Premier & Cabinet

Type:
Premier's Memorandum
Identifier:
M1991-24
Status:
Archived

M1991-24 Competitive Tendering For Services and Contracting Out

Description

Superseded by M97-24

Detailed Outline

As you are aware, one of the major initiatives I announced in the Financial Statement on 2nd July, 1991 aimed at achieving significant structural change was a proposal to pursue competitive tendering and, where appropriate, the contracting out of services now provided in-house by Government departments and authorities.

The objective is improved efficiency which should enable either the same level of service at lower cost or improved service at the same cost. The objective is to be achieved by the introduction of competition for the provision of services in the future.

I must stress that achievement of the savings does not rest solely on activities being contracted out. Integral to the policy is that existing in-house providers be given the opportunity to improve their efficiency and to bid for the provision of services, unless there are sound reasons to do otherwise.

Contracting-out is a longer term initiative and I expect that the more substantial benefits will accrue over the next two to three years. However, if the gains are to be realised, it is essential that implementation commence immediately. I have appointed a high level Steering Committee to oversight the process.

A document elaborating the policy and providing an introduction to the concepts will shortly be provided to all organisations. This will be followed by other forms of assistance, such as seminars, case studies and the establishment of a network of contacts in agencies to provide assistance.

Work undertaken by the Industry Commission has identified the potential to achieve savings of the order of many hundreds of millions of dollars by the States' governments, including the inner budget sector and government trading enterprises.

In order to strike a proper balance between achieving savings for the budget and providing incentives and benefits for individual inner budget sector agencies, it is proposed that the normal arrangement will be for the savings achieved to be shared 50:50 between the agency and Consolidated Revenue. This is the same ratio which applies to proceeds from surplus asset sales. Flexibility will exist for the share of savings to be altered in the light of individual circumstances.

For government trading enterprises, the sharing of savings achieved will be reflected through lower costs producing higher returns on assets and improved financial performance.

Agencies will be asked to develop broad strategies and annual savings targets and, periodically, will be asked to supply information on progress to the Steering Committee.

Initially, I anticipate that the focus within agencies will be on identifying the more obvious opportunities for savings and the development of experience with the processes. The early savings targets set by agencies will most likely be conservative. It is important that agencies put in place implementation strategies as soon as practicable.

Your support and assistance with this important initiative will be crucial. I trust that the arrangements outlined above are acceptable and will contribute positively to the realisation of the potential.

For additional information, officers may contact John Watt (228 5740) or Malcolm Richardson (228 4802) of the Office of Public Management.

Yours sincerely

Nick Greiner MP

Overview

Compliance

Not Mandatory

AR Details

Date Issued
Aug 19, 1991
Review Date
Jul 17, 2016
Replaces
Replaced By

Contacts

Contact
Contact us
Phone
02 9228 5555
Publishing Entity
Department of Premier and Cabinet
Issuing Entity
Department of Premier and Cabinet