Offer for Buying a Product Template

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					                 Department of Treasury and Finance                                                                                            Procurement
                 Government of Western Australia                                                                                               Reform
                 Office of Government Procurement                                                                                              Toolkit




     3. Procurement Reform Agency Self Assessment Template


INTRODUCTION
This Self Assessment Template is based on the 8 Smarter Buying Principles that are central to the
Procurement Reform Toolkit and is designed to help agencies monitor and assess their progress towards
implementing procurement reform strategies and achieving savings targets. It does this by posing a series
of questions that highlight many of the issues that agencies need to address.

The template can be downloaded as a word document from the Department of Treasury and Finance
website. Visit www.dtf.wa.gov.au/procurement.




INDEX
A.       Implementation Arrangements ................................................................................................................. 1

1.       Spend profile analysis and patterns, compare these to sector best practice and look for savings
         opportunities ............................................................................................................................................. 2

2.       Implement a process of agency forward procurement planning .............................................................. 4

3.       Consistently apply whole of government policies, processes and procurement documentation ............. 6

4.       Optimise the use of Common Use Arrangements (CUAs) and agency specific contracts ...................... 7

5.       Minimise piecemeal buying and aggregate wherever possible ................................................................ 9

6.       Standardise the range of items available for purchase and apply demand management practices .....10

7.       Invest in raising staff awareness of better buying principles and behaviours ........................................12

8.       Tighten contract management practices, particularly in service contracts .............................................13




A.       Implementation Arrangements

It is critical that agencies are proactive and adopt a coordinated approach to the implementation of
procurement reforms.

i.        Has your agency appointed a Procurement Reform Project Leader or Coordinator?                                                             yes / no

ii.       Does your agency have a Procurement Reform Steering Committee?                                                                            yes / no

iii.      Are regular progress reports submitted to the Corporate Executive or CEO?                                                                 yes / no

iv.       Is a running record of savings achievements being maintained?                                                                             yes / no




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3. Self Assessment Template                                                          Procurement Reform Toolkit



1.       Spend profile analysis and patterns, compare these to sector best practice and
         look for savings opportunities

1.1      Has your agency undertaken an analysis of spending over the past 12 – 24 months on both goods and
         services (using FMIS data)? Goods and services data can be grouped into broad categories, like
         those suggested in the table at 1.3.
         yes / no

1.2      Aggregating agency spend

         a.        What opportunities were identified for aggregating agency spend?


         b.        What action has been taken to date?


         c.        List the top five (by estimated annual $ savings if applicable) agency contracts, standing offers
                   or revised procedures, developed as a result of your spend analysis.
                   Description of Savings Opportunity                                   Estimated Savings $

                   1.

                   2.

                   3.

                   4.

                   5.




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3. Self Assessment Template                                                                                     Procurement Reform Toolkit



1.3      Savings targets

         a.        The Procurement Reform is a five-year program that commenced in 2003-04 and has annual
                   savings targets for four years. What are the savings targets for your agency in each of the four
                   years, in the different categories of goods and services expenditure (eg. Corporate Goods and
                   Services, Property Related Expenses, and so on) or particular areas of expenditure targeted for
                   reform? The following table may provide a suitable template for this purpose.

          Categories                                                                           2004-05        2005-06        2006-07        2007-08

                                    - Construction & demolition materials &           Actual
          Construction &               services
          Infrastructure            - Land administraiton charges
                                    - Transport infrastructure                        Target


          Facilities                - Maintenance & repairs to land, buildings &      Actual
          Management                   premises, road & rail
          & Maintenance             - Airconditioning systems
                                                                                      Target


                                    - Cleaning services & materials                   Actual
          Property Related          - Environmental services
                                    - Waste/rubbish disposal
                                                                                      Target


          Transport of              - Fleet management                                Actual
                                    - Fuel & oil
          Goods                     - Frieght, cartage & courier
          & People                  - Postage & postal services                       Target

                                    - Agriculture, horticulture, plants & animals
                                    - Uniforms, clothing & footwear                   Actual
          Technical, Scientific
                                    - Educational products, publications & training
          & Specialist              - Health & medicine goods & services
                                                                                      Target
                                    - Law, order & safety goods & services

