Procurement and

contract management
Lessons from the tertiary sector

1
Contents
Introduction.................................................................................... 3
Vocational education reforms........................................................ 4
Questions to ask when spending public money............................. 5
The fundamentals of procurement................................................. 6
Changes ahead................................................................................ 7
Impacts of uncertainty................................................................... 7
Our approach.................................................................................. 8
Our risk assessment tool................................................................ 8
Our assessment of the TEI sector................................................... 9
Common areas of risk across TEIs................................................. 11

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 Procurement and contract management: Lessons from the tertiary sector

Introduction
This report brings together what we have learned in recent years
about tertiary education institutions’1 (TEIs) procurement and contract
management processes.
Its purpose is to help TEIs and other public Against a backdrop of ongoing vocational
organisations understand “what good looks like” education reforms, the Covid-19 pandemic,
so they can identify and focus on areas that will rising inflation, and supply chain disruption,
best improve their practice. it is important that the sector understands
and implements good procurement practices.
Spending on supplies and services is fundamental
Carefully managing the processes used for
to TEIs’ ability to provide educational services.
purchasing and contract management can reduce
For example, Te Pūkenga’s 17 subsidiaries
some of the risks associated with challenging
comprise of 16 former institutes of technology
operating environments. Well-designed and well-
and polytechnics (ITPs), and Work Based Learning
implemented procurement processes maintain
Limited. They spent approximately $350 million
market trust and confidence, generate competition,
on purchasing supplies and services from external
and help demonstrate that best public value is
organisations in 2021, representing a third of total
being achieved. Robust contract management
expenditure.2 TEIs use a range of procurement and
helps ensure that the value achieved through
contract management approaches. This is to be
procurement is delivered in practice.
expected. Contracts for the diverse array of goods
and services that TEIs rely on may best be procured
in different ways. However, there is scope for
improvement. Some practice is below the standard
we consider to be appropriate for the scale and
importance of external sourcing in the sector.

1 This is based on our review of 22 TEIs audited by Audit New Zealand. These comprise of 13 former institutes of technology and polytechnics
(ITPs), six universities, and three wānanga.
2 Sourced from Te Pūkenga annual report for the year ended 31 December 2021.

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 Procurement and contract management: Lessons from the tertiary sector

Vocational education reforms

The creation of Te Pūkenga creates both challenges and opportunities.
The new organisation will have to decide which aspects of procurement
and contract management to consolidate and which to devolve.
Te Pūkenga has the potential to embrace good How Te Pūkenga addresses these challenges
practice in procurement and contract management, will provide lessons for other reforms across the
leverage its enhanced buying power, and support public sector.
subsidiary companies to make improvements that
We found that Te Pūkenga recognises these risks
benefit local suppliers. However, there are risks that
and opportunities. The former ITPs will be fully
procurement practices may become less efficient,
integrated with Te Pūkenga by November 2022.
existing knowledge of tertiary sector procurement
From then, Te Pūkenga will have the mandate
may be lost, and residual functions left with existing
to establish governance over procurement and
polytechnics may be inconsistent, poorly resourced,
contract management. Te Pūkenga plans to review
or inadequately co-ordinated.
the current procurement policy in November 2022,
The Government Procurement Rules and with the support of the former ITPs. Alongside this,
policies expect public organisations to: the operating model for a national procurement
function will be designed and implemented. If the
• meet the five Principles of Government
procurement policy has not been approved by
Procurement;
November 2022, the former ITPs will continue to
• deliver public value by getting the best possible use their own policies under a ‘grandfather clause’.
result from procurement, including looking for The review will provide the opportunity to ensure
opportunities to deliver broader economic, there are consistent and effective processes
social, environmental, and cultural benefits from operating across the country. In the meantime,
spending public money; and ITPs continuing to apply their existing policies,
procedures, and procurement approaches is
• meet the expectations of the Government
helping to ensure continuity through transition.
Procurement Charter for how organisations
should conduct their procurement activity to We hope that this report has lessons for
achieve public value. organisations going through change and
consolidation, as well as for organisations
The creation of Te Pūkenga marks a step change in operating in a challenging environment.
the purchasing power to support vocational learning
in New Zealand. How that power is used will be a
significant factor in the new organisation’s success.

