Federal government procurement report recommendations released
A new report on public procurement has been published following a parliamentary inquiry, with recommendations on best practices.
The Chairman of the House of Representatives Standing Committee on Infrastructure, Transportation and Cities, John Alexander, tabled the committee’s investigation report into procurement practices for government-funded infrastructure.
“Since the start of the investigation last year, these issues have become even more important and urgent,” Mr Alexander said.
“Sovereign security has become a significant issue for our country in recent times, as tensions between competing major powers escalate, with real concern about the impact this is having on our exports and flow effects on our economy.
“For many decades, sovereign security has been compromised due to our expedient choices in seeking the lowest price rather than the best value for our purchases. This has reduced our ability to provide suitable infrastructure and a sustainable industry.
“The lack of long-term planning has resulted in a piecemeal, ad-hoc and reactive delivery process, which thwarts the development of efficiencies in the construction industry that could be achieved if there was a steady pipeline of projects available.
“The industry needs confidence to prepare based on available opportunities, which would enhance industry capacity and productivity.”
Mr. Alexander also pointed out that “in the 88% male-dominated construction workforce, more needs to be done to address cultural practices and norms within the construction industry that deter women to enter or stay”.
The committee makes eight recommendations:
- That the federal government explore, in consultation with state, territory, and local governments, as well as relevant industry agencies and stakeholders, how to facilitate better planning and coordination of the infrastructure pipeline.
- That the Federal Government examine the practical application of Commonwealth procurement rules, with particular emphasis on the extent to which factors other than price are assessed in practice.
- That the federal government, in consultation with state, territory and local governments, establish a mechanism for monitoring and evaluating the performance of funding recipients on government-funded infrastructure projects, capturing evidence to whether the project was delivered to the required standards, on time and on budget.
- The committee recommends that state, territory and local government infrastructure projects that receive Australian Government funding should be subject to a value-for-money audit by the Australian Government or a specified entity. To support this, the Australian Government should establish a mechanism for assessing the plans and performance of state, territory and local governments for infrastructure projects proposed and delivered using Australian Government funds, in capturing the elements of delivering the project to the required standard, on time and within budget.
- To improve the efficiency of infrastructure project planning, procurement and delivery, the committee recommends that the Australian Government, in consultation with state, territory and local governments, explore opportunities for standardization on similar projects.
- The committee considers that increasing access by Tier Two and Three companies, and related Australian small and medium enterprises, to Australian Infrastructure Pipeline projects is essential to building the capacity of sovereign industry in the Australia. Accordingly, the committee recommends that the Australian government consider ways to maximize the development of Australia’s sovereign capacity in infrastructure delivery.
- The committee recognizes the potential benefits of increased efficiency and productivity through the adoption of a digital-by-default approach in infrastructure projects, in which governments take the lead in providing accessible digital options that can be used by government officials and businesses, from planning to post‐delivery assessment and, where appropriate, for future application to similar projects.
- To deliver Australia’s significant pipeline of infrastructure projects over the next decade, the committee recognizes the importance of improving productivity in the construction industry and recommends that the Australian Government study how, in the bidding and delivery processes of government-funded infrastructure projects, companies can demonstrate their commitment to and adherence to modern labor standards and support for cultural reform in the sector.
The report is available on the committee’s website website.
The industry reacts
Australian Constructors Association (ACA) CEO Jon Davies said the findings of the investigation support the urgent need for reform and the important role the federal government can play in achieving it.
“The issues are well understood – we just need to keep implementing the solutions,” Mr Davies said.
“The Australian Constructors Association is already advancing initiatives that directly address five of the eight recommendations.
“The cultural norm developed by government and industry will go a long way to supporting cultural reform that will make industry an employer of choice, including for women.
“Ongoing work within the Construction Industry Leadership Forum is already targeting the report’s recommendations on resource optimization, standardization, project structuring and adoption of digital technologies.”
While Mr Davies acknowledged the importance of state-based reforms, he said a cornerstone of the ACA’s advocacy efforts is the federal government’s participation in the Future Australian Infrastructure Rating (FAIR).
“FAIR is the solution to the report’s recommendations to establish a mechanism for monitoring and evaluating project performance and verifying value for money,” Mr Davies said.
“FAIR would also enable the sharing of best practices so that the industry can continue to improve.
“In fact, FAIR provides a mechanism for the federal government to co-ordinate and encourage most proposed reforms consistently in state procurement processes without requiring a major change in existing federal governance processes or a increased Commonwealth involvement.”
The Australian Constructors Association is calling on both political camps to commit to implementing the FAIR initiative within their first 100 days in office if elected.
“The skills shortage is knocking at our door and it won’t be solved by putting people on planes or sending them to TAFE alone,” Mr Davies said.
“Productivity savings of over $15 billion each year are possible and can be achieved through improvements in government procurement processes through the implementation of FAIR.
Civil Contractors Federation National (CCF) Chief Executive Officer Chris Melham commended the Committee for its report and recommendations.
“The Committee’s recommendations directly address many of the key challenges and opportunities related to the procurement of government-funded infrastructure and, in many ways, they echo a number of recommendations that the CCF has provided to the Committee in our submissionsaid Mr. Melham.
Mr. Melham said that in particular, the RTC welcomed recommendation six, which set out the Committee’s view of increasing access for Tier Two and Tier Three businesses, and related Australian small and medium-sized businesses, to key infrastructure projects.
The CCF also welcomed the recommendation for the federal government to consider:
- Provide sourcing and contracting opportunities to engage local industry and use local content
- Ways to Divide Projects into Lots Under $500 Million to Increase Competitiveness for Tier Two and Tier Three Companies
- Make as a condition of Australian Government funding for major infrastructure projects over $500 million industry sustainability criteria in the early stages of procurement design that encourage Tier 1 contractors to s associate/joint venture with a non-Tier 1 company in the main contract
- Education and training of government officials to support these goals
- Examine market conditions for infrastructure insurance and the impact on small and medium enterprises
“The CCF submission to the Committee highlighted the need for a more sustainable level of project allocation for Tiers 2, 3, 4 and below, and in doing so provide additional benefits to the community including jobs , an increased and skilled local workforce and higher economic growth in the local community,” Mr. Melham said.
“Throughout the investigation, the CCF has also advocated for a more balanced approach to the bidding process to support industry sustainability and the broader national interest by maximizing return to the Australian economy from taxpayer-funded civil construction projects.
“The CCFs additional submission The Committee emphasized the need for a formal consultative mechanism involving key representative bodies of civil industry, federal and state government infrastructure and political agencies.
“As recognized by the Committee, it would be very useful to establish a formal mechanism, such as a ‘Civil Infrastructure Consultative Forum’ to facilitate a two-way dialogue between industry and government on critical issues of civil infrastructure such as investment, procurement and improvement skills development and training.
“I am therefore pleased that the Committee has adopted the CCF’s recommendation to improve collaboration between industry and government.
“It is imperative that this report does not gather dust on the shelves like so many that have come before it on the steps needed to improve the way government-funded infrastructure is procured and delivered.