          Information               - Information technology & communication          Actual
                                       related expenses, inc equipment,
          Technology &                 consumables, maintenance, software,
          Telecommunications           licences & services                            Target


                                    - Advertising, marketing & promotions             Actual
          Corporate Goods           - Professional services
          & Services                - Stationery, office equipment, furniture &
                                       fittings                                       Target


                                                                                      Actual
          Other
                                                                                      Target


                                                                                      Actual             $0             $0             $0             $0
          Total
                                                                                      Target             $0             $0             $0             $0




         b.        What categories of goods or services achieved the greatest savings to date?


         c.        What categories offer the greatest opportunities for future savings?




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3. Self Assessment Template                                                           Procurement Reform Toolkit



2.       Implement a process of agency forward procurement planning

2.1      What was the scope of your agency’s forward procurement planning (AFPP)?


         a.        Was the scope restricted only to planned procurements over the $100,000 tender threshold?


         b.        If not, what business rules were adopted to determine the scope of your AFPP? What was the $
                   value threshold applied?


         c.        Was some procurement expense excluded from your procurement planning? If so, what was it?


         d.        What planning was made for lower value purchases?



2.2      To what extent has the AFPP been implemented?


         a.        How many of the projects or contracts listed in the plan have progressed?


         b.        What was the contract award value for the planned projects/contracts? Was it more or less
                   than the pre-tender estimate?
                   Project / Contract                                    Award Value       More or Less than Estimate




2.3      Were the opportunities identified in the spend analysis for new agency contracts incorporated into the
         AFPP?
         yes / no

2.4      Did the analysis of planned expenditure identify any seasonal or cyclical purchasing patterns?
         yes / no

         a.        Has provision been made in the annual AFPP for these peak demand periods?
                   yes / no

         b.        Is the product/service price impacted by peak period purchasing?
                   yes / no
         c.        Can any of this spend be aggregated or rescheduled to non-peak periods?
                   yes / no




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3. Self Assessment Template                                                        Procurement Reform Toolkit



2.5      Has the AFPP been discussed with your DTF Client Procurement Services Team?
         yes / no

         a.        Have schedules been provided to achieve target completion dates?
                   yes / no

         b.        Have you agreed on the particular projects that warrant a procurement plan?
                   yes / no

2.6      Have any multi-agency aggregation possibilities been identified and/or implemented?
         yes / no

         a.        Elaborate on the product/service, number of agencies involved and estimated savings.


         b.        What action has your agency taken to try and identify any multi-agency aggregation
                   opportunities?




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3. Self Assessment Template                                                         Procurement Reform Toolkit



3.       Consistently apply whole of government policies, processes and procurement
         documentation

3.1      Has your agency adopted the standardised whole of government contract documentation (request
         templates and General Conditions of Contract) - effective for all but IT&T contracts since 1 July 2005?
         yes / no

         a.        Does your agency use the standardised procurement templates available on the DTF website -
                        For public tenders?                       yes / no

                        For written quotes?                       yes / no

         b.        Have these been posted to your intranet and/or included in the relevant Corporate Guidelines?
                   yes / no

3.2      Has your agency’s purchasing policy been updated to incorporate the changes to State Supply
         Commission buying rules and purchasing thresholds introduced in August 2004?
         yes / no

         a.        Are all buyers in your agency fully aware of the impact of the relevant changes to SSC policies,
                   particularly changes to the thresholds for purchasing methods – public tenders, written quotes,
                   direct purchasing, etc?
                   yes / no

         b.        Are buyers in your agency obtaining verbal quotations for purchasing between $1000 and
                   $10,000?
                   yes / no

         c.        Are buyers in your agency, direct purchasing (with a single verbal quote) when buying items
                   valued at less than $1,000?
                   yes / no

3.3      Does your agency’s intranet page include links to relevant Office of Government Procurement and
         State Supply Commission web pages? (including lists of mandatory CUAs, GCoC and request
         templates, SSC policies and guidelines)
         yes / no

3.4      Please give an estimate (dollars) of the savings achieved as a result of process efficiency
         improvements and the implementation of other reform initiatives?




