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Appendic C-Departmental 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; and
  • payments for market research and advertising.

Procurement policies and practices

The Department's procurement framework reflects the core principle governing Australian Government procurement - value for money. The Department's approach to the procurement of all goods and services including consultancies is consistent with the requirements of Commonwealth Procurement Guidelines -January 2005-Financial Management Guidance No.1 (CPGs). The CPGs are applied to procurement activities through the Chief Executive's Instructions (CEIs) and supporting operational guidelines. The Department's procurement policies and processes have been developed to help ensure that it undertakes competitive, non-discriminatory procurement processes; uses resources efficiently, effectively and ethically; and makes decisions in an accountable and transparent manner.

Responsibility for procurement is devolved to individual business divisions. The Department supports the decentralised approach to procurement by providing information and training on procurement policies and procedures to all staff, and maintaining a single point of contact for staff to seek advice on the CPGs, CEIs and tendering processes. Standard tendering and contracting documentation has also been developed to ensure consistent procurement practices are undertaken.

As part of these arrangements, in 2006-07 we published details on AusTender of:

  • a procurement plan providing details of anticipated procurements for 2007-08 www.tenders.gov.au;
  • details of publicly available procurement opportunities with a value of $10,000 or more www.tenders.gov.au; and
  • details of all contracts, standing offers and consultancies 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 on freedom of information, see Appendix F on page 296.

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; and
  • 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 2006-07, 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;
  • 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); and
  • services to non-self governing territories.

Transport safety research and information services

Contracts relating to road safety injury data collection and analysis, and transport safety information storage and distribution continued in 2006-07. Following an open tender process, a contract was let in April 2007 with Dynamic Outcomes Pty Ltd for curriculum development and associated services for the road safety Novice Driver Programme Trial. Funding of $469,000 was provided by the project partners comprising the Australian, NSW and Victorian governments and private sector participants.

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 155. 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 58 specified aerodromes servicing Indigenous communities in remote parts of northern Australia with an annual inspection service. These services are contracted to an appropriately qualified service provider.

In July 2005 the Department used an open tender process to identify a new service provider for the programme. This service provider was contracted in October 2005 for a 12-month period. In August 2006 the Department exercised its option under the contract to extend the inspection service to 30 June 2007.

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. A 30-month contract will run from 1 June 2007 until 31 November 2009 and includes an option for the Department to negotiate to extend the contract for two further one-year periods if desired.

Services to non self-governing territories

In the absence of a state or territory government, the Department delivers a range of services 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 2006-07, and we entered into several new arrangements, including agreements or contracts with:

  • Water Corporation of Western Australia to continue to provide water and waste water services to the Indian Ocean Territories;
  • Toll Ports to continue the provision of port management services to Christmas Island and Cocos (Keeling) Islands;
  • Air Services Australia to continue broadcasting maintenance services for the Indian Ocean Territories;
  • L.J.Hooker, Jervis Bay, for the management of houses within the Jervis Bay Village, Jervis Bay Territory; and
  • Jirgens Contracting Pty Ltd for the operation and maintenance of the Jervis Bay Territory water and sewerage system was extended.

For more information on services to territories, including services we provide directly, see page 197.

Corporate Activities

The Department has conducted detailed analyses 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; and
  • 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 set up in 2004-05 after an open tender will continue for at least three years. This panel gives access to specialist project management, software development and information technology security services as needed.

Professional services

The Department has established 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.

Panels cover:

  • communications services;
  • legal services;
  • financial advisory and accountancy services; and
  • 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 Group Service Pty 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.

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. The Department exercised its option to extend the contract beyond the financial year.

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. The Department renegotiated the contract with Toll Transport for an additional year during 2006-07.

Data 3 was contracted for the development and release of an online application IT system for the Regional Partnerships Programme. Contractors were selected via the Department's tender panel arrangement.

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.

Consultancy contracts

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

In 2006-07, the Department engaged 190 new consultancies involving expenditure of $5.9 million. The Department continued to use 70 consultancies engaged in prior years, involving a further expenditure of $2.4 million.

As per section 12(6) of the JCPAA Requirements for Annual Reports (13 June 2007), agencies are required to provide specific details on consultancy contracts and any competitive tendering and contracting undertaken. Details of consultancies valued at $10,000 or more let in 2006-07 are available as a supplement to the online version of this annual report (refer www.dotars.gov.au). Information on expenditure on contracts and consultancies is also available on the AusTender website www.tenders.gov.au.

