New centralised approach to travel procurement

The Australian Government has adopted a centralised approach to travel procurement after a study recommended changes to standardise travel policy.

“There was a decentralised approach to travel procurement, with no-over arching whole-of-Australian government coordination and strategic management,” John Grant, Australian Government coordinator and head of procurement for the Department of Finance and Deregulation, said.

During 2008, the Department of Finance conducted a study of the government’s procurement arrangements for travel services and recommended a consolidated whole-of-government programme to “leverage the government’s buying power, open the market to greater competition, consolidate supplier numbers and standardise travel policy, processes and technology across agencies”, said Grant.

In response to the study the government set up a Travel Arrangements Taskforce under the aegis of Grant and the Department of Finance and Deregulation. The taskforce’s responsibility was to review the existing arrangements and implement new ones where necessary.

In addition, the Travel Contracts Management Section was established to manage the tendering and contract awards process. The target the taskforce set itself was saving the Commonwealth Government somewhere in the region of $160 million over four years.

Calls to tender were announced in September 2009, and on 1 July 2010 the air travel and travel management services contracts were implemented, naming American Express International, CWT Australia, FCm, HRG Australia and Qantas Business Travel as the preferred travel management companies and some 13 airlines, including Qantas, Virgin Atlantic, United Airlines, Cathay Pacific and Etihad as preferred air travel suppliers.

Grant feels that hits engagement was crucial in overcoming the major problems facing public sector travel buyers in Australia.

There are 105 associated central government departments such as defence, foreign affairs, agriculture and the treasury. These institutions combined make up the largest purchasers of corporate travel in Australia, roughly spending $500 million a year.

The process is far from over with phase two currently underway – reviewing hotel and car hire spend as well as credit card arrangements – and Grant is confident that so far he is on track.

“Based on a sample of the top five routes in respect of economy class travel, savings of about 30% were achieved in the first quarter of operations of the new arrangements,” he said.

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