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Appendices

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APPENDIX C-Procurement practices and outcomes

This appendix focuses on the department's procurement practices and outcomes, with attention to:

  • procurement policies and practices
  • competitive tendering and contracting arrangements
  • use of consultancies
  • payments for market research and advertising.

Procurement policies and practices

Our procurement policies and practices continue to reflect the principles set out in the Commonwealth Procurement Guidelines and associated financial management guidance:

  • value for money
  • encouraging competition
  • efficient, effective and ethical use of government resources
  • accountability and transparency
  • compliance with other Australian Government policies.

Our Chief Executive Instructions on procurement reflect these principles and the need for compliance by all staff when choosing procurement methods, sourcing potential suppliers or entering into contracts. As part of these arrangements, in 2005-06 we published on AusTender:

  • a procurement plan providing details of anticipated procurements for 2006-07 (www.tenders.gov.au)
  • details of publicly available procurement opportunities with a value of $10,000 or more (www.tenders.gov.au)
  • details of all contracts or standing offers awarded with a value of $10,000 or more (www.contracts.gov.au).

We also published on our website (www.dotars.gov.au) details of all contracts with a value of $100,000 or more entered into or active during the previous 12 months, as required by Senate Order 192.

Requests for access to contracts are considered in line with the Freedom of Information Act 1982. For more information about freedom of information issues, see Appendix F.

Note: While some contracts involve a fixed price, the value of others depends on the level of demand for the goods or services involved. In these cases, we report the best available estimate of the value of the contract based on expenditure to date and likely demand over the remainder of the contract. All values shown include goods and services tax unless otherwise noted.

Competitive tendering and contracting

The Requirements for annual reports for departments, executive agencies and FMA Act bodies, issued by the Department of Prime Minister and Cabinet and approved by the Joint Committee of Public Accounts and Audit, defines competitive tendering and contracting as 'the contracting out of the delivery of government activities, previously performed by a Commonwealth agency, to another organisation'.

We have contracted:

  • certain services delivered on behalf of the Australian Government
  • a range of corporate services.

More information on contracts valued at $100,000 or more follows. All such contracts routinely include a requirement for access to the contractor's premises by the Auditor-General.

Exempt contracts

In 2005-06, no contracts were exempted from publication on AusTender on public interest grounds.

Services delivered on behalf of the Australian Government

The department delivers a number of services on behalf of the Australian Government. Services that have been contracted out relate to:

  • transport safety research and information services
  • Maritime Emergency Towage Programme
  • management of leased airports
  • management of properties at the Sydney West airport site
  • aerodrome inspection services for remote Indigenous communities
  • the Australian Government Regional Information Service (AGRIS)
  • services to non-self governing territories.

Transport safety research and information services

A small number of contracts relating to road safety data collection, analysis and research continued in 2005-06. A replacement contract relating to the storage and distribution of transport safety information was let.

Maritime Emergency Towage Programme

The Australian Government funded the Maritime Emergency Towage Programme from 1 July 2005 to 31 May 2006, as an interim measure to maintain towage capability pending the finalisation of the National Maritime Emergency Response Arrangement. A total of $4 million in funding was provided to two providers of towage capability, United Salvage, a subsidiary of Adsteam Marine, and SvitzerWijsmuller Salvage Group. SvitzerWijsmuller received $1 million to maintain emergency towage capability on the north-west coast of Western Australia from 1 September to 31 May 2006. Adsteam received the remaining $3 million to maintain its emergency towage capability in other areas in Australia from 1 July 2005 to 31 March 2006.

Management of leased airports

Private contractors provide airport building control and parking control services at federal airports. After an open tender in 2004-05, eight contracts for building control services were let for an initial term of four years from 1 July 2005. Parking control services are contracted out to airport lessee companies annually for parking at eight airports (for details, see page 116). Contracts cannot be offered to bodies other than airport lessee companies under the Airports (Control of On-airport Activities) Regulations 1997.

