Understanding government procurement in Australia

Procurement of products and services from the private and non-government sectors is central to the achievement of the objectives of all Australian governments, for nearly all government programs depend on contracting from the non-governmental sectors. For some agencies such as Defence, procurement consumes over 40% of their $25 billion annual budget. Nationally, procurement accounts for about 25% of all Australian government expenditure. For the Australian Government, in 2010/11 over 32,000 contracts were signed with a combined value of over $79 billion. Procurement not only is central to achieving the outcomes desired by the purchasing agency; its large size in aggregate means that procurement has the potential to advance or hinder government sector economic, social and environmental objectives. The centrality of procurement to delivering agency and broader government objectives makes procurement a core function of government. Australian governments are generally aware of its importance and have continuously worked towards improving procurement efficiency and effectiveness. Most Australian governments have done this through developing and refining a principles-based procurement framework that has delegated procurement decisions to the agency responsible for the purchased good or service. This agency will usually have its own specific procurement guidance that will conform to a whole-of-government (WofG) principles-based procurement framework. To improve procurement, all jurisdictions have invested significant effort in making the procurement cycle better. To a lesser degree they have focused on improving the entire procurement system which is the combined effect of the organisational arrangements, its procurement processes and technologies, its procurement expertise, and its procurement performance management system. Some governments have also sought to improve the alignment between individual procurements and governmental outputs, outcomes and objectives. This last area - ensuring that individual procurements contribute to advancing a range of other government objectives - is becoming more important as both the government and the public demand greater integrated government responses as well as more cost efficient outputs.