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LGP News - September 2017
" Keeping you connected in local government procurement "
Challenges and Opportunities
by Luke Kenny, Chief Executive Officer
‘Building procurement capability and embracing innovation’ is the theme for Local Government Procurement’s (LGP) 2017 Annual Conference. I think the most difficult aspect procurement faces in NSW local government is knowing, and embracing innovation.
So how do you start embracing innovation, start investing in and piloting new technology? Maybe. I would rather see us as a sector sit down with others in your council to think seriously about evaluating the ability of your procurement model in order to respond to fluctuating business demands. In the last few months, I have offered and we have subsequently led some very interesting strategic procurement workshops for very senior executive groups in local government. These groups are already on the innovation journey. They are leaders who are embracing procurement, they don’t necessarily have the answers, but they have decided to chase them to be better. If you need help LGP Consulting is here to assist.
“Procurement stands on the precipice of greatness. So, what do you want to do: create the time to solve bigger problems, or carry on sourcing?” This quote comes from a recent article I read on LinkedIn, titled “What’s Next?” by Gordon Donovan. As procurement people in local government (just like we have seen in these strategic procurement workshops) it is time to reflect on your current workload and what you need to deliver in the next 3 months and ask yourself, are there bigger problems to solve, or new opportunities tackle? Or will you just carry on sourcing?
If you feel you will be forced to just carry on, then you have a problem. This is often because we are afraid to challenge ourselves to seek and gain permission, or just give yourself permission, to change how you perform your procurement role to even consider beneficial change. Those who put in the extra effort and have the courage to engage around and above you (includes your key suppliers, not just colleagues), it is those people who will lead change and start to see the rewards.
The pace of change coming procurement’s way in Australia is inevitable, now is the time to act. In her article ‘Cognitive Procurement’, Natalie Wain explains “cognitive procurement” will be driving the procurement profession. If you are not familiar with IBM’s Watson, which processes large amounts of unstructured data, driving the Artificial Intelligence (AI) boundaries, then you should be. Just understanding how Watson might change procurement is a great start. Affordability-wise, AI strategies through IBM might never be funded in local government, it does not mean procurement people in local government cannot start to think about how to embrace similar innovation, this positive change will put procurement into a gradual position of power.
If you want a place to start, think about how agile your procurement model is today. This is not necessarily a term associated with local government, but does that need to always remain the case? The NSW local government sector is facing dramatic change, we have already seen it at the legislative level with implemented local government reform. To make sure there is even more change, we have elections shortly, which will see many councils face another 2-3 years of disruption, challenge, but also opportunity.
The Hackett Group advises 74% of procurement professionals say agility is important, yet only 36% say they know how to improve it. Where can you start to become a little more agile, creative and different in your council procurement function? If you need help LGP Consulting has the capacity to help you start looking for the small steps available to you now.
We are building an event in 2017 which helps you start to think about procurement in preparation for the future, and help councils break out of old practice to innovate into the future. If you would like to join us at the LGP Annual Conference in Sydney on the 30 November and 1 December, you can confirm your attendance at the conference click here. If you want to hear about how LGP Consulting can support your council through some of these challenges I have outlined above, please email.
IT&C Products, Services and Consulting LGP115
GovDC Further Update
Last month’s newsletter advised the appointment of NSW Government Digital Community (GovDC) to the IT&C Products, Consulting & Services panel LGP115. We would like to highlight that the GovDC details can be accessed via the LGP website. Refer to the LGP115 panel where you will find Department of Finance, Services and Innovation under the ‘Managed Services’ category. (The sub-category is “Other forms of Managed Services incl. value added”)
All councils can use the GovDC arrangement for their data centre requirements under the ‘Managed Services’ category. The ‘Data Centre as Services’ under GovDC allows all NSW councils to use the arrangement via LGP along with state agencies, hospitals, universities, NFPs and schools.
The GovDC service is facilitating the shift within NSW government from traditional models of ICT infrastructure to consuming ICT services from the cloud.
