Getting the work of government done: Thinking differently about commissioning and contracting

A new report explores the importance of commissioning and contracting to achieve positive outcomes for the Australian public. Professor Janine O’Flynn argued for a more considered approach to the way the APS engages with providers at a Thought Leadership seminar in Melbourne.

The Australian Government spends three times as much money buying goods and services from profits and non-profits as it does employing public servants, but how well does this work and can we change it to deliver better outcomes for citizens?

Professor Janine O’Flynn, a Professor of Public Management at ANZSOG and the University of Melbourne, addressed the issue at an ANZSOG Thought Leadership seminar in Melbourne on June 11, discussing a paper she wrote with Professor Gary Sturgess for the Independent Review of the Australian Public Service on ‘Getting the work of government done, thinking differently about commissioning and contracting’.

The report looked at the core work of government and considered why, how and under what circumstances governments should be commissioning, partnering, co-producing, contracting, outsourcing or entering into novel forms of arrangements with other parties. It also looked at the ‘procurement mindset’, asking whether changes could improve outcomes for citizens.
In 2017-18, the year covered by the report, the Australian Government entered into about $71 billion worth of contracts, in 73,500 new agreements covering everything from the purchase of new military vehicles, the engagement of management consultants and travel for public servants.

“When we get into the dollars, the Australian Government spent $90 to $100 billion on goods and services from for profits and non-profits in one year,” Professor O’Flynn said.

But the detail painted a more interesting and complex picture. For example, about three quarters of the expenditure was tied up in about 300 very large, complex contracts – about 0.5 per cent of the total number of contracts.

“They are very complicated arrangements, which probably require a very different approach to what we might do if we’re procuring IT equipment or furniture or travel,” Professor O’Flynn said.

“Our assessment shows the Australian public service is generally stuck in this mindset around a very transactional approach; it’s very much about these one-off relationships with other parties that we are going to ask to do things for us.

“We argue that we need to get a bit more ‘relational’ and we need to start thinking about some of these contracts as much longer-term relationships, which are a bit more complicated.”

A ‘relational’ approach might mean the government would lose some of its control, for example by not having competitive markets for some things it commissioned other parties to do. It also might lose the ability to clearly specify everything required of the other party and what they might do if conditions changed.

“There’s a real spectrum of relationships that we think need to be better matched to the task that government wants to carry out with them, not just for them,” she said.

How could the system change to improve outcomes for citizens?

Professor O’Flynn said the paper sets out a vision that had two parts. The first was that the Australian public service needed to think of itself as the designer of a more complicated system.

“We talk in the paper about this idea of them being system stewards, of thinking not just about individual contracts but about the much broader set of relationships that will get the work of government done,” she said.

The second was the notion of strategic commissioning, which was more important than deciding who would provide a service and whether the tender process was competitive. This would require a change of mindset – the organisational culture that dictates how things are done – and a change to rules and regulations. It also meant being prepared to accept risk in a risk adverse environment, and to invest in the capacity to do things differently.

“If the procurement rules really force people into competitive processes and are very clearly trying to set out on paper what it is we want other parties to do, then there’s no surprise to see that that’s the behaviour that you get,” she said.

Professor O’Flynn said the draft report of the Independent Review of the Australian Public Service had provided a clear sense of what it might recommend, including a different approach to how the government works with other parties, including state and territory governments, profits and non-profits, communities and citizens.

It also might recommend rethinking the capabilities required by the public service and investing in developing a ‘professions model’ for the public service, similar to that found in other professions, and creating a more flexible, fit-for-purpose approach to third-party engagement.