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 Procurement and contract management: Lessons from the tertiary sector

Questions to ask when

spending public money
This report presents ten critical questions that TEIs, Te Pūkenga, and all
those spending public money need to ask themselves. The answers will
help to determine whether procurement processes are well-managed,
deliver the desired outcomes, and achieve value for money.

Strategic approach Effective contract management

1. Does the organisation have a clear view of its 8. Does the organisation give adequate attention
longer-term procurement needs? to contract management processes, including
contract completion and transition?
2. Does the organisation take a strategic
approach to contract management (for
example, focusing effort on critical supplies)?

Policies and procedures Information management

3. Are policies and procedures up to date? 9. Are appropriate information management
systems in place to collect and report data on
4. Do they provide practical guidance for
spending activity in a way that helps inform
decision-making?
future decisions?

Staff experience and capabilities Review and improvement

5. Does the organisation have sufficient 10. Is the performance of procurement and
experienced and capable procurement staff? contract management regularly reviewed, and
do reviews lead to meaningful change?
6. Is training and guidance available to staff
so that they can put policy into practice
effectively?

Structured planning and market

analysis
7. Do procurement managers understand the
supply markets that they engage with and the
key factors affecting supplies of goods and
services?

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 Procurement and contract management: Lessons from the tertiary sector

The fundamentals of procurement

Procurement is the overarching term used
to describe the business of purchasing.
Procurement is much more than “buying something” – it includes all the processes involved in acquiring
goods and services from a third party, from initiating a project and identifying a need through to sourcing a
supplier and managing the relationship with that supplier. Procurement is often used to describe just the
planning and sourcing stages. Effective contract management completes the cycle and helps ensure goods
and services are delivered well, to specification, and in full. Together, effective procurement and contract
management can help to ensure that public value is realised.
Like many public organisations, TEIs are highly reliant on the private and not-for-profit sectors, which
provides particular challenges to TEIs when ensuring good financial control. Capital investment, together with
procuring and managing contractors, is crucial to improving assets and enabling TEIs to operate smoothly.
Well-maintained assets, services, and facilities further contribute to revenue by attracting students.
Procurement and contract
management carry high risks to Figure 2 – The eight-stage life cycle of procurement
cost control, public reputation,
and performance, impacting
future financial viability. Getting
procurement and contract E
management right reduces AG
N

these risks as well as achieving

MA

Review Initiate
value for money. As New project
Zealand and the TEI sector
continues to experience a period
of economic uncertainty, it is
Manage
contract and
8 1 Identify needs
and analyse
important that procurement and relationships
7 2 the market
PLAN

contract management controls NEEDS

remain strong. Negotiate 6 3 Specify
and award requirements
We expect up to date policy, contract 5 4
procedures, and guidance,
which comply with good
Approach the Plan approach
practice and the Government market and to the market
SO

Procurement Rules, to set a RC select supplier and evaluation

U

firm platform for controlling E

procurement. Organisations
should review their procurement
and contract management
practice and use this experience
to support improvement. Source: (Recoloured from) the Ministry of Business, Innovation and Employment.

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 Procurement and contract management: Lessons from the tertiary sector

Changes ahead
Leadership and central coordination are the market needs in order to see TEIs as valuable
needed to deliver change and a fully effective customers.
procurement function. TEIs need to respond proactively to current
The Office of the Auditor-General’s report Using challenges to uphold good procurement practices
‘functional leadership’ to improve government in a time of change. The Auditor-General defines
procurement (November 2019) emphasised the good procurement through the principles of
benefits of central co-ordination and leadership to accountability, openness, value for money,
an effective procurement function. lawfulness, fairness, and integrity. The Government
Procurement Rules determine the need to:
Strong leadership will be required to deliver
the change signalled in the 2019 edition of the • plan and manage for great results;
Government Procurement Rules. The updated • be fair to all suppliers;
Rules state that the strategic goal for government • get the right supplier;
procurement is to achieve public value. The
• get the best deal for everyone; and
Government Procurement Charter is included in the
Rules. It sets out national priorities for improving • play by the rules.
and delivering public value. New and innovative These principles help to achieve value for money
approaches are likely to be required. Meanwhile, as well as achieving broader outcomes. Applying
Te Kupenga Hao Pāuaua, the Government’s these principles in practice helps achieve value
progressive procurement kaupapa, aims to increase for money and broader outcomes. Good contract
the diversity of government suppliers, starting management ensures this value is then delivered in
with Māori businesses. A firm basis in policy, practice. Improving contract management reduces
accompanied by transparency and accountability, risk by improving the control, monitoring and
are key to maintaining the trust and confidence administration of contracts.