Under the GovDC arrangement, the two world – class data centres, in Silverwater and Wollongong, will support the new approach to buying and use of ICT services 'on-tap' and to access additional data centre resources without major capital expenditure. These data centres are purpose built, modern, reliable, secure, energy efficient and operated 24/7.
For more information, email Santhosh Dorairajan, Category Manager – ITC & Services, or call 02 8270 8732.
Image courtesy NSW Government.
Debt Recovery Services (LGP109-3)
Local Government Procurement is pleased to announce the commencement of the new LGP109-3 – Debt Recovery Services contract with effect from 1st August 2017.
The Debt Recovery Services include (but are not limited to):
- Correspondence and direct contact with debtors where necessary
- Statements of Liquidated Claim
- Judgements
- Instructions to Sheriff
- Summons
- Garnishee orders
- Liquidation proceedings
- Bankruptcy proceedings
- Defence proceedings, and
- miscellaneous services
Click here to view the up to date list of approved contractors.
All councils can use the new Debt Recovery Services (LGP109-3) panel, with immediate effect.
For more information, email Santhosh Dorairajan, Category Manager – ITC & Services, or call 02 8270 8732.
Sustainable Choice Annual Sustainable Procurement Survey
Sustainable Choice will be continuing to provide the Sustainable Choice Annual Sustainable Procurement Survey under LGP. The survey has been sent to general managers at all councils.
The 2017 survey has been written to align with the new ISO 20400 sustainable procurement guidance standard. As such resulting scorecards and performance reports will form a ‘Health Check’ against the ISO standard.
The new ISO 20400 guidance standard is gaining traction across the globe. Procurement processes that follow the steps outlined within the standard are considered best practice in terms of sustainable procurement implementation.
Your 2017 confidential sustainable procurement scorecard and performance report will form a benchmark with which to track your council’s performance against the standard in subsequent years. The scorecard can also be used to highlight to key stakeholders, including ratepayers and the community, council’s commitment to and progress in sustainable procurement. The performance report will provide valuable recommendations identifying and assisting your council to focus on the areas of sustainable procurement where progress would provide the most benefit to council.
The survey is free to those councils who have paid their $1,200 Membership Fee for FY17/18. Councils who are not yet Sustainable Choice members can join the program now and participate free. Otherwise councils can pay a fee of $500 to cover the cost of data collation, analysis and report development.
Should a non-member council wish to become a member after having participated in the survey, the $500 survey fee will contribute towards the membership fee payable, reducing it from $1,200 to $700.
Contact us if you want to know more.
LGP Procurement Training
Enhance productivity and become more compliant in procurement processes by
up-skilling and acquiring new skills and competencies.
LGP provides a range of innovative learning and development solutions tailored specifically for NSW council staff, delivered via different mediums including face to face and online mode. Through the extensive and exciting gamut of training programs in procurement, LGP can support you in achieving the best outcome from your suitably qualified and skilled staff members.
LGP training programs are offered as the following three suites and you can learn more about each by clicking on the relevant links:
- eLearning: LGP’s eLearning programs use state-of-the-art technology, to deliver cost effective training, specifically designed for NSW local government employees engaged in purchasing, quoting, tendering and contract management. Please click ProcureLearn for more details.
- Face-to-Face Training: Our face-to-face training features a range of interactive and leading practice modules, covering critical areas of procurement and contract management. Please click LGP Learning Centre for more details.
- Nationally Recognised Training (NRT) in Procurement: In partnership with ProLeaders Academy (Registered Training Organisation) LGP offers three Accredited Nationally Recognised Training from Certificate-IV to Advanced Diploma levels, customised specifically for NSW local government employees. Please click Procurement Qualifications for more details.
Grab this opportunity to partner with LGP for your procurement training needs.
There are limited seats available for the following courses listed below.
Register now!
Training Calendar and Registration
To contact LGP Training, email or call 02 8270 8709.
