The global credit crunch, coupled with significant increases in planned government spending, is set to affect the public/private ‘mix’ in the Australian facility management sector for some years to come. In a shifting market, ALLAN ALDERSON explores the challenges of working with government.
Offices, defence facilities, sports centres, public housing, museums, libraries, schools and hospitals: the list of Australian public facilities is endless. Almost as endless, it would seem, as the list of governments and departments that operate them. There are more than 120 Federal Government departments, agencies and authorities; eight state and territory governments, each with roughly 100 divisions and departments; and more than 600 local councils and shires, each with a multiplicity of divisions and departments.
This complex weave presides over a wealth of facilities that demands a steady and reliable flow of facility management goods and services. An example is a City of Melbourne contract currently (October 2009) out to tender, describing cleaning, building and grounds services/maintenance and furniture removal services for 180 properties across Melbourne. It is a significant facility management contract by any measure, yet how can those not ‘in the loop’ become aware of such opportunities?
Equally vexing are the unique standards and policies of various government bodies, affecting OHS, QA, HR/employment and others. The Australian newspaper (8 August 2009) described the impact of such requirements on smaller contractors – specifically in reference to the Federal Government’s $14.7 billion Building the Education Revolution program – as “jumping through hoops”.
Yet, a significant proportion of suppliers in the facility management sector have been jumping through such ‘hoops’ and navigating through the weave of government bodies for years. An example is multidisciplinary architectural and interior design firm HBO+EMTB. Kate Hannaford (right), one of the company’s associate directors, points out that a large proportion of the company’s work is for all three tiers of Australian government. Most notably, the company enjoys a reputation in government for its heritage building work, and its workplace strategy and interior fitout skills. Its work in this sector includes high profile projects such as the 2008-2009 redesign of Canberra’s Australian National Audit Office and the 2004 accommodation study for the National Library of Australia
Probity, parity and transparency
Hannaford, who has worked in both the government and private sectors, notes that a vital point that must be understood when working with government bodies is its near obsession with probity, parity and transparency in all procurements. “These are such huge issues across all levels of government,” says Hannaford. “These really impact the entire procurement model. Local councils, state and federal governments all share these drivers. Viewed from the outside, this can make government procurement look complex.”
Phill Scott (right), contracts manager with Local Government Procurement (LGP), a fully integrated procurement service group supporting New South Wales local government, agrees with this point. Scott, too, has enjoyed a procurement career that straddles both government and private sectors. The procurement process in government, he believes, is all about good governance. “Providers know this,” he says, “and this is an aspect that can make government work attractive.” In the light of this, he warns new players to avoid canvassing and lobbying government officials. The dinner out or game of golf, common in the private sector, simply don’t fit with the good governance model. “This sort of thing could easily backfire on both parties. It’s better to just let the [tender] process take its course. What will get a supplier across the line is a proper tender that is well-done, well-thought through and that meets the needs of the government body.”
A trend that has aided both suppliers to government, and the government bodies themselves, has been one of procurement concentration. Such concentration provides a combined procurement front for a variety of government bodies and presents these either virtually (as web portals), and/or real-world centralised ‘one-stop-shop’ procurement organisations.
The latter has manifested most strongly across the Australian local government sector, allowing disparate councils and shires to procure goods and services as unified forces. Such groups include LGP (in New South Wales), Local Buy (Queensland), Strategic Purchasing (Victoria) and ACT Procurement Solutions (Australian Capital Territory). In most cases, these groups are not-for-profit and are wholly owned by the state local government peak body; Strategic Purchasing is unique in that it is listed on the stock exchange.
Similar procurement ‘centres’ have appeared – at least virtually – at the state and federal level. The centrepieces here are particularly informative web portals that list a wide variety of government contracts and tenders, and also provide companies with the opportunity to register as potential suppliers. These sites include the Federal Government’s AusTenders site (driven by the Department of Finance and Regulation), the Victorian State Government’s Tenders VIC site (by the Department of Treasury and Finance) and the New State Wales State Government’s NSW Procurement site (by the Department of Commerce). The local government procurement groups present similarly informative web portals.