Impacts of uncertainty
For the most part, TEIs have dealt found ways of communicating effectively with
suppliers and resolving invoicing and payment
positively with the widespread issues.
effects of the Covid-19 pandemic
The former ITPs that make up Te Pūkenga have
on procurement and contract continued to purchase supplies and services from
management. When asked, external organisations as usual during a period of
most described these effects as significant uncertainty.
‘manageable’. The creation of Te Pūkenga provides an opportunity
for the sector to build on existing good practice
Most TEIs have had to contend with challenges and address the issues we have raised in this
in sourcing certain goods. Supply chain delays report. Te Pūkenga has the potential to provide
and other issues combined with price escalation clear leadership and share learning across its
were also cited as challenges. However, TEIs have subsidiaries. It will have a stronger base from which
managed to deal with these challenges and have to exert influence in supply markets.

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 Procurement and contract management: Lessons from the tertiary sector

Our approach
In 2020, we completed an initial assessment We used recognised good practice and our sector
of the risks to good procurement and contract expertise to develop a standardised risk assessment
management faced by the 22 TEIs that are audited tool to analyse each organisation’s approach to
by Audit New Zealand. This gave us a good procurement and contract management. These risk
overview of the challenges faced by the sector. assessments allowed us to identify areas of relative
strength and weakness and suggest improvements.
We considered aspects of procurement
and contract management at each of the In 2022, we followed up our 2020 risk assessments
organisations, based on our cumulative audit through a survey of TEI procurement and contract
knowledge and experience of each organisation. specialists, which received a 72% response rate. The
In addition to understanding their approach, survey results allowed us to build on our understanding
our work enabled us to better understand the and confirmed our assessment of procurement and
challenges that they face. contract management across the sector.

Our risk assessment tool

Our assessment tool considered two aspects of risk: of controls was based on their design, not their
Inherent risk – This is risk that arises from the operation, and covers the main aspects of good
factors that impact an organisation: complexity, practice that we would expect an organisation to
instability, change, delivery of critical services, apply.
interdependencies, and reliance on third parties. Inherent risk was classified on a scale from low
Size, strategic direction, skills, and capacity are also to high, and the design effectiveness of controls
important. was classified on a four-point scale from basic
Control risk – This is risk that may arise from poor to advanced. We awarded a risk score to each
management of the systems and processes put classification. A description of the control
in place to mitigate inherent risk. Our assessment classifications is shown in the table below.

Control Classification Control Description

Advanced There is a strong level of internal control. The organisation is an exemplar

of good practice.

Intermediate Most good practice is in place. Internal control is good. This is an effective
level of control for mid-sized organisations such as TEIs to aim for.

Core Essential management arrangements are in place. Internal control is

generally adequate.

Basic A basic approach, appropriate for the smallest organisations. For

complex organisations such as TEIs, internal control is likely insufficient.

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 Procurement and contract management: Lessons from the tertiary sector