Flexible Purchasing Product (Progressive Purchasing)
by Craig Marschall, Managing Director
A ‘Progressive Purchasing’ product is a forward price exposure contract in the electricity market. Under a Progressive Purchasing product type of contract a customer will be exposed to paying a price related to the forward market (electricity contract market) price for electricity, a price which is not yet known. The forward market is ultimately related to expectations of the spot price (half-hourly market) for electricity, however as the contract applies to periods longer than half-hour increments, it is expected to reflect some averaging. The market cap on the spot market price is currently $14,000/MWh and will likely increase to $14,200/MWh in 2018.
Forward prices for electricity change all the time, are unpredictable and have the potential to be volatile.
For example, the forward settlement price on the ASX for base (all hours) electricity in New South Wales on 31 July 2016 for Q2 2017 was $54.60/MWh. If a customer had arranged a New South Wales contract around that date it would have paid a price for the energy component of its electricity bill related in some way to that forward price of $54.60/MWh. If however, a customer had not locked in a price at that date, but had locked in a price on around 13 March 2017, then the price would have been related to a forward price of $138.95/MWh.
If you were a customer with a load of 0.057 MW (~500 MWh p.a.) and a flat load profile, the cost increase (not the total cost) for Q2 2017 between 31 July 2016 and 13 March 2017 would have been about$10,500 approx (calculated at 3/12 months x 500 MWh x $(138.95-54.60)/MWh). The figure would have increased by including losses and an allowance for the volatility of your electricity load. The variation in peak price (as opposed to an ‘all hours’ price) would have been proportionally even greater.
Risks to be considered
The main risks associated with a Progressive Purchasing product are:
- Market uncertainty – risk introduced
- Future spot prices and forward contract prices are unknown
- No budget certainty - one single high price block purchase could potentially blow out a Council’s budget completely
- Historical or modelled data do NOT predict future outcomes
Financial Implications
Before considering a Progressive Purchasing product, council would need to ensure the contract meets its financial objectives. In doing so:
- Quantify the benefit/value by comparing the electricity cost under a fixed rate retail contract with the ‘worst case’ cost outcome under a Progressive Purchasing product
- Consider whether the expected savings/ benefits justify the potentially large cost /risk involved
- Council would need to be able to monitor the spot price and forward price trends in the electricity market and the risks involved in it
- Council would need to ensure it has the resources and the ability to monitor the pricing (internal/external) and define its decision making/approval processes
Other Implications
Prior to considering a Progressive Purchasing product, council should consider the following:
- Does this process comply with the Local Government Act 1993?
- Is this council’s ‘core business’? If things go wrong, what will be the repercussions? Media?
In the end, given all of the changing factors influencing the Progressive Purchasing product, it is important that council consider the risks, financial implications and its own current situation and requirements before entering into a ‘Progressive Purchasing’ product contract.
Formalising Purchase Arrangements
with LGP Panel Members
by LGP Tendering and Contracts Team
As councils become more professional in their procurement activities generally, we have noticed an increased interest from councils seeking advice regarding contract documentation. The documents which form a contract with an LGP Approved Contractor (panel member) will vary depending on the specific requirements of the parties and also on the complexity or risk of the purchase.
The most common options available are:
Purchase Orders: For simple procurements. LGP recommends that these should confirm the LGP panel contract number, a quotation reference, contact persons, required delivery dates and any specific requirements or special conditions that council would deem to be critical. As most council purchase order formats include a set of standard terms of purchase, there should ideally be a comment to confirm that the LGP Customer Terms apply to the purchase. (These are actually contained within Schedule D of an LGP Standing Offer Deed, a document that is executed between LGP and the Approved Contractor.) This helps prevent any ambiguity as to which terms apply, and also serves to remove confusion should the supplier quotation include standard conditions of sale.
Instrument of Agreement: In basic terms, this is a cover sheet which lists the names of the contracting parties and the documents representing the contract, e.g. specifications, technical drawings, quotation or price schedules and terms and conditions of contract. An instrument of agreement is typically drafted on council or lawyer’s letterhead or on an Australian Standard document such as AS 4950-2006 Form of Formal Instrument of Agreement. This document is signed by the parties.