Each web portal varies, but most provide powerful search engines, opportunities to register as a potential supplier to government, email alert functions and so on. The upshot of such ‘concentrators’ (both real and virtual) is that they streamline the supply of goods and services – including facility management goods and services – for suppliers and government alike. What was once a ‘needle in a haystack’ exercise is today more straightforward for the e-savvy.
This ‘concentration’ trend is also manifesting on the supply side of facility management. Large umbrella contracts covering facilities from across a number of government departments are on the rise. A case in point is a total property services contract awarded in early 2009 to commercial property services firm Jones Lang LaSalle. Claimed to be the largest commercial Federal Government portfolio of its kind, the contract addresses the needs of 740 tenancies (760,000 square metres of net lettable area) across six separate government agencies: Centrelink, Medicare, Department of Human Services, Health Services Australia, Australian Hearing and CRS Australia.
“This is a total property service; it covers leasing, procurement and management of facilities and services contracts and the provision of a 24/7 helpdesk,” explains Andrew McColl (right), national director and head of government business at Jones Lang LaSalle. Within this is a raft of standard fare facility management services, such as cleaning, security, supplementary air-conditioning, health and hygiene, energy management and so on.
While the economies of scale achieved is clearly a big driver in such macro facility services contracts, McColl cites a longer-term benefit: “There are moves to develop more centralisation of government portfolios to achieve more consistent use of space across the portfolios,” he says. He cites the unfortunately common case of government departments actually bidding against each other for the same space. “Providing a more holistic view of the portfolio, and a coordinated response based on this view, will avoid these problems and improves efficiencies. Outsourcing property services will be a key to achieving this.”
Value for money
Another difference between the government and commercial worlds is the government’s quest for (and understanding of) ‘value for money’. One anonymous government insider has advised FM magazine that “most government departments seek ‘best value’ – this isn’t the same as lowest price, and the way governments measure ‘value’ can seem curious”.
Jones Lang LaSalle is often called on to run tenders on behalf of government bodies. “Quite commonly we don’t recommend the cheapest price, but rather the best value for money,” says Jones Lang LaSalle’s Andrew McColl. “Selection criteria and weighting are usually very well spelled out – the price might only represent 20 to 30 percent of the weight!”
One area in which McColl feels ‘value for money’ is often sought in government is what he describes as “good old-fashioned service”.
“In the property services sector there is often a lot of smoke and mirrors,” he says. “This isn’t appreciated in government and we avoid it. Our philosophy is ‘what you see is what you get’, to really home in on good quality service.”
A uniquely governmental perception of ‘value’ is in the realm of corporate social responsibility (CSR) criteria. Here, government requests for tender extend beyond the core goods and services for the project, and ask tenders to demonstrate best practice in terms of the environment and society. “This includes issues such as backyard ‘sweatshops’, overseas suppliers using child labour and potential abuse of fair employment conditions,” says LGP’s Phill Scott. “For a local council, it could be simply about what the tenderer does in the local community.”
Scott acknowledges that some in the marketplace have raised their eyebrows over CSR requirements, but that it is not as arduous as it seems. “CSR can be scaled to the situation; in smaller communities it might be as simple as sponsoring the local footy team!” he says.
Get on the panel
Increasingly, government bodies are using ‘panels’ and multi-use lists; i.e. lists of suppliers who have satisfied certain preconditions to supply particular goods or services. Multi-use lists still require an open or select tender process to complete the purchase, whereas a panel allows government agencies to purchase directly from the suppliers on the panel. Both streamline ongoing procurement processes for government groups and suppliers alike by saving a deal of time and effort in requalification.
HBO+EMTB’s Kate Hannaford feels there is great advantage in the panel process. Her company has been successful in numerous panel registrations over the past 18 months. “Tendering is so expensive and labour-intensive. By short-listing you have, say, a one-in-five chance, rather than a one-in-30 [chance],” she says. “The standardisation and pre-qualification processes of panel registration, even though they are time-consuming, is a good system, if appropriately used.”