Our assessment of the TEI sector

Our risk assessments found that management activities below what we consider to be
an appropriate standard for the size and complexity
contract management is generally of a TEI.
weaker than procurement,
Many smaller organisations have scope for
particularly in larger, higher- improvement in both areas. Although they have
spending TEIs. lower inherent risk than some other parts of the
public sector, they exhibit high control risk due
We also found that there have been minimal changes to their lack of maturity in both procurement and
to the way TEIs approach and manage procurement contract management.
and contract management since 2020. Levels of
residual procurement risk are higher than we would Levels of inherent risk vary widely depending on
expect. such factors as the size, location, and nature of the
organisation, as well as the extent of their approach
The management arrangements for procurement to outsourcing and the maturity of the local market.
and contract management are important, but There is little a TEI can do to reduce its level of
there is no right or wrong approach. The most inherent risk. Our analysis shows inherent risk in
appropriate structure is a matter for consideration TEIs to be generally at a low to medium level for
and decision at each organisation. A small number procurement and contract management compared
of TEIs have an entirely devolved structure to to larger public organisations. This means that TEIs
manage their procurement function, but the do not necessarily need to invest in expensive or
majority have centralised arrangements for large complex systems to help them manage procurement
procurements, with delegated authority for lower- more effectively. Some simple improvements are
value procurements. likely to be just as effective and more appropriate to
Our work found little evidence of advanced practice the scale of the task.
in the sector. Most organisations self-assess their Smaller TEIs are more likely to have higher levels of
arrangements as being at a core or intermediate control risk. This may be a consequence of their staff
level, although a quarter of those surveyed consider capacity and overall resource availability. The job
their arrangements to be at an advanced level. market in New Zealand has been impacted generally
Despite the positive self-assessment by a quarter of by Covid-19 and we recognise it will take some time
organisations, evidence of good practice within the for resourcing challenges to be addressed across
sector is limited and we consider that the sector has the public sector. Accepting higher control risk can
substantial ground to make up in relation to both be a reasonable position to take if the inherent risk
procurement and contract management before it being managed is low. However, we found that some
can maximise the benefits from its relationships with large organisations have high levels of control risk. In
suppliers. Our analysis found some organisations some cases, this risk was beyond that which would
are operating at a basic level in a wide range of be expected given their profile and reputation in the
areas, undertaking procurement and contract sector.

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 Procurement and contract management: Lessons from the tertiary sector

In the charts below, each dot represents a TEI The charts show:
mapped according to our assessment of its inherent • a cluster of smaller organisations with high
risk and its control risk.3 With very few exceptions, control risk;
the chart shows a need for TEIs to move towards • some organisations with a high level of both
the green areas by reducing control risk. We expect inherent and control risk; and
organisations with higher inherent risk to have • too many organisations in the red and amber
correspondingly stronger controls. risk ratings.

Procurement Risk Assessment

Higher
Inherent Risk
Inherent Risk
Lower

Control Risk
Lower Control Risk Higher

Contract Management Risk Assessment

Contract Management Risk Assessment
Higher
Inherent Risk
Inherent Risk
Lower

Control Risk
Lower Control Risk Higher

3 This analysis is limited to 22 tertiary entities audited by Audit New Zealand. 10

These comprise of 13 former ITPs, six universities, and three wānanga.
 Procurement and contract management: Lessons from the tertiary sector

Common areas of risk across TEIs

We structured our assessment of controls against we judged to be stronger or weaker. A higher
10 areas of contract management activity and aggregated score indicates a higher risk and
10 areas of procurement practice. weaker control. The graphs also indicate that lack
The graphs below show the aggregated risk rating of sophistication in contract management controls
we assessed for the 22 TEIs audited by Audit presents higher levels of risk than those covering
New Zealand and illustrate areas of control that the purchasing stage of the procurement cycle.

Procurement Controls
1. ls there a strategic approach to procurement? (Procurement Strategy)

2. Are there good, up-to-date policy, guidance and procedures in place

to support procurement activity?
3. Does the organisation have the right number of staff, in the right
structure with the right capability to deliver effective procurement?
4. Is there an information management system to assist procurement
analysis, planning, and managing process?

5. Are staff aware of policy and guidance and supported in its use?

6. Is there good quality planning for and market analysis ahead of

procurement? (market analysis understanding what is available)

7. Are procurement specifications, documents and processes good?

8. Are supplier selection, negotiation and contract award well planned

and managed?
9. Does the entity review its approach to procurement (through
capability assessment, internal audit or otherwise)?
10. Are senior management and the governing body interested, well
informed and committed to good procurement?
Lower risk Higher risk

Contract Management Controls

1. Is there a strategic approach to supplier relationship management?

2. Are there good, up-to-date policy, guidance and procedures in

place to support contract management?
3. Does the organisation have the right number of staff, the right
structure & the right capability to manage contracts effectively?
4. Is there a contract management or supplier relationship
management system?

