Who and what’s an informed purchaser? In simple terms, an informed purchaser is someone who gets the best value-for-money – and that applies to any procurement, whether you’re shopping for a new car or buying essential goods for the Commonwealth. The challenge for procurement practitioners and those working in the government sector is that ‘the Commonwealth,’ ‘the State’ or ‘the Territory’ can be seen as an abstract concept, along the lines of ‘big government’ or faceless or nameless processes. However, a simple way to think about being an informed purchaser, and any procurement process is to ask yourself – what would I do if I were spending the money? The first step is to do a little research – and that applies equally to buying submarines, power plants or the family ute.
Another ‘evergreen’ fact is that we undermine our ability to get value-for-money if we do not know what we are buying, how to buy it and what the industry’s capability is to deliver. More often than not, we go out to market with the same statement of work or extending contracts, stifling innovation and reducing opportunities for new players to enter the market, that is the large, Federal Government procurement “pie”. Stated another way, we don’t think about procurement in the same creative ways that we’d take when haggling over the ute that we are so desperate for – we don’t ‘kick the tyres’ or think about the thousands of items that become bargaining chips before, during and after our purchase.
Those of us who work in procurement understand that ‘our job’ is to assist the Commonwealth to fully engage with the market, to ensure they know what they are purchasing and how they are purchasing it – and how they can squeeze as much value as they can out of that purchase. That’s not for some abstract concept, but the ‘reality’ of Australia’s taxpayers who want a bloody good deal. In a nutshell, our objective is to help ‘the Commonwealth’ to become an informed purchaser and, thereby, make better choices for all Australians.
However, this requires time, expertise and foresight to ensure a comprehensive needs determination and market testing process can be followed. In my experience, Commonwealth agencies tend to shy away from engaging fully with needs determination or market testing. And why? For fear of breaching probity principles or compromising the procurement process in other ways. But those fears are misplaced. It is imperative for Government to challenge assumptions, to test the market – and to be an informed purchaser. It’s the only way for procurement practitioners to ensure that they generate value-for-money and foster innovation.
This begs the question – how to be an informed purchaser? We need to be aware of the market, as it stands at the time, ensuring we have the knowledge and information handy that’s relevant to the market. This, in turn will ensure requirements align with business requirements, what the market is placed to deliver and innovation, in terms of where the market is heading, leveraging private industry’s insights and focus.
But it doesn’t stop there. To become an informed purchaser, the Commonwealth should further engage with research, industry and any innovative approaches that are being developed. They may also engage with other buyers. I hear you readers think “But what about probity?” at this stage. Here are a few thoughts on what we can all do in our role as procurement professionals – and embed these activities in your procurement process:
- Research: We CAN conduct research and gather information about the product or service, including features, benefits, and downsides.
- Draw Comparisons: We CAN look at different options and alternatives, including allowing alternate tenders where industry may have different solutions to problems posed.
- Collaborate – We CAN engage with other agencies! We CAN engage with potential suppliers, as long as we abide by the Commonwealth Procurement Rules (CPRs). We CAN engage with all agency business areas to ensure that we capture current and emerging needs, along with the ‘good, bad and ugly’ qualities of current contracts – and how we can do better, going forward.
- Understanding Costs: We CAN and SHOULD know the full price of the product or service, including any additional fees, ongoing costs, disposal costs. A key here is to also look at current licences that your agency owns, or that other agencies own where piggybacking is allowed (particularly relevant in ICT).
- Checking Review and Reputation: We CAN and SHOULD know ‘the history’ when buying services or consumables, reach out to other areas who may have used the service provider or product to get their “on the ground” experience. This collaboration can be incredibly helpful in ensuring that what is written aligns to lived experience.
And now for ‘the why?’ Why would I want to put all this additional effort into the front end of a procurement process? Well, firstly, the CPRs compel us to do so because we need to achieve value-for-,money, meet business requirements and ensure we engage fairly and transparently with the market. Most importantly though, being informed in our procurement processes ensures we harness our collective power of collaboration, achieving the best outcomes for the Australian taxpayer whilst partnering with industry to drive forward innovation.
I am conscious that this is all a bit “theoretical”, so here are some real-life examples:
- Not needing to buy a license for an ICT software because the portfolio agency already owns the license, and their arrangement allows for sharing with other government agencies.
- Re-determining requirements for a new fire-retardant helmet because, despite assurances of integration, the ancillary equipment does not attach in a seamless manner, compromising firefighting safety and visibility
- Not engaging with a supplier because of repeated breaches against the APS Code of Conduct within an agency.
- Buying a newer specification laptops, for the same price, as technology has advanced.
For any ‘informed purchaser,’ their key objective is simple: the more information they have, the better. In other words, transparency and knowledge are key. If we can use existing processes to expand our understanding of the market, the better prepared we will be, and we will better emulate the informed purchaser mindset. In that way, we will not breach CPR requirements, and we’ll achieve better procurement outcomes, drive better value for our agencies and deliver the best value-for-money for the Australian community.
At Synergy Law, we understand the nuances and challenges faced by the public sector, which enables us to identify and mitigate risks, provide practical and strategic advice, and help to deliver on strategic sourcing priorities. Our team ensures that procurement activities are transparent, accountable, represent value for money and can withstand scrutiny.