Dexion Office, a provider of storage solutions for both commercial and specialist markets, has enjoyed similar ‘government list’ success. The company is included as a supplier of office furniture for the New South Wales State Government’s ‘office furniture (chairs, steel and general)’ contract. “We submitted price lists, warranty descriptions, specifications and so on, and made products available for testing and review,” says Dexion Office major accounts manager for government, Robyn Young. “The actual process itself can be demanding and exacting, but definitely worth it in the end.”
The issue of government work being something of a ‘closed shop’ poses a perplexing riddle. Probity objectives drive government bodies to make tenders and contracts as broadly inclusive as possible; nevertheless, practicalities, of course, make those who have government project experience more attractive. Sometimes previous government experience is actually nominated as a requirement. A spokesperson from the Victorian Department of Treasury and Finance explains how to deal with this riddle: “If previous government experience is a requirement, the best way for a new player to deal with the issue is to be upfront about the fact, and rather demonstrate why they are ‘best for the job’.”
LGP’s Phill Scott agrees with this view. “I don’t think a party should be put off by not having done local government work in the past,” he says. “If they feel that they’ve got the right credentials and can demonstrate this, then it’s worth their while to submit the tender.”
Equally, the government market is not the sole domain of big players – it remains wide open for niche players and smaller suppliers. Jones Lang LaSalle’s Andrew McColl points out that his business draws on myriad smaller suppliers. “While there are a handful of companies providing total facility management services such as Jones Lang LaSalle, there are many smaller niche players providing individual-type services,” he says. “To meet demand, we’ve probably got in excess of 1000 contractors that we call on across the country.”
A case in point of such a specialist group taking on government work is electrical contracting group Elecraft. The company has recently unveiled its ‘eco-efficient solutions’ division, which is headed up by Ben Barbour. The division addresses the broad issues of building energy management, and has recently submitted an expression of interest for the provision of energy performance contracting services to the Victorian Government. This is Elecraft’s first foray into direct-to-government contract work. “We’ve been involved in a number of Green Star projects, including the new Melbourne Convention Centre, and have particular expertise in energy-efficient lighting and control,” says Barbour. “We really understand what we can achieve from a control and efficiency perspective.”
The challenge for government bodies and the facility management sector moving forward will be to work more closely together and truly understand each other’s requirements and abilities. In the wake of the Rudd Government’s Building the Education Revolution project, it is worth noting that the Master Builders Association plans to run forums for its members to help demystify government processes and aid registration. There is clearly scope for Australia’s facility management peak bodies to provide similar industry support, in what appears to be an era of intense activity for facility management goods and services providers in the Australian government sector.
TIPS: GETTING OVER THE GOVERNMENT LINE
There are many tips for success in government tenders and contracts. Essential reading in this area is a paper developed by the Federal Department of Finance and Deregulation entitled ‘Selling to Australian Government: A Guide for Business’. It covers a wide range of tips for success in selling to government – some common sense, others not so obvious.
The number one tip is to make your company known to the government sector. The easiest and most straightforward method is to register at web portals such as AusTenders, LGP, Tenders VIC and NSW Government Procurement, and to apply for selection on relevant panels and multi-use lists.
The underlying theme to most advice is that of understanding the government bodies’ specific needs and processes. “You must understand what the client wants, what services they require and demonstrate that you can actually deliver it,” says Jones Lang LeSalle’s Andrew McColl. Understanding the process is also fundamental, says HBO+EMTB’s Kate Hannaford: “Government has unique drivers, and if you aren’t in tune with this then the ‘process’ can be misunderstood. You really need to understand their model.” A suggested starting point is to obtain the relevant government body’s procurement guidelines; they are heavy reading, but explain the process.
Assuming that the evaluation committee knows of the tenderer and its goods and services is a common mistake, according to a spokesperson from the Victorian Department of Treasury and Finance. “Prospective tenderers should always assume that the evaluation committee has no knowledge of them,” he says.
Lastly are issues of incomplete, non-compliant and late tenders. LGP’s Phill Scott recommends tenderers provide as complete a tender as possible, and avoid multiple non-compliances. Most importantly, the tender submission should be lodged on time. “Late tenders are the most common error – councils have a primary obligation to the tenderers who have met the closing time and all other conditions of tender,” he says.