VGPB activities in 2019-20

In 2019–20, we continued to work with the Department of Treasury and Finance’s Procurement Policy and Reform team on the five workstreams established in 2017–18 under the procurement reform program.

With most recommendations from the procurement review now complete and the remaining implementation activities to be carried out by the Strategic Sourcing Group in the Department of Treasury and Finance, the procurement review program has mostly wrapped up. The VGPB will continue to be updated on the progress of these remaining activities.

The key outcomes completed under the five workstreams in 2019–20 are described here:

Workstream 1: Victoria’s Social Procurement Framework and reporting

In 2019–20, we continued to support implementation of the Social Procurement Framework. The Procurement Policy and Reform team reviewed and gave feedback on more than 200 agency strategies. The strategies set out how agencies plan to embed social procurement into their procurement process. This has been a critical step to support implementation across government.

The Procurement Policy and Reform team continued to build and maintain partnerships with social benefit suppliers, Social Traders, Kinaway and Supply Nation. They also continued to promote the framework through newsletters, seminars and workshops, including presenting at the Social Traders Conference 2019, the 14th Procurement Australasia Annual Conference and the Social Enterprise World Forum 2019.

In 2020–21, the Procurement Policy and Reform team will continue to work with the Department of Jobs, Precincts and Regions to strengthen buyer and supplier engagement.

Social procurement reporting

The Procurement Policy and Reform and Local Jobs First teams started work on a joint reporting system to streamline social procurement reporting requirements for agencies. The system will be rolled out in 2020 and further supports the move to simplify procurement through better use of technology.

The first social procurement annual report was published in November 2019. The report highlights the progress made by agencies to date with case studies of the people benefiting from social procurement. This report has set a baseline to measure social procurement achievements in the future.

The report is available here: Social procurement annual reports.

Key highlights:

• published first social procurement annual report
• three conferences as keynote speaker
• 200+ agency social procurement strategies reviewed
• five social procurement newsletters

Case study: The hunt for hand sanitiser is a win for social procurement

Hand sanitiser has become a much sought-after essential during COVID-19. When supplies ran low and became difficult to source, the procurement team at the Department of Transport found a solution that supported an Aboriginal business.

The department chose to buy hand sanitiser supplies from Panku, a Supply Nation Certified Supplier in south-east Melbourne, to keep all its sites across Victoria well equipped over the following few months.

Panku, which means 'united, together' in Nyiyaparli language, offers a range of goods and services, from safety equipment and personal hygiene products to first-aid training.

“The contract provides security and continuity for our business, especially in these uncertain times,” said Panku’s Chief Executive Officer Jadah Pleiter. “It is rewarding for us as a business to support the community in making a difference, especially as an Aboriginal business.”

This win-win is a prime example of how social procurement can deliver for stakeholders and communities.

Workstream 2: Governance, extending the reach

We continued to work towards bringing 150 extra organisations under the VGPB umbrella, creating a scalable framework that aligns compliance requirements with an organisation’s procurement risk and complexity profile.

Implementation has been deferred to 1 July 2021, due to the impacts of COVID-19 on agencies and to allow procurement teams to focus on their pandemic response first and foremost. Over the coming year, we will finalise and implement supporting materials to help new organisations transition to our goods and services policy framework and continue to monitor overall delivery of this workstream.

Workstream 3: Policy and practice

Aligning and harmonising goods and services and construction procurement

We worked with stakeholders to investigate the risks, costs and benefits of aligning goods and services and construction procurement policies.

We found that buyers are adept at applying the two different policy frameworks, and there is little appetite for legislative or policy change at this time.

The VGPB has developed a draft integrated procurement framework to encourage agencies to harmonise their internal procurement arrangements for goods and services and construction, wherever the two frameworks overlap.

Alternate procurement paths

Towards the end of 2019–20, we published three new guides on innovative pathways to market. These complement our current range of guides that help buyers with the principle aspects of the procurement process.

Pre-commercial procurement

Pre-commercial procurement helps buyers purchase goods or services when the market does not have an existing or fully developed solution.

Early market engagement

Early market engagement is the strategic exchange of information with the market prior to procurement. This guide helps buyers understand how to drive early participation, innovation and collaboration with the market for upcoming procurement activities.

