurement qualification has been required by the New Zealand Transport Agency (NZTA) for at least one member of the Tender Evaluation Team on projects valued over $200,000 (extract from NZTA manual).
This is a significant contributing factor to NZTA being universally recognised as New Zealand’s best performer in procurement (one source is the Infrastructure NZ surveys, 2016 and 2017).
Until 2016, the qualification that underpinned this success was limited to NZTA’s procurement procedures.
However, a Targeted Review of the Qualification undertaken by Connexis ITO in 2015-2016 has seen the Level Six Qualification broadened to include all of infrastructure, as well as application of the Government Rules of Sourcing. This is now the only practical procurement qualification available on the NZQA framework.
More than 300 qualified tender evaluators hold the previous version of the NZQA Procurement Qualification. The first three graduates of the new version of the qualification received their certificates in 2017; and a further 90 (approximately) people are at various stages in their assessments towards achieving the qualification.
The current NZQA qualification title is restrictive
Although the title of the NZ Certificate in Infrastructure Civil Engineering suggests it is limited to the infrastructure sector, the content is generic in nature.
It covers procurement planning, developing RFT documents, evaluating tenders and application of legal and ethical principles to tendering. The Outcomes and Evaluation Criteria can be readily applied to any significant procurement activities, regardless of the industry or sector of the contract being procured.
The new version of the NZ Certificate in Infrastructure Procurement Procedures is not well known. Where it has been introduced (such as at the GovProcure 2017 conference in Wellington) there is a common and understandable perception among public sector procurement professionals that it applies exclusively to infrastructure.
That forms a barrier to organisations with wider procurement needs (as expressed by the Ministry of Education, NZ Defence Force, District Health Boards, Ministry of Justice, Ministry of Social Development, Department of Internal Affairs, and others).
When approached, the qualification developer Connexis (as the infrastructure ITO) stated that it wishes the qualification to retain the word ‘Infrastructure’ in its title.
Support from stakeholders
A recent pilot survey was circulated to suppliers to government as well as procurement staff. There were 98 responses from the sectors indicated below. Of these, 98 percent agreed that there should be a generic NZQA procurement qualification that demonstrates capability relevant to all government procurement practitioners (82 percent fully agreed, and a further 16 percent agreed “in some circumstances”, with commentary indicating this will be relevant for larger, more risky or complex contracts being procured.
An impressive 99 percent of respondents further agreed that the government should make it mandatory for at least one tender evaluator for all significant public procurements to be NZQA qualified (88 percent fully agreed, and a further 11 percent agreed “in some circumstances” – ie, for larger and riskier, more complex projects).
Industry groups that have expressed support for the development of a generic public sector practical procurement qualification include Business NZ, Metals NZ, Civil Contractors NZ, Infrastructure NZ, and Medical Technology Association of NZ.
There is a well established need, strong support and a vitally interested market for a practical and generic procurement qualification suitable for public sector procurement staff engaged in tendering activities.
This article was first published in Contractor March 2018.