Some Australian Standard contracts recommended by LGP (e.g. the AS4122 -2010 General Conditions of Contract for Consultants) already include an execution page within the document, for signing by the parties.
In most cases, the queries that arise on this topic are simple procurement process matters, but occasionally, legal advice may be appropriate. Speak initially with your LGP Business Development Manager if you have any queries.
Certificate-IV (PSP40616) & Advanced Diploma (PSP60616) in Procurement & Contracting Successfully Delivered
The delivery of Block 1 (8-10 August 2017) and Block 2 (23-25 August 2017) of the Certificate-IV in Procurement and Contracting (PSP40616) qualification at LGP. Participants representing different councils, both from metro and regional areas attended this course. They will be back in the class for Block 3 during 18-19 September and continue further with the next part of this course.
The group for the Advanced Diploma of Procurement and Contracting (PSP60616) course is halfway through now after having completed Block 2 of the course during 28-30 August.
Classroom discussions, group activities and delivery by the Trainer contributed to the fun-packed learning and knowledge sharing experience for the attendees.
The first block of the Diploma of Procurement and Contracting (PSP50616) is currently underway.
Sydney Network Meeting - Update
In August we had our Sydney Network Meeting at the Grace Hotel. The day was a tremendous success attended by procurement professionals from surrounding councils within the metro and greater Sydney region.
We were fortunate to have the LGP Chairman, Paul Braybrooks OAM officially open the event and the agenda for the day was well received and full of current topics.
Discussions were held on the latest procurement issues in the contract and legal space held by Phill Scott (Head of Tendering and Contracts – LGP) and Monica Kelly (Principal - Prevention Partners). We also heard from Sustainable Choice on the new ISO 20400 for Sustainable Procurement, LGP and Arcblue on the LEAP Program, which delivers procurement enhancements to councils and our 2017 Network sponsor, Boral, who provided the group with some insight into procuring with local government from the suppliers’ perspective. The day was wrapped up with a lively Q&A session, where questions from the floor were discussed and different perspectives were shared.
We had over 30 attendees present, representing many different sections of council such as procurement, fleet, finance, legal, engineering, governance and executive. A great day was had by all, discussions were robust with excellent networking providing an opportunity for collaboration and sharing of information which was pivotal to the success of the day.
LGP would like to thank all those that attended for contributing to a successful day and we look forward to facilitating future networking events in 2018.
The next LGP networking meeting will be held in Junee on Thursday 7th September. For further information, visit the LGP website.
UPCOMING EVENTS
Local Government Procurement
Annual Conference 2017
Registration Now Open!
'Building Procurement Capability and Embracing Innovation' is the theme of the 2017 Local Government Procurement Conference. The key topics covered over the two days will revolve around people and culture, technology, supplier relationship management, sustainable procurement, innovation and future trends.
The Annual Conference will be held on Thursday 30 November and Friday 1 December 2017 at the Sydney Masonic Centre, 66 Goulburn Street Sydney.
The conference provides opportunities to develop new and build on existing professional networks and working relationships and to learn from industry experts and peers.
The conference will bring together local government managers to hear and learn about a range of procurement challenges within the sector. The conference is an ideal event for those involved in procurement, in particular:
- Procurement Managers
- Governance Managers
- Purchasing Officers
- Contracts Managers
- General Managers and Senior Managers
Visit our website to view updated information, or register your attendance to lock in the early bird rate of $990 inc GST for this two day conference.
If you would like documentation to support your application request, email LGP and we will provide a business case to supplement your application.
Sponsorship Opportunities
Local Government Procurement
Annual Conference 2017
The Local Government Procurement Conference is an established industry event for NSW local government. The conference provides a unique opportunity for suppliers to showcase their goods and services to a cross section of procurement professionals from across the state over two days. It is also an excellent opportunity to attract potential customers and build on existing relationships already established.
The conference will be held on Thursday 30 November and Friday 1 December 2017 at the Sydney Masonic Centre, 66 Goulburn Street Sydney.
