A remote Queensland council is shaking up the way it handles procurement, introducing a five-star rating system to reward locally-based businesses that contribute to the community.
Maranoa Regional Council Councillor David Schefe says the My Maranoa Business system, which has started rolling out, creates a clearer definition of a what a “local” business really is.
“We had 10% weighting toward local business, but the problem we had was determining what was local,” he says. “That definition varied greatly between us, external companies, even our own staff.
“What did that weighting relate to? Was it the whole-of-job cost, or was it just the price?
“That’s why when we started looking at this two-and-a-half years ago, we ended up deciding to go for a tiered structure, whereby we could define different levels of local business, to recognise the contribution those businesses make to the community.”
Schefe says the new system has been formed following extensive collaboration with the community, local businesses and businesses working in the area.
A perfect five-star rating will see businesses rewarded with 15 points out of 100, Schefe says, making it easier for local businesses to win contracts.
“That’s if you’ve got 100% ownership within the region, all your Directors are here, 100% employees are local and the head office is in the Maranoa,” Schefe explains.
“Then it steps down the scale – for four stars you get 12 points, and that’s 75% ownership within the region, 75% local employees etc.”
The My Maranoa Business initiative has also seen the council’s procurement process streamlined and simplified. Schefe says these measures will make the council a more appealing option for contractors, who also service resource companies in the region.
“A lot of these resource companies out here have been making contractors wait 90 and 120 days to get paid, which is really difficult for small businesses with their cash-flow, so we decided we would make council better,” Schefe says.
“We have 28 days invoice to payment – that gives us enough time to check that the job’s been done properly and then authorise payment and make payment.
“The other part was simplifying the documentation. Previously, if you were tendering in different tendering areas you would get different tender documents. Now we’ve got the one set of documents across the board and we’ve tried to keep them nice and simple.
“There’s even a little plain language explanation in a blue box down the bottom in case you don’t understand the legal speak, just to simplify it. That’s been very well received.”
The net result of these measures, Schefe hopes, will be to make the Maranoa region a more attractive place for companies to operate and invest in.
“It also is creating an incentive for businesses to look at how they do business in our region,” he says. “If they really want this bonus, they might consider setting up a branch office here with one of their directors, or even consider packing up and moving out here, setting up a whole new business, going, ‘we’ll get the local benefit out of this, we’re doing most of our business in the region, we’ll relocate there’.
“It’s our belief that local government has to step up to the mark, and put the right incentives in place for businesses to encourage them to be in that area. If local government doesn’t step up and do it, no one is really going to do it.”
Cutting red tape is an important part of this, Schefe says.
“We’ve got certain things that we have to do from a legislative point of view – but how far do you go? Do you make it really difficult for businesses to do business with you? At the end of the day, we want to do business with local businesses, and we do need them, because they supply services to the council, so that we can then supply services to the ratepayer.
“It mightn’t be quite as profitable as working in the resource sector, but if we make it easier, than they’ll still want to do work for us when times are busy.”
Although Schefe believes the council’s initiative is unique, he pointed to the Gold Coast City Council as another local government organisation that has a strong “buy local” focus.