5. Are staff aware of policy and guidance and supported in its use?

6. Is there a robust approach to contract financial control?

7. Is there a robust approach to contract monitoring and performance

management?

8. Is there a structured approach to contract completion and

transition?
9. Does the entity review its approach to contract management
activity (through internal audit or otherwise)?
10. Are senior management and the governing body interested, well
informed and committed to good contract management?
Lower risk Higher risk

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 Procurement and contract management: Lessons from the tertiary sector

Our conclusions are listed below, in areas where we see most scope
to strengthen procurement and contract management.

Our assessment showed that only four TEIs have

procurement arrangements in place that exceed
1. Strategic approach our expectations for an appropriate strategic
approach. Four further TEIs have arrangements
which do not meet the expected requirements. Our
What does good look like? work indicates that many TEIs are responding to
We expect evidence of long-term planning, with an procurement needs as they arise rather than taking
annual procurement plan or strategy in place, and a longer-term view.
senior management approval and oversight.
Our work exposed a similar situation in relation
We expect a strategic approach to contract to managing supplier relationships. Only one of
management, informed by categorisation that the organisations we reviewed had arrangements
differentiates between the relative importance of that we considered to be better than the minimum
suppliers (for example, strategic partners, routine appropriate standard, with over a third of the
suppliers, and commodities). organisations reviewed having an approach which
We expect contract management plans to be was below that standard.
applied to significant contracts, with risks to
We accept that staff capacity and poor information
contractor delivery identified and managed.
systems can constrain an organisation’s ability to
think strategically, but our findings suggest that in
Highlights for improvement most TEIs procurement and contract management
activities are not given the profile, priority, or
attention they deserve. They are typically too
• TEIs should take a more strategic view of responsive to immediate needs, with insufficient
procurement and contract management. regard for longer term objectives.
• More attention needs to be given to Structured planning can support contract
sourcing and managing contracts, management and improve decision-making by
especially where the contract is identifying and managing risk. Plans for better
strategically important. contract management may include supplier
categorisation (differentiating between the relative
importance of suppliers, for example, strategic
We found that most TEIs are not taking a strategic partners, routine suppliers, and occasional needs).
view of procurement and contract management. Better specification of contracts are also useful.
Some TEIs do not have a procurement strategy Well-drafted contracts can enable stronger
or a document which might serve the same performance monitoring of those contracts which in
purpose. This can result in a repetition of existing turn increases the opportunity to identify areas for
practice regardless of changing circumstances. improvement.

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 Procurement and contract management: Lessons from the tertiary sector

strategic nature of procurement may help it to

become more proactive rather than process-led.
2. Policy, procedures, and In contract management, 20% of TEIs have
guidance policies, procedures, and guidance that
exceed the core requirements, although some
organisations have up-to-date policies and
What does good look like? procedures that we recognise as supporting
We expect there to be an organisation-wide their procurement activity. One university has
policy or consistent suite of policies in place that developed a contract management framework
apply across all procurement activity (such as together with supporting policy and guidance
opex, capex, and grants) and all contracts (such templates. Such frameworks provide clarity for
as commercial, capital works, and strategic staff and aid consistency of approach.
partnerships). These should be up to date and
Policy, procedures, and guidance should be
supported by detailed guidance, procedures,
regularly reviewed and updated to ensure
templates, and standard contracts.
they remain consistent with good practice and
We expect guidance on what to do when contract current Government Procurement Rules. A
performance obligations and expectations are not consistent approach should be documented for
being met, so that suppliers are treated fairly and all types of procurement activity (for example,
the organisation gets the full value it has procured. operating, capital, and grants), starting at policy
The approach to negotiating and approving contract level and supported by detailed guidance,
variations should be clear with reference to procedures, and templates. Other areas of
delegated authority.
policy and guidance which should be considered
include ethical issues such as conflicts of
Highlights for improvement interest, gifts and hospitality, managing contact
with providers, and confidentiality. Guidance
on what to do when contract performance
• Contract Managers need better support. obligations and expectations are not being met
• Policy needs to be regularly reviewed and is also beneficial.
kept up to date. As Te Pūkenga develops its role and approach
to procurement, our work indicates two policy
areas to focus on:
We found TEI policy and procedures to be an area • defining its own policy position, for centre-
that is addressed relatively well in procurement
led procurement and well as defining which
but less so in contract management. Although
procurement and contracting is centralised
sometimes policies are incomplete or out of date,
and which is devolved; and
some 40% of TEIs have policies, procedures, and
guidance for procurement that exceed the core • in structures like Te Pūkenga, which bring
requirements. However, policy is the place to signal together multiple organisations, policy needs
intent, and making clear policy statements on the to be coherent and consistent.