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3. Self Assessment Template                                                       Procurement Reform Toolkit



4.       Optimise the use of Common Use Arrangements (CUAs) and agency specific
         contracts

4.1      What mechanisms have been implemented by your agency to ensure the optimum use of Common
         Use Arrangements (CUAs) and agency specific contracts?


         a.        Does your intranet site link to the CUA Guide on the DTF website?
                   yes / no

         b.        Are staff aware that CUA’s are mandatory for purchasing conducted in the Perth region?
                   yes / no

4.2      The launch of new Common Use Arrangements are generally supported by information sessions that
         focus on how to maximise the CUAs’ benefits. Do buyers from your agency typically attend these
         launches?
                   yes / no

         a.        What follow-up occurs after the launch to inform all relevant agency buyers of the new CUA and
                   to implement changed standards or buying rules?



4.3      Since July 2005, the largest spending agencies have been provided with regular CUA Buying
         Behaviour Reports. If your agency receives these reports -

         a.        To what extent is this information communicated to buyers across your agency? How is this
                   done?


         b.        Are the reports regularly discussed at meetings of the Corporate Executive and Business Unit
                   Managers?
                   yes / no

         c.        What changes have been implemented as a result of spend patterns/buying behaviours
                   illustrated in these reports?


         d.        What process do you have in place to monitor adherence to the recommended buying
                   behaviours or product/service standards?


         e.        What process do you have in place to minimise leakage from CUAs?




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3. Self Assessment Template                                                          Procurement Reform Toolkit



4.4      Do you monitor the use of agency specific contracts in a similar manner to CUAs?
         yes / no

         a.        If off-contract purchasing is occurring (i.e. contract leakage), what remedial action has been
                   taken (or is planned to be taken)?


         b.        Is there a government-wide CUA for the purchases covered by any of your agency specific
                   contracts?
                   yes / no

         c.        Has a recent cost comparison been undertaken between the agency specific contract and any
                   similar CUA?
                   yes / no

         d.        Are you intending to convert to the CUA(s) soon?
                   yes / no


4.5      Have you quantified the savings achieved from different agency specific contracts?
                   yes / no

         a.        What is the estimated dollar savings from such contracts for the current financial year?
                   Contract                                                                          Savings $




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3. Self Assessment Template                                                                   Procurement Reform Toolkit



5.       Minimise piecemeal buying and aggregate wherever possible

5.1      Have you analysed the extent of piecemeal purchasing in your agency (particularly through invoice
         analysis)?
         yes / no

         a.        What was the extent of piecemeal purchasing identified by the spend analysis? Elaborate on
                   the product or service areas that were characterised by piecemeal purchasing.


         b.        A starting point is to determine the value and number of purchases being undertaken by your
                   agency in the following price ranges and to then check the mix of suppliers per product. By
                   filtering this data by price, supplier and product the objective over time is to reduce the number
                   of separate purchases in the lower price categories:
                   Period:           from              to
                   Group                        Price Range       Total Number of Purchases        Total Value of Purchases

                   Group A                       $0 - $500

                   Group B                   $501 - $999
                   Group C                $1,000 - $4,999

                   Group D                $5,000 - $9,999

                   Group E              $10,000 - $19,999

                   Group F              $20,000 - $50,000




5.2      What mechanisms have been implemented to monitor piecemeal purchasing?


         a.        Where has piecemeal purchasing been reduced or eliminated for a type of commodity or
                   service purchase?


         b.        Were further opportunities for agency specific contracts identified through this process?
                   Provide details.



5.3      What invoice rationalisation arrangements have been made with suppliers where there are an
         excessive number of invoices?



5.4      What is your agency’s best illustration of a new aggregated purchasing arrangement? What are the
         estimated annual savings from this example?




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3. Self Assessment Template                                                                  Procurement Reform Toolkit



6.       Standardise the range of items available for purchase and apply demand
         management practices


6.1      What regular purchases have been standardised by your agency – i.e. the range of items available for
         purchase by staff that has been rationalised?



