‘I am unable to conclude whether the Buy Local plan has had a positive effect’: Buy Local advocate

by | Dec 12, 2020 | Business, News | 0 comments

The NT Government’s Buy Local advocate has said he is unable to conclude whether the Territory’s Buy Local plan actually increases local procurement, that there is still no agreement of what constitutes a “Territory enterprise”, and concerns remain over the government’s ability to accurately record where it has made purchases.

In his third annual report, Denys Stedman concluded he did not expect the situation would change in the next year. 

He also highlighted that there was no whole-of-government database system to provide for storage of, and access to, contractor performance reports produced by all government agencies, so agencies had to request information about contractors from other agencies. 

Mr Stedman said the lack of credible information meant measuring the effectiveness of the Buy Local Plan “cannot be reliably undertaken”.

He said the concept of “value for Territory” was misunderstood by some and until it was widely accepted and understood by those making procurement decisions it was highly unlikely value would be delivered.

COVID-19 had a significant impact on procurement processes with many exempt from full compliance with standard NT Government procurement rules, which lead to purchases outside the NT which in normal times may not have occurred, the report found.

Problems with reporting on contractors’ performance

In his last annual report, Mr Stedman gave 22 recommendations for systems, procedure or training, and found most had either not been adopted, or implemented or were still done badly by agencies generally.

He said most agencies were willing to improve procurement processes, with some making significant changes, but many didn’t make enough effort to comply with contract management planning and contractor performance reporting obligations. 

He found only one agency had actually started using the Contrax contract management and reporting platform, which he said he had hoped would lead to better compliance. Five had begun adopting it, seven had started but had put it on hold, and eight had not started or considered unnecessary.

The new system was designed to alleviate one of the most serious issues he discovered.

Mr Stedman said he had found agencies had high non-compliance rates for procurement rule 26 covering contract management planning, and procurement rule 28 covering performance reporting – with eight out of nine selected agencies being considered as having unsatisfactory compliance.

“The outcome of this review program has reinforced my lack of confidence that effective contract management planning and performance reporting has been adequately performed across the NT Government,” he wrote.

“Poor contract performance reporting contributes to inaccurate perceptions of suppliers’ abilities, poor delivery outcomes and inaccurate assessment of past performance in future tender assessments.”

He added he did not understand why an agency should provide this information to another agency on request, seeing it as “an unnecessary waste of resources in requiring two agencies to engage with each other to exchange information which could be readily accessed from a centralised database”.

“I believe the current process may also be an impediment to some procurement staff going to the effort to obtain this information when assessing tenders,” he wrote.

Mr Stedman also said he did not believe the new “value for Territory assessment framework”  – which is aimed at making decisions on what contracts gave the Territory best value –  would only start to roll out in March next year, even though it was already well behind schedule and was not projected to be finished until December next year.

A lack of data to blame for lack of effectiveness

Mr Stedman said, as highlighted in his two previous annual reports, there was no accurate across government baseline spending data so periodic comparisons could not be made to measure changes.

“The absence of this information continues to leave me unable to make a reliable assessment of the effectiveness of the Buy Local Plan based on verifiable data,” he said.

“Any assessment that I make can therefore only be made on incomplete statistical and anecdotal information.”

Mr Stedman also noted the Economic Reform group said it did not have the data to show economic multipliers for the NT economy as a whole.

“I am advised that due to data availability and cost this information is only available for broad industry categories, and it therefore cannot be accurately produced for specific goods or services,” he wrote.

He said the definition of a Territory enterprise was “an enterprise operating in the Northern Territory, with a significant permanent presence in the NT and employing NT residents”, but it was difficult to get two parties to agree on whether a specific example was or was not a Territory Enterprise. 

“Recently I have been concerned that the classification of tenderers as a Territory enterprise may have been made in order to make it easier to award a contract to a business that is perhaps not a Territory enterprise as contemplated by the definition,” he wrote.

He said that may breach the procurement rules.

He also found there was inconsistency and confusion among public servants about what a conflict of interest is, when it needs to be declared, and how and who will manage it – if anyone.

What he concluded

 

He concluded that while the number and total contracts awarded by the NT Government last financial year increased from the previous year, in percentage terms the number and value of contracts awarded to Territory enterprises both decreased. 

“This data suggests that the primary objective of the Buy Local Plan, being; ‘to ensure that the largest possible proportion of every dollar spent by the NTG is retained within and delivers benefits for the Territory economy and community’, is not being delivered,” he wrote.

But he cautioned that it was difficult to draw conclusions because the current NT Government systems only provide contract award data for Tier 2 to 5 procurements ($15,000 and above) and does not include government owned corporations and pre-existing period contracts. 

He said there was a culture problem in some agencies where the agency and individuals were unwilling to accept responsibility for poor outcomes. 

“This leads to a lot of time and energy being spent to justify reasons for poor decision making or blaming others, rather than accepting that something could/should have been done better, and ensuring it will be done better next time,” he wrote.

Mr Stedman said he could not form a view on whether the Buy Local Plan had led to more buying from Territory businesses and until he had reliable information he would remain unable to form a view.

And he added there were too many examples where optimal value for the Territory had not been delivered.

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