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 Procurement and contract management: Lessons from the tertiary sector

management but we recognise how challenging

this can be, particularly for small organisations and
3. Staff capacity and those located in areas where the pool of specialist
knowledge is limited. Nevertheless, we acknowledge
capability the training that takes place to equip staff to deliver
their roles and we encourage qualifications and
What does good look like? training to support wider professional development.
Structured training to supplement experience with
We expect procurement and contract management qualifications is preferred.
to be led by a Centre of Excellence, a dedicated
team, or a Chief Procurement Officer so that We found there to be slightly greater capacity
leadership and accountability is clear. The Centre of and capability in procurement than for contract
Excellence can provide advice and guidance. management. Our work showed staffing capacity
and capability to be at a basic level for contract
We expect good oversight and co-ordination of staff
with devolved procurement responsibility, with role management in about a third of TEIs. Of these,
numbers reflecting the need to effectively deliver many were also operating at the same level for
the service. procurement, meaning that we found a strong
correlation between organisations whose
We expect training and development to be available procurement was weak and those whose contract
to staff so that policy is put into practice as management was also weak. We assessed only 14%
intended.
and 23% of organisations as operating above the
expected standard for both contract management
Highlights for improvement and procurement respectively. All such
organisations are in urban areas. Smaller TEIs could
source external specialist expertise to supplement
• Consider whether contract managers existing skills.
have too many competing priorities.
Role numbers should reflect the need to deliver
• Contract management staff numbers, the functions effectively. Our review indicates that
time, and skills need to match the effectiveness is helped where it is possible for
importance of the task. procurement and contract management to be the
• Smaller organisations should seek principal responsibility of a dedicated team under
external support for more complex, the supervision and guidance of a Chief Officer or
high-value, high-risk procurement. similar post.
The University of Canterbury has a range of
dedicated staff in procurement roles, while contract
We found that staffing levels are deemed by management operates on a decentralised basis
most organisations to match their requirements. and is often combined with other functional
However, many organisations rely on a small responsibilities. The university has demonstrated
number of staff, and in some cases responsibility its commitment to alternative options by reviewing
for procurement is allocated to staff who have responsibilities for contract management within the
other demanding functions. This increases risk decentralised structure. This is one example of a TEI
related to business continuity and may place staff thinking creatively to ensure it has the right level of
under pressure. Developing the competency of expertise dedicated to procurement and contract
staff to discharge their responsibilities is a duty of management.

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 Procurement and contract management: Lessons from the tertiary sector

4. Quality of planning 5. Contract management

and market analysis and delivery practice
What does good look like? What does good look like?
We expect significant procurements to have We expect contract managers to be identified for all
appropriately skilled teams, budgets in place ahead contracts.
of procurement, financial delegations to be clear, and
approvals obtained prior to procurement. We expect a good approach to setting out
requirements and defining quality in contracts.
We expect business cases to justify significant
procurements, with formal procurement that We expect regular reporting, monitoring, and
assesses procurement risks. evaluation of delivery.
We expect a good understanding of the market and We expect effective working relationships with
operating environment and a clear rationale for supplier and key stakeholders, with good feedback
adopting procurement approaches. provided to contractors on their performance.