Procurement auctions

Procurement auctions and reverse auctions are when several sellers compete with one another to win the business of a buyer. Auctions can achieve greater value for money by bringing down prices.

Uniforms and personal protective equipment

We continued to support the Government’s commitment to buying locally made uniforms and personal protective equipment (PPE).

On the buyer side, the Uniforms and PPE Monitor ran regular working groups for the major buying agencies, worked closely with Local Jobs First and the Local Jobs First Commissioner, and engaged the Australian Advanced Manufacturing Council on industry support initiatives.

On the industry side, the Monitor worked with the Textile, Clothing and Footwear Union (part of the Construction, Forestry, Maritime, Mining, and Energy Union), Ethical Clothing Australia, the Industry Capability Network Victoria, and numerous suppliers.

The Monitor set up a strategic partnership with the Australian Fashion Council – the national peak body for the textiles, clothing and footwear sector – to develop the sector’s capability to supply local manufacturers, and to build buyer capability.

Last year, an ethical supplier register was set up to connect buyers with accredited suppliers and support job creation. The register has been very successful with 24 suppliers registered at the end of the financial year and applications still coming in.

Key highlights:

• three guides on innovative pathways to market
• strategic partnership with Australian Fashion Council – the national peak body for the textiles, clothing and footwear sector
• 24 suppliers signed up to the ethical supplier register
• a draft integrated procurement framework to integrate goods and services and construction procurement

Workstream 4: Procurement technology

Procurement technology provides an opportunity to support better procurement decisions and simplify the procurement process for both buyers and suppliers. We are seeing considerable momentum in this space.

Buying for Victoria website

In early 2020, the Department of Premier and Cabinet delivered the second stage of the Buying for Victoria website, converting all PDF guidance to HTML to make content more accessible. The website brings together information for government suppliers and buyers on procuring goods and services, and construction works and services.

The content is being continually improved through a joint effort between the VGPB, the Department of Premier and Cabinet and the construction team in the Department of Treasury and Finance.

E-procurement strategy

The Department of Treasury and Finance ran a successful pilot for the proposed procurement data centre. After the pilot, the department started working with departments and major agencies to implement the rollout across government. This will provide visibility of consolidated procurement data, giving important insights into what government is purchasing.

A key part of the project is spend data analytics to collect and consolidate accounts payable data from across departments and Victoria Police, and classify the data against a common procurement taxonomy (the United Nations Standard Products and Services Code).

This project will also match spend categories to state purchase contracts to check that the benefits of these contracts are being maximised. Much of the work has been completed and we will implement this project at the end of August 2020.

Over the next year, the department will roll out two key data projects:

Master supplier database pilot

A master supplier database will provide a single point for suppliers to register and update their details and provide common required data. It will also give buyers visibility of the whole supplier base and enhance verification activities. The database will be piloted in 2020–21. The outcomes of the pilot will be evaluated prior to broader implementation.

Build data analytics capability

We will analyse categorised procurement data and establish plans and processes as to how this data will be used, analysed and published, so that we can start identifying the activities that will lead to savings and benefits.

Key highlights:

• migrated all guidance on Buying for Victoria to HTML for better accessibility
• procurement data centre pilot project successfully completed
• Victorian Procurement Data Centre operations began
• government spend data collected, consolidated and analysed
• master Supplier Database Pilot began

Case study: Software solutions help take the legwork out of procurement

Many organisations are introducing software solutions to help run their procurement processes more efficiently. Victoria Police piloted two software solutions in 2019–20:

A cloud-based source-to-contract tool pilot is giving Victoria Police significantly more oversight of all procurements and at various stages of the procurement process thanks to online decisions being captured at multiple points and dashboard reporting. It has also been shown to reduce end-to-end processing timeframes.

Victoria Police's Procurement Department is also piloting DocuSign, a software that enables binding electronic signatures and signoffs, reducing the need to run hardcopy files around the organisation for approvals.

