• Aerial view of RAAF Base Williamtown, runway and taxiways. Credit: Defence
    Aerial view of RAAF Base Williamtown, runway and taxiways. Credit: Defence

The Base Services Retender (BSR) process was developed by Defence after a great deal of thought and a sensible approach to industry consultation and, while there are inevitably winners and losers in such a far-reaching remodelling of the way garrison support and maintenance services are provided, the initial results are positive.

Nigel Pittaway | Melbourne

The Department of Defence is responsible for the delivery of Base Services to around 500 properties across Australia and although many are situated in or nearby major cities and regional centres, others are quite remote.

Previously, contracts were let on a sub-regional basis within 12 Defence Support Regions, and comprised 12 regional contracts for garrison support services and 12 regional contracts for comprehensive maintenance services (albeit the two were actually combined in three of the regions).

“Essentially we were operating at a regional level for garrison support and comprehensive maintenance,” explained Luke McLeod, director of Strategic Contracting, Defence Estate & Infrastructure Group (DE&IG, formerly known as the Defence Support and Reform Group) to ADM.

“But those three regions where the contracts were combined gave us an insight into how it would work were all of the activities bundled together.”

The BSR process was born from a desire to realign services on a regional basis, aggregating volumes of work across five areas. One of the major drivers of this desire to rationalise was the outcome of the Strategic Reform Program (SRP), with two mutual objectives of sustaining Defence capability while optimising value for money for those services provided in the sustainment of that capability.

Methodology & timeline

Defence began looking at an acquisition strategy in July 2011, with the SRP as a backdrop.

“We had some fairly significant targets for both the garrison support and maintenance activities, so in some respects the SRP targets provided a catalyst for us to look at the way we did things with Base Services,” McLeod detailed. “And how, from a supply side or procurement perspective, we could drive enhanced value from those contracts.”

A range of industry consultation exercises were conducted over an eighteen month period in order for Defence to better understand the market and where it might derive enhanced value over what it currently had.

“As a result of that process we settled on a strategy which was quite different to the previous strategy, in terms of the approach to market strategy, but also in the way we structured our service offerings to the point where in some respects we moved away from that garrison and maintenance split and started looking at things in terms of an estate maintenance and operation,” McLeod continued.

“But we looked at access control and hospitality and catering separately and a few other activities that were previously embedded within a single contract, because Defence took the view that we wanted to approach the market directly for those services and not necessarily be led by a prime contractor-subcontractor model.”

Eight individual service packages were taken to market as a result of the consultation process, where five were across the regions, rationalising from 12 to five. The remaining three packages – Retail Stores, Waste Management and Petrol Oil & Lubricants (POL) were identified as requiring a national solution, to align with the broader logistics transformation then being rolled out across Defence.

A Request For Information (RFI) went out to industry in late March 2012 during the industry consultation process and the market was formally approached in a two-stage procurement process in July 2012 approximately 20 service providers were ‘pre-qualified’ to progress to the tender stage.

A Request For Tender (RFT) was released in early October 2012 and tenders ultimately closed on February 28 2013, following requests from industry for an extension.

“The big thing here was that it was a single approach to market for all of the activities and in some respects a lot of that was about leveraging our volume and our position in the market, with the size and scale of our requirements,” McLeod said. “So there were some pretty big rewards at the end of that tender process, should a company be successful.”

Submissions were evaluated between March and December 2013 in Melbourne and an outcome was reached just prior to Christmas, with contract negations beginning early in January 2014. Negotiations were successfully negotiated by June and two tranches of contract execution occurred in July and August.

The previous service providers were given contract extensions to the end of the 2013-14 financial year, allowing progressive transition to the eight new services packages covered by the Base Services contracts.

Incumbent service providers

There are essentially 10 contracts covering the Base Services scope, ranging from multiple service, multiple region contracts through to single-service contracts at a national level.

“We have 10 contracts, one with each provider, so any provider who was successful in multiple areas was signed up to a single contract and we were not maintaining multiple contracts with the one provider,” McLeod explained to ADM. “The current status is that all contracts are in place and operating.”

“The intent is to give industry the maximum period of certainty possible.”

The contracts are for an initial six year period, with four years’ worth of extension options. Defence has reserved the right to either award two two-year extensions, or combinations of one-year and two-year extensions, depending on performance.

“The intent is to give industry the maximum period of certainty possible,” McLeod said. “So a company will sign up to a six year contract and we will then have to make an extension decision no later than the end of the third year.”

Altogether the suite of contracts is valued at around one billion dollars annually.

The first tranche of contracts were ultimately signed on July 10 2014 with UGL Services, Aurecon Australia, and Wilson Security.

For the record, the incumbent contractors comprised of: Transfield Services, who provide an Estate Maintenance and Operations Service (EMOS), refuelling and rescue and firefighting activities, hospitality and catering and retail stores and Petrol Oil & Lubricants (POL).

In terms of regional distribution, Transfield were successful across the three service lines of the EMOS, refuelling and catering for Central and Western Victoria and Tasmania, with the retails stores being a national solution. Veolia Australia Waste Management Services are the national waste service providers. Compass Group has a contract to provide hospitality and catering services in Northern New South Wales and Queensland and Southern NSW.

Access Control is split between two service providers: Wilson Security in Central and West Victoria, Tasmania and Southern NSW, with MSS Security being successful in Northern NSW and Queensland.

Brookfield Global Integrated Solutions (formerly Brookfield & Johnson Control) provide EMOS in Northern NSW and Spotless Services provide a similar service in Queensland and Southern NSW.

DTZ (formerly UGL) provides National Program Services (NPS, which as the name suggests is a national activity) and finally, Aurecon and Agility provide services in the project delivery space, also a national activity. Defence sought a minimum of two providers in this area, to both provide a level of redundancy and excess capacity.

Report cardMcLeod said that Defence was conducting a ‘lessons learnt’ project at the present time, but so far, from a procurement process perspective, he had not received any complaints or criticism of the process from the participants.

“Subject to performance being the true test, at this stage we would say that we’re happy. With the size and scale of this enterprise there will always be issues that you have to work through,” he said.

“From an effectiveness perspective we are also pretty happy to date. The market research and the ability to demonstrate why we could get better value were quite fundamental from getting the agreement within to take the approach and we were then able to take that to industry fairly positively.”

He said that the first 12 months of the new contracts had proven the model to be sound but that Defence was always conscious that actual performance was more important than procurement outcome.

“I think that the way that we have bundled and packaged would stand the test. These are partnerships; at the end of the day we can’t do what we need to do without industry and, ultimately, industry isn’t sustainable without us,” he concluded. “So it has to be seen to be a partnership, we actually have to work together so it’s not a master-servant relationship. It needs to be a collaborative relationship.”

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