Highlights for improvement Highlights for improvement

• Investment in market analysis and • Investment in contract management

intelligence pays off. needs to reflect the importance of
third-party suppliers to effective service
• Where supply is limited, organisations
delivery.
can use their combined buying power
to help stimulate the local market. • Performance monitoring, assessment,
and feedback to suppliers needs to be
focused on business needs.
We considered supplier selection, negotiation,
and contract award to be managed well in 32%
of organisations, although there remains scope Although our assessment found that 65% of
to improve procurement specifications and other organisations have arrangements in place that
documentation. We assessed the practice of TEIs exceed basic requirements, we found little evidence
to be below minimum requirements in 18% of the of dedicated contract managers, even in larger
organisations we reviewed. In some locations we organisations. Contract management is a role which
were told that there is a very limited market for is often allocated to staff alongside other duties,
certain goods and services and that this reduced resulting in some areas of contract management not
TEI’s ability to gain advantage from market analysis. receiving the attention they require.
Structured planning and market analysis enables In addition to monitoring providers’ performance,
procurement managers to understand how the time should be made for maintaining relationships
supply market works and the key suppliers for with suppliers, including giving feedback. At an
goods and services. Good market analysis can help appropriate stage in the contract, provision should
determine the best approach, helping buyers to be made for contract completion or transition
achieve better value for money through reduced planning.
prices or improved service. This can be achieved
through better identification of relevant stakeholders,
good use of appropriately skilled teams for significant
procurements (for example, producing clear
business cases to justify the rationale for significant
procurements), and linking risk analysis and
management to strategic objectives.
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 Procurement and contract management: Lessons from the tertiary sector

Organisations that we assessed to be operating

at a lower standard retain information on shared
6. Investment in computer drives or spreadsheets.

information management In most organisations, existing systems provide

only core management information. Just two
organisations have systems which exceed
What does good look like? what we consider to be core requirements for
We expect an information system which records key managing procurement. This leaves around 23%
data on procurement activity/spend. of organisations functioning at a level which, in our
view, is less than optimal. Several TEIs are reliant
We expect documentation supporting all
procurement activity to be stored electronically and on time-consuming manual systems or basic
be easily accessible. This might include the original spreadsheet applications. Absence of a contract
agreement, record of contract progress claims and management information system is a particular
payments, monitoring and inspection, meeting feature of small organisations.
records, relevant correspondence, records of any A good approach to information management allows
variations or claims, producer statements and/or organisations to store and analyse information in a
guarantees, and completion certificates. way that best suits their needs. This means having
We expect links between the contract management access to data which enables analysis, supports
system and financial management information planning, and assists the management of the
systems. procurement and contract management cycle.
When managing contracts, it means having readily
Highlights for improvement available information about the number of contracts
in place, their values and end dates, the contracted
suppliers, and their performance.
• Consider whether the approach to contract We recognise the financial barriers which may
information management is providing the prevent the procurement of systems which are
intelligence to manage procurement and truly fit for purpose, but recommend that data and
contract management effectively. documentation supporting procurement is accurate
and up-to-date. It should be stored electronically,
be easily accessible, require minimal manual input,
We found that 77% of TEIs have an information and control unauthorised access. Key data on
system that enables them to meet core procurement activity and expenditure is essential.
requirements for analysing their procurement Systems should record all contracts and link to the
spend and managing the procurement process. payment process.

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 Procurement and contract management: Lessons from the tertiary sector

We found that although most senior management

teams are said to be interested and committed to
7. Monitoring, review, and improving procurement and contract management,
around half of all TEIs do not adequately review
reporting practice in these areas. The frequency of reporting
is low in many cases. Commitment to review is a
What does good look like? starting point for improvement but must be pursued
by involvement in action planning and sharing good
We expect a comprehensive programme of review,
practice. We are concerned that some organisations
with internal audit reviews of procurement and
have senior management teams which, according
contract management informed by risk assessment.
to our information, do not demonstrate the level
We expect to see good evidence of action in of commitment to monitoring and review that we
response to review findings and recommendations. expect.
We expect to see reporting to and interest from A structured approach to monitoring, review,
senior management. and reporting of procurement and contract
management can provide a valuable contribution
Highlights for improvement towards achieving continuous improvement.
Impartial and objective input from those who are
not directly involved in the process can also help
• Reporting to senior management needs identify areas for improvement.
to be regular and relevant, and should
reflect the importance of third-party
suppliers to achieving organisational
outcomes.
• Structured programmes of review
help to identify strengths and areas
for improvement. They also provide
confidence that policy is being put into
practice effectively.

Find out more

[Link]/assurance-services
[Link]/resources/procurement
[Link]/resources/contract-management

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