>> Drug and Alcohol Office Drug and Alcohol Office Procurement – responding Procurement – responding to reformto reform

James HunterJames HunterDirectorDirectorClient Services and DevelopmentClient Services and Development

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DAO and the Alcohol and Drug SectorDAO and the Alcohol and Drug Sector • DAO – Statutory Authority under the Alcohol and Drug

Authority Act 1974, core functions:– Treatment and Support – Prevention– Workforce Development– Policy and Strategy– Research

• AOD Sector – 38 Not-for Profit Organisations and 3 Government providers

Peak • WA Network of Alcohol and other Drug Agencies (WANADA)

The Alcohol and Other Drug SectorThe Alcohol and Other Drug Sector Main service types• Integrated Metro Community Drug Services and DAYS

(5 services)• Regional Community Drug Service Teams (7 services)• Residential Rehabs (9 services)• Sobering-up Centres (9 services)• Detox (3 main services, plus some hospitals)• Pharmacotherapy (e.g. Methadone, Buprenorphine,

Naltrexone) (numerous services)• Other specialist services (numerous services)

The Alcohol and Other Drug SectorThe Alcohol and Other Drug Sector DAO Funding• Government providers – $17.6 million (35%)• Not for Profit NGOs – $32.7 million (65%) • Total of $50.3 million is approx 80% of DAO

budgetOther funding• Commonwealth Government • Fundraising / donations

2009/10 - Change is coming!2009/10 - Change is coming!

Component 1 ProcessComponent 1 Process• Budget announcement – 15% in 2011/12, average of 10% in

13/14• Decision to extend all DAO agreements to 30 June 2012• Delivering Community Services in Partnership Policy• All eligible DAO service agreements have received the 15%

($4.4 million in 11/12 for AOD sector) - this was the easy part!• Initial information indicates salary boosts of 5% to 12% in the

AOD sector • Some early reports of decreased staffing turnover• An effective but blunt instrument

Component 2 - PreparingComponent 2 - Preparing– Average of 10% price adjustment, some will get more,

some less, and some none at allOur focus has been on:

• Putting the Policy into immediate practice with request processes

• Designing a process for expiring agreements – 30 June 2012

• Collecting material for DAO’s Agency Implementation Plan and Component 2

• DAO and sector capacity building – including this forum funded from the Government’s Fostering Partnership grants process

Agency Implementation PlanAgency Implementation Plan

DAO is required to submit an AIP in June 2012, that covers:– Our capacity to undertake reform– What we have done so far– What we plan to do

We are focusing on• Demonstrating commitment and capability • Partnership and collaboration with our sector and FaCS

Unit• Positioning the sector to maximise the opportunity of

Component 2 funding

New Policy in Practice – New agreements Open New Policy in Practice – New agreements Open Request ProcessesRequest Processes

• Goldfields Community Drug Service Team

• Northwest Alcohol and Other Drug Support Royalties for Regions initiative – Kimberley and Pilbara

New Policy in Practice - Expiring AgreementsNew Policy in Practice - Expiring AgreementsTwo groupsTwo groups

1. Preferred Service Provider process for residential rehab program services and a few specialist services

2. Extensions for 2012/13 year for remaining services (most services)

DAO’s – Preferred Service Provider ProcessDAO’s – Preferred Service Provider Process Delivering Community Services in Partnership Policy & State Supply

Commission policy on Open and Effective Competition

Community service Commercial

Does need still exist and is there an existing service provider?

Request / tender process (Restricted or Open process)

Yes - assess for Preferred Service Provider status

No & funding > 150k

PSP status - Sole Supplier Request process

No PSP status

Consult to refine service requirement

Issue Request (tender)

Receive Offer, evaluate, Community Services Procurement Review Committee

Provide letter of acceptance to finalise service agreement or letter of preferred respondent to clarify issues before finalising service agreement

Broader procurement strategy and 2013/14 Broader procurement strategy and 2013/14 processprocess

• DAO has historically utilised PSP, with Open Requests only used for new funding or for when underperforming contracts expire.

• DAO’s strategy going forward is being finalised and will be reflected in our Agency Implementation Plan.

• Delivering Community Services in Partnership Policy supports a range or processes:– Open Request– Restricted Processes– PSP– Direct Negotiation

Broader procurement strategy and 2013/14 Broader procurement strategy and 2013/14 processprocess

• DAO’s strategy will be scrutinised independently via our AIP

• Approach taken needs to demonstrate it will deliver best outcomes and value for money for the community

• Likely to be a mix of PSP and Open Request, with some agreements extended for a further year

• Greater focus on agreeing outputs and outcomes in Service Agreements (what services, how much service, and what quality of service)

Reducing the administrative burdenReducing the administrative burden

• A key objective of Government is to reduce the administrative burden on the NFP sector

• Strategies planned to be introduced by DAO include:– Longer contract terms, with the norm being 3years + two 1

year options (5yr total)– Reduced financial reporting – Largely automated reporting (SIMS)

To make this work DAO’s challenge is to specify the right outputs/outcomes in the beginning, and your challenge is to price your services accurately

DAO perspective so farDAO perspective so far

• Opportunity to address sustainability issues in the sector.

• Opportunity to clarify and more sharply define and measure the outcomes we are purchasing on behalf of the community

• Work for DAO has increased in the short term – but has been coupled by increased support from FaCS Unit

• Increased external scrutiny of processes and decision making re purchasing services via CSPRC and FaCS unit

DAO perspective so farDAO perspective so far

• A framework now exists for the development and promotion of best practice in service procurement

• Relationships are critical in any complex change process – we are focussed on collaboration with WANADA and the sector, and the FaCS Unit

• The sustainability of reform appears secure due to high level commitment and a central unit in place to drive it (FaCS Unit)

Challenges remainingChallenges remaining• Procuring services on an outcomes basis is hard -

need to better define and measure outcomes• Pricing services sustainably to deliver outcomes is

also hard• Funding models are evolving e.g. self directed service

design• Inputs (resources required) and outputs (products of

activity) are the way most people understand service procurement and delivery

Challenges remainingChallenges remaining• Capacity of the Sector – the sector is diverse with a

range of organisations providing services• Capacity of DAO – Capability assessment to occur in

May 2012• Component 2 – the challenge is to use the

opportunity to address remaining sustainability problems

• Relationships – how to maintain and strengthen them while changing the way we do business

Challenges remainingChallenges remaining• Anxiety about the consequences, intended and

unintended, reform will have in the medium/long term

• Increased external scrutiny of procurement processes in our sector

• An evolving response to the DCSP Policy – how to remain flexible but also provide stability and certainty

• Commonwealth Government – a key player with a different approach to service procurement

Questions?