As government agencies grapple with complex procurement demands, many discover that simply meeting compliance is not enough. A lack of deep procurement capability can spiral into inefficiency and risk.
This article explores why targeted capability reviews are vital for agencies striving to move beyond minimum standards and achieve operational excellence in procurement.
Firms such as SPA Australia are often engaged to provide specialist commercial skills to support standalone procurement-related activities of a significant size and/or complexity.
But what happens when an agency can’t deliver the minimum level of procurement and contract management skills and capacity required to ensure day-to-day operations are met?
In our experience, this is a common, ongoing issue agencies struggle with. In response to this scenario, we’re seeing a number of agencies conduct capability reviews to enhance their internal procurement capabilities.
Why undertake a capability review rather than simply provide additional resourcing?
While it might sound simple, recruiting someone with the relevant skills and experience is not as straightforward as it appears, given the current lack of depth for procurement and contract management staff in the marketplace.
The lack of experienced central procurement staff within agencies, and the resulting issues, is leading several agencies to realise that their procurement processes are overly complex and challenging for staff unfamiliar with them.
This is exacerbated when agency staff are required to navigate the procurement process on their own rather than partnering with a procurement expert, creating a vicious circle.
While we won’t try to solve the issue of a shortage of procurement people in this article(!), we will look at the value in agencies undertaking a procurement capability review.
Typically, an agency’s procurement and contracting framework is not established through a greenfield approach; rather, it evolves over time as changes are made to the overarching Commonwealth Procurement Framework, such as the agency having reason to adjust or add to its existing policies and procedures, or a machinery of government change occurs that requires a change to policies and procedures.
These examples typically involve adding policies and/or procedures in a standalone manner, without a review to determine whether unintended consequences will arise.
Unintended consequences can materialise as red tape, contradictions between policies and procedures, and a general misunderstanding of what’s required, which can jeopardise an agency’s compliance and value-for-money outcomes.
SPA Australia has conducted capability reviews for a number of agencies over the past few years.
While the approach we take depends on the level of review being sought, it typically includes reviewing policies and procedures and interviewing stakeholders from the central procurement area, their customers and relevant customer business owners. We may also be asked to assess the skills and experience of the centralised procurement team.
In addition to uncovering the unintended consequences listed above, common findings include:
- Resourcing within a centralised procurement area is being run down over time, and due to the lack of depth in the marketplace, staff coming into the team do not have the same level of skills and experience
- A general lack of appreciation for the procurement process within a Commonwealth setting
- A lack of clarity around roles and responsibilities within the procurement process
- Tension between the agency’s procurement framework and the broader Commonwealth Procurement Framework
- A lack of understanding of the role of a delegate and the associated consideration
- A lack of dedicated contract and vendor management for those strategically important contracts and suppliers to the agency
- A lack of training and development of staff within the central procurement team, and training in procurement and contract management across the agency more generally
Once the issues are identified, we work with the agency to walk them through the issues and discuss options to address them, which allows us to develop a range of recommendations to inform the agency’s future direction for its procurement and contracting functions.
In addition to developing a range of recommendations for the agency to consider, we also provide a revised suite of procedures, templates and, where requested, improvements to the structure of procurement teams, procurement workflows and training materials.
Examples include:
- Document review: This ranges from providing comments on existing documents through to providing an updated Procurement Manual, where we amend and add to existing policies and procedures to ensure accuracy and efficiency and, importantly, develop a suite of documents that work together rather than contradict each other
- Organisation structure: Having the right organisation structure for a central procurement team is important. It aids in learning and development for staff that results in a consistent approach, provides for ongoing development of procurement staff and helps to position procurement staff as the procurement professionals within an agency. This is important from both the perspective of the agency, so staff and executives trust and seek out appropriate advice and support from the procurement team, and also ensuring the procurement staff themselves recognise the importance of their role and appreciate that they are the stewards of their agency’s procurement activities and not there to simply take people through a process
- Technology and workflow: When properly designed and applied, technology can help manage access to the central procurement team. It automates workflows, driving consistency and directing resources more effectively to where they’re most needed. This, in turn, helps address issues around underserving and overserving that can occur when the procurement function has developed a less structured approach over time that may see people reaching out to the procurement team through means other than a recognised point of entry
- Training materials: We’ve also assisted agencies in developing a range of training materials, delivered as standalone documents, in train-the-trainer formats or in team-delivered training sessions
If your agency is looking to ensure your procurement function is efficient, resilient and “ready for tomorrow’s challenges,” then it might be time for a capability review.
About the author
Andrew Stephen
Andrew is an Expert Advisor and a Team Lead in the Commercial Group at SPA Australia. He’s a highly experienced project manager and procurement and contract management specialist. Andrew has managed major acquisitions in the Defence portfolio and was responsible for overseeing an annual procurement budget exceeding half a billion annually for Services Australia. He was also responsible for the Commonwealth Procurement Framework while in the Department of Finance, including leading the rewrite of the Commonwealth Procurement Rules in 2012. Andrew has also undertaken reviews of procurement frameworks for both government and private-sector organisations. He sat on several cross-government and private-sector procurement steering committees, including the Department of Finance Centre of Procurement Excellence, the National Indigenous Australia Agency Cross Agency Working Group and Supply Nation’s Leadership Round Table.
