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Appendix 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 approach to the procurement of all goods and services, including consultancies, is consistent with the requirements of the 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 2007-08 we published details on AusTender of:

  • a procurement plan providing details of expected 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.tenders.gov.au.

We also published on our website www.infrastructure.gov.au/department/contracts/ 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.

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.

Australian National Audit Office Access Clauses

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

Exempt contracts

In 2007-08, 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 Sydney West airport site;
  • aerodrome inspection services for remote Indigenous communities; and
  • the Australian Government Regional Information Service (AGRIS).

Transport safety research and information services

Contracts relating to collection and analysis of road safety fatality and injury data, and road safety information storage and distribution continued in 2007-08.

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. 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 the previous Sydney West airport site (Badgerys Creek) was contracted out to Zeckendorf Holdings Pty Ltd following an open tender process. 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 and has since been extended further until 31 December 2008.

Aerodrome inspection services for remote Indigenous communities

The RAI Program is a small program to conduct annual safety inspections of, and provide technical advice to 58 aerodromes supporting remote Indigenous communities in Northern Australia above the 19th parallel. These communities rely on air services, however, they lack the technical expertise and resources necessary to conduct their own safety inspections, as required of aerodrome owners, in accordance with Civil Aviation Safety Authority (CASA) standards. 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 program.

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 commenced on 1 June 2007 and will run until 31 November 2009. There is an option for the Department to negotiate to extend the contract for two further one-year periods if desired.

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 ASG Group Ltd after an open tender. The contract took effect from 1 July 2008 and has an initial term of four years with an extension option of four years.

Wide area network and voice communication services were contracted to Optus Networks Pty Ltd after a select tender. In June 2008 the Department exercised an option to extend the contract.

A panel of ICT service providers was set up in 2004-05 after an open tender process. This panel gives access to specialist project management, software development and information technology security services as needed. A new tender process will be conducted prior to the end of December 2008 when the current arrangement expires.

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:

  • communication services;
  • legal services;
  • financial advisory services and accountancy services;
  • SAP services; and
  • recruitment services.

Internal audit services were contracted to KPMG after a tender process. The contract was signed on 23 July 2007 and has an initial term of three years. There is also an option to extend the contract for a further two years.

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 had an initial term of five years, with an option for two 2-year extensions. The Department has exercised its extension options and the contract will run until December 2009.

Travel services were contracted to HRG after a select tender process; the arrangement commenced in September 2007 for a period of three years.

After a select tender process, Converga was awarded two contracts, one for records and file management, the other for mail distribution and dispatch services. These contracts came into effect from 30 April 2008; both have an initial term of three years, with an option for one 3-year extension.

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.

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 CPGs, the Department's Chief Executive's Instructions and the Infrastructure Procurement Manual.

In 2007-08, the Department engaged 172 new consultancies involving expenditure of $4.9 million. The Department continued to use 16 consultancies engaged in prior years, involving a further expenditure of $1.4 million.

As per section 12(6) of the JCPAA Requirements for Annual Reports (18 June 2008), 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 2007-08 are available as a supplement to the online version of this annual report www.infrastructure.gov.au/department/annual_report/index.aspx. Information on expenditure on contracts and consultancies is also available on the AusTender website www.tenders.gov.au.

Table C.1 Trends in procurement

  2003-04 2004-05 2005-06 2006-07 2007-08
Purchasing outcomes
Invoices paid within 30 days 95.1 % 96.7 % 97.0 % 97.0 % 97.5%
All consultancies, including consultancies let in previous years
Total expenditure $4.0m $7.6m $10.9m $8.3m $6.3m
New consultancies valued at $10,000 or more
Number let 54 129 113 92 68
Total value over the life of these contracts $3.7m $8.5m $8.9m $6.9m $4.8m
Advertising and market research paymentsa
Creative advertising $0.4m $0.6m $0.15m $0.1m $0.3m
Market research/polling $0.4m $0.2m $0.02m $0.3m $0.1m
Direct mail $0.0m $0.4m $0.02m $0.1m $0.0m
Media advertising recruitmentb $0.8m $3.1m $1.07m $0.8m $1.1m
Media advertising non-recruitment     $0.71m $1.2m $0.1m
Total payments $1.7m $4.3m $1.97m $2.5m $1.5m

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. All payments are inclusive of GST.
b In previous years all media recruitment and non-recruitment was reported as a combined figure.

Payments for advertising and market research

In 2007-08, the Department paid $1.5 million for market research and advertising. Table C.2 lists payments of $10,500 or more made during the financial year, as required by section 311A of the Commonwealth Electoral Act 1918.

Table C.2 Detail of advertising and market research payments of $10,500 or more

Creative advertising agenciesa
Firm Service provided Payment made in 2007-08 ($)
Universal McCann Targeted advertising for the Green Vehicle Guide 260,946
Other Various 14,074
Total creative advertising 275,020
Market research/pollinga
Firm Service provided Payment made in 2007-08 ($)
Colmar Brunton Social Research Pty Ltd Airport Screening Review Research 79,612
Other Various 2,343
Total market research 81,955
Media advertising organisationsa
Firm Recruitment Service provided Payment made in 2007-08 ($)
Recruitment advertising
  hma Blaze Pty Ltd Recruitment advertising 998,261
  Hobsons Australia Pty Ltd Recruitment advertising (graduates) 17,930
  Graduate Careers Australia Ltd Recruitment advertising (graduates) 14,366
  Unimail Pty Ltd Recruitment advertising (graduates) 10,714
  hma Blaze Pty Ltd Recruitment advertising (graduates) 10,395
  Other Recruitment advertising (graduates) 16,561
Total recruitment advertising 1,068,227
Media advertising organisationsa
Firm Non-Recruitment Service provided Payment made in 2007-08 ($)
Non-recruitment advertising
  hma Blaze Pty Ltd Advertising for the National Awards for Local Government (NALG) 15,107
  Eryl Morgan Publications Pty Ltd Advertising for the National Awards for Local Government (NALG) 16,600
  Attorney-General's Department Aviation Instruments gazettal 24,387
  Attorney-General's Department Coastal Trade Permits gazettal 24,492
  Other Various 21,337
Total non-recruitment advertising 101,923
Total media advertising organisations 1,170,150

a Where payments have been made to firms that do not reach the $10,500 reporting threshold for 2007-08, those payments have been included under the category 'Other'.

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