Government procurement has the potential to contribute to jurisdictional economies through two distinct levers – savings and local investment.
The savings are achieved in several ways.
First of all, procurement recognises the capacity for private sector specialists to deliver services more efficiently and at a lower cost than a government could do itself.
For this reason, as we strive to return to the ACT Budget to surplus, it has been argued by organisations such as the Canberra Business Chamber, that the ACT Government should be further utilising private sector expertise and innovation to improve delivery of key services.
Procurement also provides a process through which governments can assess and choose the company or companies that provide best value for money for a defined job.
The second lever through which procurement can bolster the economy is by boosting the local private sector. Businesses that win government contracts are likely to grow and employ. This leads to more income for government coffers through higher tax payments, increased employment levels, more consumer spending and even population growth. It filters throughout the local economy in a positive way.
Unfortunately, here in the ACT, the Labor Government is missing the opportunity to use these procurement levers to the best effect to help our economy improve.
Anecdotally, Canberra Region businesses have talked for many years about the difficulty they face in winning ACT Government contracts.
The Canberra Business Chamber has even convened workshops with local businesses and ACT Government representatives to try and resolve this impasse. At these workshops, Canberra businesses have talked about how their services are highly sought by other jurisdictions and even around the globe, but they have rarely been successful in securing an ACT Government contract. Whilst ACT Government officials have spoken of their desire to ensure Canberra companies get work locally, their statements are not always reflected in outcomes.
This sentiment was clearly evidenced in a recent procurement process undertaken by the ACT Education Directorate. A tender was held to renew the contracts for public school cleaning services.
Up to this tender round, 23 Canberra businesses shared the work of keeping our public schools spic and span. Following the renewal process, the contract was awarded to four companies – just one of them an ACT firm.
The impact of this decision is still to be fully realised, but it will most definitely affect local employment. The majority of businesses who missed out on a contract are already scaling back as a result.
For one family-owned business, which has been cleaning ACT schools for over 12 years and received glowing reports in all audits undertaken while it held the contract, losing this work has forced it to lay off its entire staff.
While the ACT Government may argue this decision is based around the pursuit of savings, it has definitely come at the expense of local investment.
The savings argument when it comes to procurement is also harder for the ACT Government than its counterparts around the country, due to its controversial MoU with UnionsACT that makes input from this non-government entity mandatory before any procurement contract can be awarded.
A government procurement process should have sufficient checks, balances and transparency to enable assessment of bidders’ viability and commitment to meet all legislative requirements, including workplace health and safety and industrial relations responsibilities. Involvement of a third-party with its own agenda threatens the neutrality of the process and the ability of a government to shift the procurement levers as necessary.
Participation of UnionsACT in procurement decision-making actually has the potential to push costs up by locking out those best placed to efficiently provide the service, without the transparency of understanding why a company might be rejected. It also removed the opportunity for businesses to learn what they might do better, and thus stymies growth, innovation and improvement within the business sector.
While the ACT Education tender is now done and dusted and can’t be reversed, the misfortune for the Canberra Region and its economy will be compounded if we don’t strive for an open and fair procurement process that both keeps costs down and contributes positively to our community.
We would hope that Government realises that when there is transparency, openness and collaboration everyone benefits: workers, businesses, community and Government.
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