Ask the Leyland brothers
Over the last two months, MAV Procurement has visited almost 60 councils right across the state, meeting with senior management to explain the strategy behind MAV Procurement.
Cameron Spence, Senior Consultant, and Dan Hogan, Business Strategy, drove thousands of kilometres and stayed in some of the country's finest 3.5 star motels to ensure all councils have a clear understanding of why MAV Procurement was started, and how councils can benefit.
Feedback was very positive. MAV Procurement's not-for-profit status is seen by many councils as a key advantage in driving maximum possible savings for councils. Increased transparency and the ability of councils to participate in the development of tenders and the selection of suppliers were also perceived as unique advantages.
The information from councils has proved extremely valuable in shaping the further development of the business, and suggestions for several future tenders are currently under consideration.
Procurement - nothing new to the MAV
The recent road trip visiting Victorian councils allowed some explanation of the genesis of MAV Procurement. Turns out, procurement is nothing new to the MAV. In fact, the MAV has been involved in procurement activities since its formation in 1907, when it secured fidelity insurance on behalf of Victorian councils.
More recently in 1987, the Municipal Association formed Co-operative Purchasing Services (CPS) to service councils not included within the MAPS Group (which later became Strategic Purchasing, and is now branded Procurement Australia), which had been formed by 12 shareholder metropolitan councils. The Melbourne City Council is currently majority owner of MAPS Group, a commercially focused public company.
After eight years of service, in 1995, under the Kennett Government's Compulsory Competitive Tendering (CCT) reforms, the MAV was forced to divest CPS, which was sold into private ownership for the next 14 years.
In 2009, the MAV purchased back CPS for $1,000, formalising procurement activities undertaken by the MAV, which had continued on a project-by-project basis.
MAV Procurement was formed primarily on the basis of a Department of Planning and Community Development report by Ernst & Young which identified up to $350 million in annual savings for Victorian councils through better procurement practice. In keeping with the legislated responsibility of the Municipal Association of Victoria to represent the best interests of Victorian local government, MAV Procurement seeks to assist councils reach this goal.
At a 2009 State Council meeting, 78 of 79 councils approved the activities of MAV Procurement.
New entrant to Office Supplies
After a rigorous tender process, MAV Procurement has appointed local government newcomer Lyreco as the successful sole supplier of Office Supplies.
Lyreco is one of the world's leading office supply distributors, operating in 29 countries across five continents. The appointment of Lyreco will increase competitive pressure in the sector by introducing a new supplier into a segment traditionally dominated by a small number of companies.
28 councils signed agency agreements to allow MAV Procurement to tender on their behalf, and now have access to a contract that delivers substantial costs savings on sales volume tipped to exceed $2m per year.
As part of the National Procurement Network, MAV Procurement partnered with South Australian peak body procurement organisation Local Government Corporate Services to develop the tender and maximise economies of scale.
Max Fonovic 9667 5545
Engaging with Councils Reforming Business
Part of the bigger picture, MAV Procurement has been engaging with the State Government department responsible for improved procurement outcomes in local government, the Department of Planning and Community Development (DPCD).
Meeting with leaders of the 'Councils Reforming Business' project team has developed a clearer understanding of respective strategic objectives, and a commitment to work collaboratively to drive better outcomes for the sector.
Removing agency appointment provisions
Under current legislation, when using a procurement organisation, councils have to sign an agency agreement (prior to tender) to access the resultant supplier contract. Unfortunately, this often has the unintended consequence of locking councils out of contracts that can deliver significant time and cost savings.
Only in Victoria must councils sign an agency agreement. In NSW, the State Government appoints certain procurement organisations as "proscribed bodies", which allows councils to access their supplier contracts at any time. This is much the same mechanic that allows Victorian councils to access State contracts at any point.
MAV Procurement has been working with Local Government Victoria to try and establish a better way, and discussions to date have been very positive, with an acceptance that the agency appointment process can be improved. Watch this space.
s186 exemption sought for fuel tender
Following a successful tender for the provision of fuels and lubricants on behalf of 36 councils, an additional eight councils have sought access to the contract, despite not originally signing agency appointment.
Normally, this would preclude councils from accessing the contract, but MAV Procurement has requested a s186 exemption from the Minister for Local Government, Dick Wynne, to allow access for the late comers.
MAV Procurement is waiting on the decision of the Minister, having based the request on the principle that no council should be disadvantaged through administrative complexities embedded in legislation.
MAV Procurement will continue to pursue s186 exemptions where applicable to ensure all councils can access best-fit procurement outcomes.
Media Advertising Agreement
Councils spend very significant sums advertising job vacancies, public notices, tender notices and general information in various forms of media, particularly newspapers.
Traditionally, established media titles have been resistant to requests for discounted pricing. A State Government media contract currently exists, but unlike many, councils are denied access to this contract.
With the rise of online media driving discounted print media advertising, a great opportunity to renegotiate favourable rates for the sector exists for perhaps the first time. As a result, MAV Procurement will soon be seeking information from council communication departments to identify the needs of councils, and will be working to identify opportunities to drive costs down.
Dan Hogan 9667 5518
Library Materials contract management
MAV Procurement recently sought feedback from councils and library corporations regarding the performance of newly appointed library material suppliers.
Good, bad or indifferent, MAV Procurement is keen to hear your feedback, to ensure that contracts are being managed satisfactorily, and that suppliers meet their service level obligations under the terms of the tender.
In the most part, feedback has been positive, but some libraries have identified areas requiring improvement. MAV Procurement will follow up these issues accordingly.
Should you wish to comment, please get in contact with either Max Fonovic or Cameron Spence
Joint Management Panel for Telco contract management
As part of the telecommunications contract, providing fixed voice telephony, mobile telephony and data to 65 councils, Telstra committed to participating in a Joint Management Panel (JMP).
Made up of council representatives, MAV Procurement and Telstra management, the Joint Management Panel will meet on a quarterly basis to ensure councils are receiving the best possible service from Telstra.
The JMP will also identify further cost-saving opportunities for councils by monitoring technological advancements in IT&T over the course of the contract.
MAV Procurement is currently calling for volunteers to join the JMP and we are seeking representation from rural, regional and metropolitan councils.
Cameron Spence 9667 5554
HR professionals guide tender specifications
To help develop the best possible Human Resource Services Tender for councils, MAV Procurement recently sent all council HR Managers an online survey, asking which HR services should be included under the tender.
40 councils responded, indicating on a 5 point scale the relative importance of ten separate categories. Four councils (Frankston, Kingston, Manningham and Maribyrnong) have volunteered to develop the tender specifications in conjunction with MAV Procurement.
Should you wish to form part of this working group, please contact Cameron Spence, who will be facilitating the working group.
Cameron Spence 9667 5554