6.2      How was the standardisation achieved?

         a.        Through clearly defined contract specifications?
                   yes / no

         b.        By limiting staff choice from CUAs?
                   yes / no

         c.        Other method. Please provide details.



6.3      What estimated cost and/or efficiency savings have flowed (or are anticipated) from increased product
         standardisation? (This could be the actual for 2004-05 and the estimate for the current financial year).
                   Contract                                   Standardisation   % Saving          Period    $ Savings or
                                                                                                              Estimate

                   eg
                   Stationery CUA                       Nominated 200           25%pa            2004-05     $32,000
                                                        standard items




6.4      List any examples, where a tender specification has been amended to ensure the request just meets
         (rather than exceeds) your agency’s requirements?



6.5      What happens to remaining budgeted funds where a tender result is under the approved budget
         (typically the pre-tender estimate)?


         a.        Does your agency recognise the tender price difference as ‘savings’ when smarter buying
                   principles have contributed to the lower tender price?


         b.        What is the total value of such ‘remaining funds (by financial year)?
                   Tender No.                                Approved Budget      Tender Price             Saving




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3. Self Assessment Template                                                             Procurement Reform Toolkit



6.6      How does your agency deal with tenders that come in over the approved budget? Are these amounts
         subtracted from any savings calculations?



6.7      It is recommended the following questions be considered for such tenders (over a selected tender
         value nominated by your agency).

         a.        What was the reason(s) that the award value exceeded the approved budget?


         b.        Was this the first time your agency had purchased this good or service?

                   yes / no

         c.        Would you have written the specification differently in light of the result?

                   yes / no




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3. Self Assessment Template                                                        Procurement Reform Toolkit



7.       Invest in raising staff awareness of better buying principles and behaviours

7.1      What activities has your agency undertaken to raise staff awareness of better buying principles and
         behaviours?


         a.        Does your staff induction process and/or manual, include a section covering basic agency
                   buying rules and smarter buying practices?
                   yes / no



7.2      The DTF is running a range of procurement training and buyer awareness sessions. Which DTF
         organised events or training did staff from your agency attend in the past 6 or 12 months and how
         many staff participated?


                   Training Program                                                           No. of Attendees

                   Better Buying Program – Levels 1-4

                   Better Buying Program – Levels 5-8

                   Professional Advisory Services Training – Scoping

                   Professional Advisory Services Training – Contract Management

                   Other



7.3      Does your intranet include sections and/or links related to your agency’s purchasing policies?
         yes / no

         a.        Does your intranet include links to specific web pages on the DTF Office of Government
                   Procurement website dedicated to Smarter Buying Behaviour?
                   yes / no

7.4      Are your staff informed of the findings and proposed actions flowing from CUA Buying Behaviour
         Reports provided by DTF or agency specific spend analysis undertaken via the Data Warehouse?
         yes / no

         a.        Do you conduct in-house staff procurement training sessions?
                   yes / no

         b.        Who provides such training and who attends?




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3. Self Assessment Template                                                         Procurement Reform Toolkit



8.       Tighten contract management practices, particularly in service contracts

8.1      Has your agency reviewed the way in which the scope of service contracts are developed?
         yes / no

         a.        What strategies were implemented to minimise or eliminate the potential for ‘scope creep’?



8.2      What strategies are included in contract management plans for service contracts to ensure that
         contract outcomes and objectives are met?


         a.        To what extent are strategic service contracts monitored and reviewed at a senior level?


         b.        How is ‘exception reporting’ used where service contracts exceed their original scope?


         c.        What approval process is followed in respect of contract extensions and variations?


         d.        To what extent are contract performance criteria monitored and reviewed?



8.3      How many people from your agency have attended the Contracting for Professional Advisory Services
         training sessions (which focus on the scoping and management of such contracts) being run by DTF?


         a.        Does this number cover all the people in your agency who should attend this training?
                   (i.e. people who are likely to be either scoping or managing consultancy contracts).
                   yes / no




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