Procurement Strategies - One Size Fits All?

Annual Conference

The Local Government Act 2002 requires all Councils to provide good quality local infrastructure and perform regulatory functions in a way that is most-cost effective, efficient, and appropriate. Many local Councils develop guidelines and strategies to provide direction for procuring goods, services or works. These procurement guidelines usually incorporate a number of intangible aspirations such as cultural value, fair operation and sustainability. Balancing these intangible aspirations against the ratepayers concerns regarding cost can be difficult, particularly when trying to justify short term “pain” for long term gain.

Even with a procurement policy that requires consideration of intangible aspirations it can be difficult to truly give fair weighting to these factors. Typical methods such as lowest priced conforming tender or weighted attributes are heavily swayed by the weighting placed on price. There is a risk that this focus on lowest price can be at odds with the ‘good quality’ requirement of local infrastructure.

This focus on upfront cost can drive the procurement pathway to the tried and tested “open tender” method based on client specifications. This paper will examine whether this is the most appropriate procurement method, given that the cost of bidding for each supplier is incorporated in the final price. It will also explore different methods used in recent projects and whether these can provide added benefit to the Council.

Procurement options tend to fall under the four main categories: specifications, nominated suppliers, free issue and novation. Each of these options can be used separately or in combinations to provide procurement that meets the intangible and tangible aspirations of the procurer.

During a recent upgrade at the Waihi and Paeroa Water Treatment Plants a mixture of procurement methods were used to balance the desire for consistency of equipment throughout the district with the need to deliver the project for the lowest cost. In particular the award of a large portion of the contract was by closed Tender with one supplier only.

This paper will examine procurement methods used in upgrading water and wastewater infrastructure using the Waihi and Paeroa Water Treatment plants as a case study and how the overarching goal of affordability was balanced against the intangible aspirations of the council.

Conference Papers Management Resource - Conference Papers

16.00 - Anita Simpson - Procurement Strategies - One Size Fits All.pdf

412 KB
19 Dec 2016