Improving Government Procurement in South Australia

John Held , 10 February 2015

ACA – SA is on the front foot with changes in government procurement. John Held provides a report on the recent DPTI priorities survey.

In late 2014, ACA – SA met with Judith Carr in her role examining procurement across the SA Department of Planning, Transport and Infrastructure (DPTI). They subsequently surveyed members about government procurement in South Australia. This formed the basis of a letter sent to Michael Deegan, Chief Executive of DPTI, in early February.

ACA – SA has had a long, close working relationship with the Building Management and Project Services section of DPTI and its predecessors. ACA – SA  acknowledges that the DPTI has done many things well, particularly in comparison with some government procurement systems interstate. in particular, having a relatively centralised system for building procurement has promoted a consistency of approach to contracts and procedures that is not found in some other jurisdictions. This also provides an important central point of contact for any concerns that industry may have.

ACA – SA members have identified a set of key issues through the survey, with the following issues being the most important:

  • Retention of architects as Lead Professional Services Consultants (LPSC)
  • Introduction of universal Limited Liability
  • Introduction of cascading Subconsultant appointments, with Lead PSC being appointed first
  • Use of AS4122-2010 and GC 21 as standard contracts
  • Introduction of agreed fee scales for standard projects

These and related issues were conveyed to Mr Deegan in detail as follows:

A) Procurement

Retention of Architects as Lead Professional Service Consultants

DPTI Project Services has usually appointed the Architect as Lead Professional Services Consultant (PSC). ACA – SA believes this works well. When implemented correctly, the roles of Project Services Risk Manager and Lead PSC work well together without another layer of unnecessary project management between them. ACA – SA has always advocated for sufficient skilled and experienced staff within the department to undertake the roles that are related to the government’s risk, program and budget obligations as well as the necessary advice to other departments.

Introduction of Universal Limited Liability

This issue has been discussed for a long time without satisfactory resolution. At present contracts offered to consultants by Project Services have no limitations of liability. This is inconsistent with the contracts within other parts of DPTI.

As part of the prequalification process, consultants are required to have Professional Indemnity Insurance with specified minimum limits. These limits do not necessarily align with the Australasian Procurement and Construction Council guidelines on the subject.

We had hoped that the limitations of liability guidelines issued in 2014 by the Office of the Industry Advocate may have helped, as this limited liability for “low-risk” projects under $1m to five times the value of the contract. In practice, however, we have been frustrated by the inability of DPTI Project Services to consistently nominate which projects are low risk and to which projects the policy should apply.

As most DPTI consultants are considered small to medium enterprises, the total recoverable liability would be little more than that amount available through their PI policy. We therefore ask that reasonable limits be placed on professional liability, and suggest the APCC guidelines are a suitable starting point.

Introduction of Cascading Subconsultant Appointments, with Lead PSC Being Appointed First

At present the normal procedure for tender call for consultancy contracts, except for very large projects, is for the lead consultant to submit fees for the full team with the exception of the cost manager. This is a complex task given the short tender times. It increases the cost of tenders and limits the possible choices of subconsultants to those who have been submitted with the winning lead consultant. ACA – SA believes it is preferable to select the lead consultant first, and then embark on a process involving DPTI and the lead consultant to choose the remaining team.

In recent discussions with Judith Carr (Executive Director Procurement, DPTI) and others, the merits of this approach have been highlighted, and we trust it can be implemented on smaller projects as well.

Use of AS4122-2010 and GC 21 as Standard Contracts

ACA – SA is pleased that until now DPTI has used industry standard contracts such as AS4122 and GC21. We endorse this approach and, apart from a request to change from AS4122-2000 to AS4122-2010, strongly recommend this practice continues. Standard and familiar contracts allow confidence in tendering and avoid the need for legal advice on risk issues that come with non-standard contracts.

Offshore Documentation

There is some concern amongst firms about projects being documented offshore. The Architects Act SA Code of Conduct clause 4.6 requires architects to outline if the work is to be subcontracted, and it would seem prudent for DPTI to reflect this in their procurement conditions.