Management of properties at Sydney West airport site

Management of properties owned on and around the proposed Sydney West airport site (Badgerys Creek) was contracted out to Zeckendorf Holdings Pty Ltd after an open tender. This contract was signed on 1 January 2003 for an initial term of three years with an option to extend for two years. The option was exercised from 1 January 2006, to conclude on 31 December 2007.

Aerodrome inspection services for remote Indigenous communities

The Remote Aerodrome Inspection Programme provides an annual inspection service for 58 specified aerodromes servicing Indigenous communities in remote parts of northern Australia. These services are contracted to an appropriately qualified service provider. In July 2005, the department put out an open tender to identify a new service provider for the programme. This service provider was contracted in October 2005 for a 12-month period.

Australian Government Regional Information Service

The freecall 1800 call centre for the Australian Government Regional Information Service (AGRIS) is currently contracted to Cooma Monaro Technology Centre Ltd. The centre has provided these services for AGRIS since 20 August 2001. The department is currently evaluating tender responses to a request for tender for the services. Storage and distribution services for the dispatch of the Australian Government Regional Information Directory are currently contracted to Universal Express Group. A two-year contract from 1 June 2006 to 31 May 2008 was signed on 29 May 2006 and includes an option for the department to negotiate to extend the contract for three further one-year periods. For more information on AGRIS, (see page 128).

Services to non-self governing territories

In the absence of state government services, a range of services are delivered to Australia's non-self governing territories. While the department continues to provide some of these services directly, others are provided through contracts with the private sector or under service delivery arrangements or contracts with state and territory governments, such as the Western Australian Government in the case of the Indian Ocean Territories and the ACT and NSW governments in the case of Jervis Bay Territory.

Some existing arrangements expired in 2005-06, and we entered into several new arrangements, including:

  • a contract with Integral Energy for the maintenance of the electricity infrastructure within Jervis Bay Territory
  • an agreement with the Water Corporation of Western Australia to continue to provide water and waste water services to the Indian Ocean Territories
  • an agreement with Toll Ports to continue the provision of port management services to Christmas Island and Cocos (Keeling) Islands.

For more information on services to territories, including services we provide directly, (see page 144).

Corporate activities

The department has previously carried out detailed analysis of our corporate activities in line with government requirements for market testing of those activities. Corporate activities that have been contracted fall into three broad areas:

  • information and communication technology (ICT) services
  • professional services
  • property and office services.

Like most organisations, the department has a range of contracts and standing offers in place for the supply of professional services, energy, office equipment and other consumables.

ICT services

Desktop, help desk and related information technology services were contracted to Ipex ITG Pty Ltd (now part of Volante Pty Ltd) after an open tender. The contract took effect from 1 July 2004 and has an initial term of four years. Wide area network, data communication and voice communication services were contracted to Optus Networks Pty Ltd after a select tender. These contracts were consolidated into one agreement, which was extended in 2006. We are now in the two-year extension period of that contract.

The panel of ICT service providers that we set up in 2004-05 after an open tender will continue for at least three years. This panel gives us access to specialist project management, software development and information technology security services as needed.

Professional services

The department has set up several panels of professional services providers. We use the panels when we do not have sufficient capacity or specialist expertise. The panels are subject to regular review, and several were put to market during 2005-06.

Panels cover:

  • communications services
  • legal services
  • accounting services
  • SAP services.

Internal audit services were contracted to KPMG after a select tender. The contract was signed on 6 December 2002 and had an initial term of two and a half years. The department exercised an option to extend the contract for a further two years in 2005.

Other services

Property and security services were contracted to United KFPW Ltd after a select tender. This contract was signed on 11 December 2002. It has an initial term of five years, with an option for two 2-year extensions.

Office services were contracted to Pickfords Pty Ltd after a select tender. This contract was signed on 4 April 2003. It has an initial term of five years, with an option for two 2-year extensions.

Travel services were contracted to American Express after a select tender. The contract was signed after the collapse of the Ansett group of companies and was extended in early 2004 to 31 December 2006.