Figure C.1 Trends in procurement

  2002-03 2003-04 2004-05 2005-06 2006-07
Purchasing outcomes
Invoices paid within 30 days 91.8 % 95.1 % 96.7 % 97.0 % 97.0 %
All consultancies, including consultancies let in previous years
Total expenditure $6.08m $4.0m $7.6m $10.9m $8.3m
New consultancies valued at $10,000 or more
Number let 62 54 129 113 92
Total value over the life of these contracts $3.8m $3.7m $8.5m $8.9m $6.9m
Market research and advertising paymentsa
Creative advertising $0.0m $0.4m $0.6m $0.15m $0.11m
Market research/polling $0.5m $0.4m $0.2m $0.02m $0.33m
Direct mail $0.5m $0.0m $0.4m $0.02m $0.11m
Media advertising recruitmentb $3.4m $0.8m $3.1m $1.07m $0.77m
Media advertising non-recruitment $0.71m $1.21m
Total Payments $4.4m $1.7m $4.3m $1.97m $2.53m

a Payments have been rounded to $ 0.0 where payments were less than $50, 000. Discrepancies in table between totals and sums of components are due to rounding. Also for previous years this total did not include payments below the reportable threshold which for 2005-06 was $ 1,500.
b In previous years all media recruitment and non-recruitment was reported as a combined figure

Payments for market research and advertising

In 2006-07, the Department paid $2.3 million for market research and advertising. Table C.2 lists payments of $10,300 or more made during the financial year, as required by section 311A of the Commonwealth Electoral Act 1918.

Figure C.2 Detail of advertising and market research payments of $10,300 or more

Creative advertising agencies
Firm Service provided Payment made
in 2006-07 ($)
Colmar Brunton Social Research Pty Ltd Conduct a survey of readers across the range of Australian Transport Safety Bureau reports $28,625
The Social Research Centre Pty Ltd Conduct the nineteenth survey of community attitudes to road safety $28,019
Cre8tive Australasia Pty Ltd Maritime Security Identification Card (MSIC) graphic design for advertisements $10,906
Total creative advertising $67,551
Market research/polling
Firm Service provided Payment made
in 2006-07 ($)
The Research Forum To determine future measures to support the general aviation industry to comply with their obligations under the Aviation Transport Security Act 2004 and the Aviation Transport Security Regulations 2005. $53,636
Morris Walker Pty Ltd To help design a targeted industry engagement strategy to inform Regulated Air Cargo Agents (RACAs) and the wider cargo industry about the changes to the RACA scheme and how it will affect them. $56,093
Eureka Strategic Research Pty Ltd To conduct exploratory research among regular shippers to identify, explore and measure current levels of awareness, and attitudes towards, increased air cargo security measures. $77,828
Di Marzio Research Pty Ltd Liquids, Aerosols and Gels (LAGs)-developmental research $55,000
Di Marzio Research Pty Ltd Liquids, Aerosols and Gels (LAGs)-follow-up research $44,000
Colmar Brunton Social Research Pty Ltd Green Vehicle Guide follow-up research $54,883
Total market research $341,442
Direct mail organisations
Firm Service provided Payment made
in 2006-07 ($)
Swell Design Group Goodna Bypass information brochure and information advertisements. $5,436
Pirion Printing Collation of materials for Goodna Bypass letterbox drop. $49,745
Australia Post Goodna Bypass letterbox drop of brochures into surrounding suburbs. $29,022
Total direct mail organisations $84,204
Media advertising organisations
Firm Service provided Payment made
in 2006-07 ($)
Recruitment advertising
   hma Blaze Pty Ltd Recruitment advertising $750,386
   Hobsons Australia Pty Ltd Recruitment advertising $2,200
   2B Advertising & Design Recruitment advertising $1,375
Total recruitment advertising $752,899
Non-recruitment advertising
   hma Blaze Pty Ltd Other $19,679
   hma Blaze Pty Ltd Liquids, Aerosols and Gels (LAGs) advertising $895,438
   hma Blaze Pty Ltd Maritime Security Identification Card (MSIC) advertising in industry and trade publications. $63,205
   hma Blaze Pty Ltd Goodna Bypass advertising $75,000
   Reputation Pty Ltd Liquids, Aerosols and Gels (LAGs) advertising $207,442
Total non-recruitment advertising $1,261,324
Total media advertising organisations $2,014,224

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