Increasing number of schools take up AoG contractsNovember 2013
Last year, Education Review looked at the fledgling AoG contracts for schools and noted the lack of buy-in. One year on, the tide appears to be changing, with more and more schools opting for AoG contracts. JUDE BARBACK looks at the ongoing work of the MBIE to increase schools’ awareness and dispel common misconceptions about the contracts.
A year ago, it would be fair to say that All-of-Government (AoG) contracts appeared to be floundering in the education sector. While public service departments and state service agencies are expected to use these contracts, organisations in the wider state sector, including school boards of trustees, are “encouraged to do so”.
At that point, 12 months ago, any “encouragement” had been fairly minimal. The programme had been running for a year already to get schools more involved, but efforts to get buy-in from schools had been “fairly low key” according to Mark Richards, chief of procurement for the Ministry of Education. Richards said at the time that the Ministry didn’t wish to foist the AoG agreements onto schools when schools were dealing with a “mammoth amount of change”. However, he hinted at the recruitment of a new role based within the Ministry of Business, Innovation and Employment (MBIE) that would be dedicated to assisting schools with opting in to the AoG contracts.
One year on, and Jan Barnett now fills this role. As senior procurement advisor for schools, Barnett says AoG contracts are starting to build momentum in the education sector.
The negotiation of the first AoG contracts was a significant aspect of the reform of state sector procurement policy and practice. These contracts establish a single supply agreement between the Crown and approved suppliers for the supply of selected common goods and services purchased across Government. The thinking behind the contracts is that they will save the participating agencies money, boost productivity for the suppliers involved in the agreement, and ultimately, save the Government and taxpayers money. Current contracts range from things like computers, travel, and vehicles, with more under way.
Increasing uptake of AOG contracts
Grant Lyons, who is the collaborative procurement manager within the Government Procurement Branch, Market Services at the MBIE, says they have seen a big increase in interest from schools in AoG contracts in the past few months.
“We are really pleased with the progress being made.”
He says the most popular contracts with schools at this stage are the desktop and laptop (DTLT) and office consumables contracts. At the beginning of the year, the Ministry had 70 schools signed up with a DTLT contract; now there are 107.
Graham Prentice, general manager of Cyclone Computers, a supplier for the DTLT AoG contract, is also noticing a shift towards AoG contracts. He says close to a third of eligible schools (state and state integrated) have now moved into the first phase of the AoG process and more than half of those schools have moved to enable purchasing.
“Depending upon the size of the schools involved, this can represent a very large proportion of the sales from the sector.”
It would appear the decision to focus more on marketing the contracts to schools, through the creation of Barnett’s role, an enhanced web presence and other initiatives, is starting to pay off.
“We are really striving to raise awareness of the contracts on offer and their benefits with schools. We’ve introduced an easier online sign-up process that is really quick from start to finish. We have also customised the contract documentation for schools. Schools tell us one of the things they like the most is the ‘Schools’ page on our website. It has general information as well as an online non-disclosure agreement. By signing this, they can immediately begin the sign-up process and view pricing.”
In addition to these measures and to creating the senior procurement analyst for schools role, which gives schools a central point of contact, the Ministry has also been attending education events and conferences to raise the profile of the AoG contracts.
The ‘me too’ aspect appears to be playing a part as well.
“We are now seeing a flow of schools signing up or showing an interest as they see others come on board and realise the value in signing up,” says Lyons.
Lyons says overall the focus has been on simplifying the end-to-end process for schools.
“We had heard time again from both schools and suppliers that schools found the whole process very confusing. After having an initial look, they were putting it in the ‘too hard’ basket. We have really focused on making the whole process a lot more user-friendly.”
Still room for improvement
However, Prentice believes there is still room to improve the process. He says there needs to be a simpler way for schools to see what products are on offer.
He gives the example of how quickly computers change – every quarter, or more regularly if driven by the vendors. He says some schools have looked once at what was on offer and have not revisited, whereas schools that re-visit the catalogues will see and embrace the changes.
“Over the last few months, desktops and laptops have made way for enormous numbers of tablets being provided via AoG. Apple iPads, Samsung tablets, and Motion tablets have all been added to the schools catalogue this year. And there are other devices being planned as vendors make appropriate tools for learning.”
Prentice says the move to tablets mirrors what many schools are doing – moving from stationary desktops to more flexible tablets.
He also suggests there needs to be an easier mechanism for schools to make their purchases under the AoG contracts.
Cyclone is due to launch a full online transactional ‘shop’ for AoG customers that will bring together the vendor catalogue items in one place and enable school managers to simply quote and order online.
“This will provide an easy way of doing business with AoG, currently missing for the schools sector,” says Prentice.
Lyons admits there is still work to be done in this area.
“We are continuing to work on improving the sign-up process and benefits accrued. This work will include getting a better understanding of what schools want to see in the contracts and better communicating the benefits and choices on offer,” he says.
Prentice remains baffled that some school managers believe that the purchasing power of their relationships can deliver a better return than the combined purchasing power of centrally negotiated contracts.
“While there may be one-off retail specials where a local reseller is in need of making a sales target that are less than the AoG pricing, long-term the savings being returned to Government are significant via AoG.”
He says suppliers have recently reviewed the savings experienced via AoG agencies for their product sets across each sector and the savings are significant. Lyons agrees, stating that for some contracts savings of 20-30 per cent are possible.
Despite the efforts to increase communication with schools, there still appear to be some common misconceptions around AoG contracts.
Many believe, for example, that when a school signs for AoG, they have to include all of the contracts, such as print services, data, stationery, and so on. Prentice is quick to dispel this myth and emphasises that schools can opt for the single DTLT contract.
Another area of confusion is around using local suppliers. From the outset, one of the big criticisms of the AoG contracts is that smaller, local suppliers are at a disadvantage as they try and compete with the AoG contracts.
Lyons says it is important to note that in some categories the contract allows for schools to nominate a third party to work with them through AoG or at times to buy ‘off catalogue’ or from a different supplier if what they are wanting to purchase is not available on the AoG catalogues.
“Working with a third party generally happens in the DTLT contract. This means a local supplier ─ who may be the school’s service provider ─ can continue to work with the school under AoG. For example, a school could order computers at AoG pricing and its local service agent could prepare, install, and then train and support staff on the new computers. With this arrangement, the pricing for the supply of computers and the supply of additional service/support is fully transparent.”
Prentice says he believes the third party provision is “sensible” for the DTLT contract.
“The local supplier then has the ability to charge for the services around the supply and can also pick up the services after sale.”
Another common misapprehension is that schools cannot lease their purchases.
“This is not true,” says Prentice.
“Panel suppliers work with finance companies of the school’s choice to supply AoG goods.”
Recognising the benefits
Prentice points out that finance is one area from which schools can benefit. Through AoG contracts, there is the facility to enable goods to be bought under finance, whereby the school supplies are obtained via an operating lease rather than capital.
Other benefits, beyond savings, are the timely delivery of goods and stipulated turn-around times for items needing servicing.
Despite the benefits and savings touted by the Ministry, there are no plans to make AoG participation mandatory for schools – although they expect to see more and more schools signing on.
“Over time, as more schools become aware of the benefits, we expect non-participation will become more of an exception. If for some reason an AoG contract was not working out for a school, they are welcome to withdraw from the scheme,” says Lyons.
It is interesting to reflect on the change that has occurred in a year and witness the gradual increase of schools signing up to AoG contracts. It begs the question of what we will find in another 12 months, and whether the MBIE’s efforts to better promote the contracts to schools and increase their user-friendliness will result in further uptake.
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