Procurement of Air Travel Services for the
Australian Government
Discussion Paper – July 2015
This document provides information and seeks feedback on the proposed strategy and draft statement of requirement (SOR) for the future air travel services (airline panel arrangement) for the Australian Government.
This document is not a notice or otherwise a part of any tender process for travel management services, which is yet to be determined or commence.
Introduction
The Whole of Australian Government (WoAG) travel arrangements are coordinated procurements, established by Finance. They service the diverse travel needs of approximately 150 Australian Government entities.
Prior to the introduction of the WoAG travel arrangements, there was no consistent approach to travel procurement across Government entities. A Scoping Study (‘the Study’) into the travel arrangements noted the decentralised approach to travel procurement, with no overarching coordination and strategic management, had resulted in a fragmented approach with inconsistent practices, duplication of effort and different pricing levels across the Government entities.
In response to the findings of the Study, Finance established and implemented the WoAG travel arrangements, with the objectives to:
reduce the cost of supply to Government entities
continue to meet the business needs of Government entities
contribute to a competitive and viable industry
establish fair, equitable and transparent processes
optimise savings through cost reductions, improved efficiencies and promoting behavioural change.
Phase 1 of the travel arrangements came into effect on 1July2010, with the establishment of a panel of five Travel Management Companies (TMCs) to provide travel management services, and panel arrangements with four domestic and twelve international airlines (Airlines).
Phase 2 of the travel arrangements improved efficiencies further, through the appointment of a single travel card provider, a sole accommodation program manager, and a panel of two car rental providers. These arrangements came into effect on 2July2012.
The first TMC panel arrangement expires in June 2015 and after an RFT process, QBT was awarded the sole TMC provider from 1 July 2015 until 30 June 2019 (excluding extension periods).
The Airline Panel, which consists of separate domestic and international deeds, is due to expire in April 2016 at the end of the current extension.
Further information on the current arrangements can be found at: http://www.finance.gov.au/procurement/travel-and-related-services/index.html
Both phases of the travel arrangements have provided savings, addressed contractual efficiencies, increased transparency and provided greater value for money in the purchasing of travel services.
Whilst the current air travel services are a significant improvement on the decentralised approach prior to 1July2010, there is scope for further improvements. This paper sets out the strategy for the renewal of the air travel services (‘the Services’) and provides a draft SOR.
It is intended that the Services will include integration with the service providers under Phase 1 and 2, especially with the appointed TMC (QBT) and travel card provider (Diners Club Australia).
Air Travel Services Requirements
Finance intends to approach the market in the third quarter of 2015 to establish a new airline panel for the Australian Government. Tenderers that meet the evaluation criteria and provide value for money would be invited to join the panel.
The objectives for the air travel services arrangement include:
Continuing to maximise value for money for the Commonwealth.
Meeting the current and where possible future travel needs and requirements of Government entities.
Increasing the use of technology to streamline and increase efficiencies in service provision.
Contributing to transparency of travel expenditure through the provision of accurate and timely travel data.
Within the context of the objectives for this procurement, the key elements of the Services are:
For individuals – a service that is accessible, easy to use, safe and meets the requirements of travellers.
For Government departments and agencies – a solution that promotes administrative efficiency, reduces cost and supports effective reporting across diverse travel requirements and organisational systems, policies and operational environments.
For Finance – an arrangement where the service providers are fully accountable for the services they provide to the Australian Government.
Finance expects panellists will contribute to these objectives by:
Developing a strategic partnership with Finance to provide exceptional levels of service to departments and agencies, where issues are quickly identified and resolved.
Representing the Australian Government’s interests when dealing with relevant parties in delivering the Services to the Australian Government.
Acting reasonably at all times to ensure the success of the arrangement, including minimising risk for departments and agencies.
Maintaining open and effective communication with Finance as the contract manager of the arrangement, and with the departments and agencies as recipients of the Services.
Providing transparent pricing arrangements, including any discount or other reductions linked to the Services.
Recognising the need for delivering consistent and high quality products and services across departments and agencies, and allowing tailoring where appropriate to suit the specific needs of departments and agencies.
