financial contestability 31st governance institute of australia national conference peter lacey...
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Financial Contestability
31st Governance Institute of Australia National ConferencePeter Lacey
Executive Director, Social Services Procurement Transformation
Department of Housing and Public Works
December 2014
Why we are transforming procurement
Apr 2013
PTP Wave 1
March 2014
PTP Wave 2 and beyond
Dec 20132018
Renewal Procurement
Review
Oct-Dec 2012 June 2013
The process of achieving contestability is:
• Reviewing the delivery of services to ensure the best possible solution is provided at the best possible price.
• Encouraging more efficient and more innovative service delivery, whether by the public, non-government organisation or private sector.
• An ongoing process to challenge the status quo.
• Ensuring service delivery outcomes remain contestable.
Renewal means our services will be contestable
What we’re doing to make it happen
• Detailed functional design and implementation strategy• Strategic governance• Procurement performance measurement• Delegations
• Workforce strategy• Procurement capability strategy• Capability and capacity resourcing
• Source to contract process• Procurement process framework• Contract register• Unsolicited proposals policy• Contract management framework• Standard contracts and tender documents
• Procurement technology enablement• Contract Lifecycle Management system (e.g. QContracts)• RMS – ICT contingent labour• QTravel
• Progression to category-based whole-of-government procurement
One Government approach to procurement
2013 Enabled early value
2014 – 2018 One Government transformation journey
Developed and launch new principles-based Queensland Procurement Policy
Ran proof of concept: strategic sourcing
Modelled and base-lined transformational initiatives
Enabled $60-92m in benefits Developed benefits realisation
framework Recommended: new way of
working Business case: funding to change
how we work
BaselineBusiness Case
Ou
tco
me
People
Process
Technology
Organisation
Mega Category
Management
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Better managing investment for now and for the future
Actions now for the future:• More strategically managing our investment to maximise value and
outcomes7
Demand for social services is increasing
Projected increase in spend to meet this need
Significant implications – unsustainable
Market Stewardship: choice and competition• Co-creating markets that empower service users and
incentivise outcomes• Monitoring service quality and price (including access)• Identifying and addressing supply gaps• Reducing barriers to market entry and increasing
entrant capability• Reducing barriers to and impacts of market exits• Avoiding crowding out (investment and supply)• Fostering regional, small and medium enterprises, and
hidden champions
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Two models of market governance:1) The control model governance chain
Source: McKinsey
Shareholder environment
Independenceand performance
Capital market liquidity
Corporate context
Institutionalcontext
Transparency and accountability
OECDPrinciples
Concentrated ownership
Reliance on family, bank and
State finance
‘Insiderboards’
Incentivesaligned with
core shareholders
Limitedtakeover
market
Under-developednew issue
market
Inadequateminority
protection
Limiteddisclosure
Two models of market governance:2) The market model governance chain
Source: McKinsey
Shareholder environment
Independenceand performance
Capital market liquidity
Corporate context
Institutionalcontext
Transparency and accountability
OECDPrinciples
Dispersedownership
Sophisticatedinstitutionalinvestment
Non-executivemajority boards
Aligned incentives
Active takeover
market
Active privateequity market
(incl. IPOs)
Shareholderequality
Highdisclosure
What’s in it for Government and Service Users?
Coordinated and integrated approaches to managing investment
Clear, structured visibility of spend
Tap into industry ideas
Strategic relationships with providers Better understanding client need
Competitive solutions
Better services and outcomes with available resources
Better value for money
Stronger market
Government and
community confidence
that spend is effectively managed
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What’s in it for Providers?
Easier to find contracting opportunities
Transparency of funding approach
Simpler contracting
More meaningful reporting
Improved productivity
Sustainable, client focussed outcomes through enabling innovative service delivery models
Value in service delivery is recognised
Strategic relationships
Quicker and easier to do
business with
Government
Resources are directed to service delivery
Outcomes are
recognised and rewarded
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