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Procurement and Contract Management
Learning from audit findings2015 to 2017
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Why procurement matters
DHBs – 60%
LG – 40%
to 70%
Procurement spend
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Good practice
www.procurement.govt.nzGovernment rules of sourcing
www.oag.govt.nzPublic sector purchases, grants, and gifts: Managing funding arrangements with external parties
www.cips.orgCIPS global standard for procurement and supply
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What is probity?
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Principles
• Accountability• Openness• Value for
money• Lawfulness• Fairness• Integrity
• Plan and manage for great results
• Be fair to all suppliers
• Get the right supplier
• Get the best deal for everyone
• Play by the rules
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Two types of work
Assurance Audit
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Assessing risk and opportunities for improvement
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What factors drive procurement risk?
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Where are the opportunities for procurement improvement?
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Probity or outcome? or the best of both worlds…
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Conflict of interest
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Conflict of interest
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Conflict of interest
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Engagement of consultants
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A continuum
Funding arrangements with external parties
Purchases
Conventional purchase
consumables, consultants, contractors
usually an effective market
Relational purchase
strategically significant
market may be absent
Grants
Conditional grant
often 3rd
sector
Grant with limited
conditions
capability development,
limited enforcement,
lower risk?
Gifts
Gifts and donations
low value, No
obligations
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Emerging practice
• All of Government and common capability contracts
• Strategic alliances• Panels and pre-qualification• Fairness, value for money and a preference for
local supply• Market engagement
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Contract management risk
Still a number above the line
A cluster near the line
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What factors drive contract management risk?
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Where are the opportunities for contract management improvement?
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MBIE’s guide to mastering procurement
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MBIE’s guide to mastering procurement