Workstream 5: Capability, process streamline and change management

We released a goods and services buyer capability framework in June 2020, setting out standardised skill sets for buying goods and services based on the complexity of the procurement. Organisations and individuals can use the framework to assess the skills and behaviours that procurement practitioners need to carry out procurement. In 2020–21, we will release:

• a modified web version of the framework
• a revised capability guide and tools that align with the new framework
• a skills matrix

The online module to support professional procurement development was tested during the year and was very well received. The model was a collaboration with the Department of Premier and Cabinet, the Public Sector Innovation Fund and RMIT. The project rollout date is currently being considered.

We started working with the Australasian Procurement and Construction Council to develop training and education pathways for procurement.

To help buyers implement the procurement reform, we set up a procurement practitioners’ network to discuss procurement-related matters.

We also have a Government Buyers Community of Practice on the government intranet. This is a great resource and has grown to include more than 600 members.

Key highlights:

• released a new goods and services buyer capability framework
• two community of practice forums with 200+ attendees
• developed and tested an introductory online procurement training module
• set up a procurement practitioners’ network
• Online Buyers Community of Practice grew to 600+ members

Other VGPB activities in 2019–20

Policy changes

Cybersecurity is a growing issue for both public and private sectors. In June 2020, we added new procurement requirements for cyber and information security to the relevant VGPB supply policies to ensure organisations apply best practice cyber risk management in their procurement of goods and services.

These new policy requirements apply to all goods and services procured by mandated agencies. For more on how goods and services policies have changed to manage information security, visit Procurement policy changes - goods and services.

Key highlights:

• three policies updated to strengthen cybersecurity
• one information security guide and three tools collaborated with the Department of Premier and Cabinet

VGPB accreditation

On 1 January 2019, the Department of Transport and the Department of Jobs, Precincts and Regions were formed from a machinery of government change in the former Department of Economic Development, Jobs, Transport and Resources.

All transport-related procurement now sits under the Department of Transport, including VicRoads and Public Transport Victoria from 1 July 2019.

Both new departments needed to apply for VGPB accreditation, given the substantial changes to their procurement profiles. We are currently reviewing the Department of Transport’s application and are working with the Department of Jobs, Precincts and Regions. Both are expected to gain accreditation during the next financial year.

Supplier Code of Conduct

Following last year’s review of the Supplier Code of Conduct to address the issue of modern slavery, we started another review in 2019–20 to strengthen ethical procurement practices and develop options for enhancing the application and operation of the Code. The outcomes of this review will be considered in late 2020.

Supplier satisfaction survey

Every year, the VGPB surveys suppliers to gauge their satisfaction with each organisation’s market approach. Up until 2019–20, the survey was sent out by the market research company contracted to conduct the survey.

To improve response rates, we moved to an event-based survey which is distributed directly by departments after completion of the procurement process. This resulted in our highest response rate to date (15 per cent). Given the success of this new approach, we will continue to send the event-based survey for the next two years.

Strategic priorities for 2020–23

Now that the VGPB has finished overseeing the 2017–18 procurement reform, it will begin working on four new strategic priorities developed at a series of planning workshops during the first half of 2020. The VGPB will also continue to oversee the ongoing work to develop and implement a procurement data centre and expand the VGPB supply policy framework to an additional 150 agencies.

Strategic priorities:

Drive savings and manage risks via data reporting and analysis

• Support Strategic Sourcing to implement the data reporting and analytics project. This project will give us detailed analytics on government spend, which will help us look for new ways to deliver value for money.

Deliver a more outcome‐oriented procurement policy framework

• review departments’ procurement models to understand pain points to inform future goods and services policy reform
• review and update policies to emphasise benefit realisation and risk management
• review VGPB guides to ensure they are relevant and scalable, particularly as more organisations come under the VGPB umbrella
• continue to refine and streamline the Buying for Victoria website to make it easy for suppliers and buyers to find information

Deliver value creation across the procurement lifecycle

• research opportunities to pilot alternative procurement models to show how different procurement approaches can drive value-for-money outcomes; and
• work with lead agencies to strengthen tracking of saving and benefits reporting to ensure contracts continue to deliver benefits throughout their contract life

Uplift procurement capability

• elevate procurement capability through stronger engagement, concentrating on contract management, alternative paths to market, supplier performance management and category management including supply chain risk assessments; and
• continue to engage broadly across government and hold workshops and forums to increase procurement capability