Procurement Process Review

Procurement Process Review for Commonwealth Government Department

The situation

This Commonwealth department (the department) undertook in excess of 4,000 procurements in FY2022 for a total value of more than $600M. A central procurement team within the finance department provides procurement advice to the department. Together with several specialist decentralised procurement teams it ensures that procurement practices and contractual agreements represent value for money and the departments internal procedures comply with Commonwealth guidelines.

Since the Machinery of Government (MoG) Changes in 2022, the departments’s procurement function underwent significant changes, with resources being relocated and a cost code change-over completed in 2023.

Given this quantum of change, the department identified a need to review its procurement processes to improve efficiency, compliance, and staff capabilities. The review of its procurement processes were planned to occur in parallel to other organisational restructure considerations.

The task

The department engaged Grosvenor Procurement Advisory (Grosvenor) to conduct this review and ensure that it has effective and efficient procurement practices that deliver value for money, follow robust governance and probity, is compliant with the Commonwealth Procurement Rules, uplift commercial processes and procedures, optimise the procurement pipeline and follow higher-order policies. Grosvenor was engaged to conduct the following program of works:

1.     Review the current pain points within its procurement function

2.     Identify existing gaps to procurement better practice; and,

3.     Devise targeted recommendations for the department to strengthen its procurement capabilities.

Our approach

The overall approach to delivering this project included the following steps:

Step 1 – Establish and Manage the project: establish project and finalise project plan, and establish status meeting frequency

Step 2 – Understand the Current State: Obtain and review relevant documentation, conduct a walkthrough of intranet systems, analyse existing reviews, and design and execute a survey to understand expectations and knowledge of procurement. Undertake workshops with various procurement teams and key users to assess the current state

Step 3 – Identify Gaps and Opportunities: undertake the Grosvenor Procurement Better Practice Comparator, and identify efficiencies in compliance methods, risk thresholds, team structure, AAIs, policy alignment, workflow, reporting, and team capability. Review comparable models in the Commonwealth Government and meet with the project team to share and test findings

Step 4 – Define and Articulate the Future State: hold a workshop to explore future state opportunities, propose solutions for the identified gaps, define the future role of the procurement function, and develop a ‘to-be’ Lean Process Map. This includes. Suggesting enhancements for the workflow systems, defining RACI responsibilities, outlining compliance improvements, template revisions, and recommending data enhancements that align with the future state.

Step 5 – Develop Final Report: develop a draft final report which includes an executive summary, introduction, background, current state findings, gap analysis, comparator assessment, and recommendations for the department review and finalisation.

The outcome

Four major gaps were identified within the department’s procurement function: leadership, an unfit procurement operating model, insufficient resourcing, and inadequacies in systems and data functionality. Grosvenor developed 22 options to address these gaps, including future state process maps and a roadmap for implementation. Recommendations were presented in terms of their likely (relative) impact towards addressing the gaps/better practice and the (relative) difficulty of implementing them to ensure the proposed changes are considered from a wider view of cost and benefit. The final report was endorsed by the C-suite, including the Deputy Secretary.

The department further commissioned Grosvenor to develop a Procurement Function Strategy to clarify the role and purpose of the procurement function, supporting the department in achieving its broader corporate objectives.

Does your department need a procurement process review? Book a chat with our MD, Stefan Gassner