Graduate relocation services were contracted to Toll Transport Ltd, following an open tender process. The contract was signed on 9 January 2006 for an initial term of one year, with three further options to extend for one year.

Consultancies

The department generally engages consultants to carry out research or provide professional or technical advice that cannot be provided by departmental staff. Consultants are procured as required by programme managers in accordance with the Commonwealth Procurement Guidelines, the department's Chief Executive's Instructions and the DOTARS Procurement Manual.

In 2005-06, the department engaged 113 new consultancies involving expenditure of $8.9 million. While this is a decrease in the number of consultancies, the value increased due to a major consultancy associated with the North-South Rail Corridor Study. The department continued to use 56 consultancies engaged in prior years, involving a further expenditure of $2.0 million.

Details of contracts valued at $10,000 or more let in 2005-06 are available on our website (www.dotars.gov.au).

Table C.1 Trends in procurement

2001-02

2002-03

2003-04

2004-05

2005-06

Purchasing outcomes

Invoices paid within 30 days

not reported

91.8%

95.1%

96.7%

97.0%

Consultancies

All consultancies including consultancies let in previous years

Total expenditure

not reported

$6.0m

$4.0m

$7.6m

$10.9m

New consultancies valued at $10,000 or more

Number let

49

62

54

129

113

Total value over the life of these contracts

$5.3m

$3.8m

$3.7m

$8.5m

$8.9m

Market research and advertising payments-not including payments less than $1,500a

Creative advertising

$0.8m

$0.0m

$0.4m

$0.6m

$0.15m

Market research/polling

$0.3m

$0.5m

$0.4m

$0.2m

$0.02m

Direct mail

-

$0.5m

$0.0m

$0.4m

$0.02m

Media advertising-recruitmentb

$0.4m

$3.4m

$0.8m

$3.1m

$1.07m

Media advertising-non-recruitment

$0.71m

Total payments

$1.5m

$4.4m

$1.7m

$4.3m

$1.97m

a Payments have been rounded to $0.0m where payments were less than $50,000. Discrepancies in table between totals and sums of components are due to rounding.
b In previous years, all media advertising for recruitment and non-recruitment was reported as a combined figure.

Payments for market research and advertising

In 2005-06, the department paid $2.8 million for market research and advertising. Table C.2 lists payments of $1,500 or more made during the financial year, as required by section 311A of the Commonwealth Electoral Act 1918.

Table C.2 Details of advertising and market research payments of $1,500 or more

Firm

Service provided

Payment made in 2005-06 ($)

Creative advertising agencies

Greyworld

Creative design for Green Vehicle Guide

65,978

The Social Research Centre

Conduct a national survey of community attitudes to road safety

91,445

All creative advertising

157,423

Market research/polling organisations

Colmar Brunton Social Researcha

Online survey for Green Vehicle Guide

22,814

All market research/polling

22,814

Direct mail organisationsb

National Mailing and Marketing

Local Government National Report

1921.96

Canberra Mailing and Envelopes

Printing and distribution of letters to all CASA pilots

23629.45

All direct mail organisations

2551.41

Media advertising organisations

Recruitment advertising

hma Blaze

1,064,819

Hobsons Australia Pty Ltd

6,500

Hansen & Searson

24,840

All recruitment advertising

1,096,159

Non-recruitment advertising

hma Blaze

214,552

ATSB Information and Coordination

69,203

Executive Media Pty Ltd

8,581

Cre8tive Australasia Pty Ltd

20,330

Shipping Australia

7,500

The Production Hub

6,498

Sponsorship advertisement Regional Skies

63,882

Departmental Gazette advertisement

48,428

Growing Regions Conference advertising

25,926

Universal McCann

227,340

All non-recruitment advertising

692,240

All media advertising

1,788,399

a Contract previously listed as a consultancy with a value of $10,000 or more.
b Some payments to direct mail organisations have been included in printing costs.