Sponsorship opportunities are limited. Suppliers who wish to participate as a sponsor or as a trade exhibitor can view our Sponsorship Prospectus.
LGP Consulting Team
LGP extends its expertise and experience to provide councils with an additional service through its Consulting Team.
LGP’s consulting team are well positioned to facilitate end to end tender processes on behalf of individual councils. Our consulting team comprises highly qualified and experienced professionals who have demonstrated success in facilitating tenders on behalf of councils.
Examples of recent tenders we have conducted on behalf of individual councils are:
- Refurbishment of Library Building
- Legal Services Panel – two individual council tenders
- Internal Audit Services
- Natural Resources Services
- Management and Operation of Swimming Centre
- Security Services - two individual council tenders
- Food and Garden Organic Processing
- Scrap Ferrous Metals, Green Waste Processing, Crushing and screening of concrete and Waste Bin Audit (4 separate tenders for a group of councils)
- Remediation of Land works
- Development and Management of Caravan Park (EOI)
- ICT Services Provider
- Vehicle Leaseback
- Cleaning Services
- Trade Services Providers
- Lighting and Sound Technician services
- Dry and Wet Plant and equipment – two individual council tenders
- Insurance Broker and Insurance Brokerage Services for ten councils (joint tender process)
- CBD Reconstruction Tender
If you have any requirements for tender facilitation for any product or service please email the LGP Consulting Team or call 02 8270 8747.
Webinar - Leading Efficiency & Analytics Program - LEAP
Following on from the successful launch we had two successful LEAP webinars where we had over 90 attendees in total who showed keen interest in the product and were eager to learn how the program would benefit their council.
LGP in partnership with ArcBlue invite you to join our upcoming webinar where we will explain our new Leading Efficiency and Analytics Program (LEAP), a low-cost ongoing continuous improvement program that uses real data and evidence to improve procurement capability.
The program delivers:
A solution giving better visibility and categorisation of spend
Highlights cost saving opportunities across various categories
Allows benchmarking to drive continuous improvement of procurement
Performance tracking through sector and regional benchmarking
Ability to monitor procurement compliance with policy and probity
We will explain how we can support procurement improvements through use of technology and data, and how you can effectively manage data to deliver a greater service solution.
Date: Friday, 15th September 2017
Time: 9:30am - 10:15am
Cost: Complimentary
Want to Know who Your Business Development Manager is at LGP?
Local Government Procurement has a dedicated team to look after the needs of councils, approved contractors, not for profit organisations and other government bodies.
Click here to see who can help you.
Sustainable Choice - The Sustainable Approach to Procurement in Local Government
Sustainable Choice assists local government to integrate sustainability into their procurement systems and purchase sustainable products and services. Every purchase counts and Sustainable Choice can make it easier; it’s the responsible and sensible approach to procurement.
Find out more about Sustainable Choice, its products and services click here.
What Does ‘Indemnity’ Mean?
Indemnity is a word used a lot in contract law circles, but what does it mean and how is it used?
The word ‘indemnity’ derives from Latin indemnis, meaning unhurt, undamaged or without loss.
In brief, indemnity may refer to compensation for damage or loss. For example, your car insurance contract agrees to compensate you for any damage or loss it suffers in return for the premiums you pay.
Liability is an obligation, legal responsibility or duty. A liability is a matter of fact and does not require intention of the party involved. Liability is a state of being responsible for something.
Message to take away
- While many policies require minimum amounts of public liability and professional indemnity insurance, there may be situations where these standards are unrealistic or unnecessary.
- A well conducted risk assessment prior to compiling contracts will inform you whether the contract requires insurance, or not.
Contact Prevention Partners NSW on 0438 280 621 or email to assist.
Monica Kelly from Prevention Partners explains more here.
If there is any topic you would like covered next month, please feel free to contact Prevention Partners NSW to make suggestions.
LGP Approved Contractor Items in LGP News
LGP Approved Contractors are invited to submit items for inclusion in LGP News. The information submitted must be relevant, and be of interest and benefit to councils.
For more information about submitting an item please view the Guidelines document.