B) Fees

Introduction of Agreed Fee Scales for Standard Projects

The perception of the erosion of ‘benchmark fees’ due to downward market pressure – and the link between this and lower quality of service – has been an ongoing issue for ACA – SA members. ACA – SA supports the concept of DPTI taking a lead in analysing data already collected about fees, allowed hours, documentation outcomes and expectations, possibly coupled with further research into actual hours spent on projects.

It is interesting to note that, due to poor experiences with ‘benchmark’ fees, other jurisdictions such as the Department of Education and Early Childhood Development (DEECD) in Victoria have re-established set fee scales for their projects. ACA was involved in that process and would be happy to discuss the advantages of this system

Publishing of Standard Fee Bands

There is still a perception within the architectural community that bids below the ‘benchmark’ are being accepted for many projects. The fact that the benchmarks are not published, and very little feedback is often available to unsuccessful tenderers, reinforces this perception. DPTI should aim to be as clear and open as possible about their assessment methods and criteria.

C) Process

Standardisation of Tender Call Documentation (Only Project-Specific Information)

At present, all tender documentation is issued with each tender call. This includes a large amount of standard documentation, which all must be read through carefully to check for edits, omissions or additions. It would be a great timesaver to have the documentation split into standard clauses published on the web, issued only when there is a change, plus unique project specific information for the project which may include amendments to the standard clauses.

Better communication with the profession

DPTI Project Services has met regularly in the past with the professions, but communication with its list of prequalified consultants could be more regular and informative.

Better and More Timely Feedback to Tenderers 

Often tender feedback is slow, incomplete or lacking altogether. Sometimes months pass before tenderers are officially informed they have been unsuccessful. This makes planning within firms very difficult. We request that DPTI undertake to inform tenderers of their preferred or non-preferred status as soon as possible, with formal notification and feedback following when final sign-off is given.

Increase Usability/Efficiency of BPIMs 

BPIMS is a useful system but has limited links to other packages and is often slow and cumbersome. We ask DPTI to undertake a survey of usability and performance of the system.

Refining Prequalification Process 

The current DPTI prequalification system for consultants and contractors is designed to gather relevant information on the financial stability and technical and managerial expertise of companies wishing to tender for government projects. It also ranks firms on various attributes, which are then used as part of the tender assessment process.

Due to the long lifecycle of many construction projects, the system is not effective as an early warning system of potential changes in consultant and contractor performance, and design of the questionnaires allows too much variability in responses depending on the individual filling out the responses. There is also a lack of agreement on what should be measured, and whether some criteria are actually relevant or within the control of the consultant or contractor. Recent attempts to encourage new consultants into the system for low-risk smaller projects such as the 3M category have had limited success because of excessively stringent financial criteria.

We therefore request a working group to enable prequalification for projects not covered by the national prequalification system. We believe the system could be a much better tool for monitoring and quality improvement.

Improvement in Approval Times 

We understand that the proper process of government leads to reasonably long approval times, but we ask that DPTI look at its own and its clients’ approval processes, because often program times for design, documentation and construction are unreasonably reduced as a result of slow approvals.

Programs to Increase Documentation Quality 

DPTI is in the unique position of holding information on fees, times, documentation quality, project issues on site and construction and variation costs. It appears to us that there is more time could be spent on analysis of this data to improve documentation quality and project performance. ACA would be happy to contribute to research methodologies to achieve these goals.

Strategic Infrastructure Plan

ACA – SA would welcome an update of the plan to assist with forward planning by its members. We believe such a update should also clearly articulate the state’s procurement strategies and their role in sustaining an innovative, vibrant and cost-efficient construction industry in South Australia.

D) Expertise

Introduction of Agreed Standard BIM Guidelines 

This work began in 2014 and we believe it is a high priority in reinforcing SA’s acknowledge expertise in BIM including the opportunity to develop best practice models for collaboration and standardised approached to this new technology.

Increasing the Amount of In-House Expertise in DPTI 

A number of recent reports into government procurement have emphasised the need to foster and attract expertise in design and construction within the government. In a time of fiscal restraint and reducing public service size, this is a difficult challenge but an important one to ensure DPTI can advise government on best practice procurement. It will also help to ensure there is less inconsistency between risk managers in the application of agreed policies and procedures.

John Held is President of ACA – SA.