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NZ DOC Hails New Procurement Model

NZ DOC Hails New Procurement Model

The New Zealand Department of Corrections (DOC) and Honeywell are both claiming benefits from a new procurement model they say allows DOC to take a more strategic approach to upgrading security systems and keeping ahead of the technology game.

DOC and Honeywell have been engaged a seven year collaborative working relationship for the design, installation, training support and maintenance of Integrated Security Systems for DOC since March 2004. Both parties say the collaborative relationship, known as the Integrated Security Collaborative Working Arrangement (ISCWA), provides an alternative contracting model to traditional master/servant contracting and a practical framework for achieving genuine "win/win outcomes. Australian clients have also entered into similar arrangements, but are apparently not ready to talk about them publicly.

According to a newly-released Honeywell White paper, DOC began seeking a long term partner to help it standardize its security management technology in early 2003, as part of an extensive program of construction and refurbishment projects for its corrections facilities.

DOC also saw the advantages of having a long term partner to help it develop and use security technology as an enabler to support its strategic operational objectives in a way that traditional one off "bid to spec" procurement could never achieve.

"Long term" - considered to be a minimum of seven years in order to achieve greatest benefit - fitted with accounting cycles for vulnerable equipment and allowed for DOC strategic imperatives to be built into the program of projects while allowing time for the relationship between the partner organizations to mature.

Local advisory and facilitation firm Collaborative Management Systems, who originated the Collaborative Working Arrangement model in the UK and has since adapted the commercial and legal frameworks to suit Australian market conditions, facilitated the ISCWA formation. The ISCWA is only the 35th project adopting this framework worldwide.

Both DOC and Honeywell have a long history of operating under "master/servant" contracts. Such contracts can encourage negative behaviours - secretiveness, defensiveness, finger pointing, and a sense that if one party is going to win, the other must lose.

The ISCWA is a paradigm shift in the way of working together, principally because of the level of equality inherent in the arrangement and because of the change from individual objectives to a unity of purpose.

A cornerstone of Honeywell's proposal to the Department during the ISCWA partner selection process was its procurement model. This model defined the needs and benefits of contestable buying of third party product and labour. Through this process, all suppliers in the New Zealand security market gain open access to the opportunities presented by the Department's building program and use of proprietary equipment is minimized. This was important for DOC in the expenditure of public money.

Around 80 percent of all ISCWA project spend is third party supply and the procurement model ensures that this spend is open, transparent and that the best value for money for the ISCWA members is extracted.

Honeywell's global purchasing power means that it enjoys considerable discounts from major suppliers. These discounts automatically flow through to the ISCWA.

Both parties are claiming big benefits from the arrangement. Honeywell says it gains certainty of forward workload, enabling better planning. DOC, meanwhile, says it has gained the certainty that their security spend is achieving outcomes aligned with their medium to long term strategic objectives. It also says it is saving money and achieving far greater transparency of wall to wall project risk.

Meanwhile both say under the new arrangement there is almost no potential for disputes and non valued-add activities associated with traditional contracts have been eliminated.

Ends

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