Actively contributing and supporting innovation and continuous improvement in service delivery.
Driving efficiencies in service delivery to support value for money to the Australian Government.
Providing services consistent with the Australian Government’s travel policies, including any individual guidelines of departments and agencies in respect of travel.
Key features of the new airline panel arrangement are likely to include:
A simplified arrangement with both international and domestic airline arrangements covered under a single deed that provides efficiencies in contract management processes.
A two-tier structure that aims to enable a positive and collaborative arrangement with the Australian Government and apportions the administrative effort for panellists and Finance with government travel patterns.
Continued support of Australian Government’s policies including the Lowest Practical Fare (LPF) policy for official domestic travel, and the Best Fare of the Day (BFD) policy for official International travel.
Flexibility to add or remove key routes, pricing, fare classes and fare conditions.
Ability to add or remove airlines, to maintain the relevance of the arrangement to changing government travel behaviours.
A simplified annual pricing review mechanism and process for the fixed route deal fares and point of sale discounted fares.
The new Airline Panel arrangement may potentially be put in place for approximately 10 – 11 years (inclusive of extension options).
Airline panellists will provide pricing that includes:
Domestic - fixed price route deal fares for the top volume domestic city pairs with Point of Sale (PoS) discounts across other fare classes.
International - fixed price route deal fares for the top volume international city pairs with PoS discounts across other fare classes.
Point of origin (offline) - discounted pricing for Government travel that encompasses ex Australia trips, including: internal Country / Regional travel (e.g. Internal USA - Washington to New York return), inbound travel - departure outside of Australia to arrive in Australia (e.g. Ex Kuala Lumpur to Sydney return).
Ancillary services - discounted pricing or ancillary services bundled into the fare/s at no extra cost, including (but not limited to): excess baggage, airport lounge access, airport transfers, and limousine services.
Fare conditions - Flexible and highly advantageous fare conditions including (but not limited to): no ticketing time limits, last seat availability, greater standard baggage allowances, flexible fares with no change or cancellations fees, and transferability (name changes).
Airline panellists will meet the standard and special requirements for Government entities and travellers including (but not limited to): VIP bookings, group travel, conference bookings, charter flights, travellers requiring assistance (vulnerable and/or disabled), unaccompanied minors, excess baggage and small freight, transport of dangerous goods, transport of prisoners, witnesses and/or asylum seekers, secure hand delivery, and unaccompanied baggage.
Attachment A - Overview of Australian Government’s travel profile
Attachment B – Draft SOR (for discussion)
Indicative Timeline and activities
The following table sets out a high level indicative timeline and activities in order to deliver the project.
Start-up(Now – July 2015) / RFT Process
(Aug 2015 – Mar 2016) / Implementation
(Mar - Apr 2016)
Appointment of support resources
Consultation with entities and suppliers
Draft RFT documents
Establish due diligence information / Issue RFT
Evaluate tenders
Negotiate and execute deeds
Develop change management plan / Finalise Transition Plan
Implement new arrangement
Entity communication
Services commence
Submitting your comments
Comments on this paper and the draft SOR can be directed to:
Procurement Coordinator Blog
The closing date for providing feedback on this consultation paper is 12 noon on Monday 20 July2015.
Feedback and comments should be concise and include references to this discussion paper and requirements of the SOR where applicable. Please do not provide marketing data or make any other associated representations with regards to specific services of your organisation.
Where appropriate, Finance may incorporate feedback into any subsequent tender documentation, or otherwise use it to inform the proposed approach to market[1].
Finance encourages organisations to respond to this paper. However, organisations that do not respond to this paper will not be excluded for that reason from any subsequent approach to market.
Finance will not pay for any information requested nor is it liable for any costs incurred by respondents.
Finance asks that correspondence occurs through email at or the Procurement Coordinator Blog at Procurement Coordinator Blog.
Attachment A – Overview of Australian Government’s Travel Profile
Air Travel (1)
Spend ($): / Volume (sectors):Domestic: / $243 million / 1,147,000
International: / $134 million / 194,000
Total: / $377 million / 1,341000
1. Air travel spend and volume is for the 2013/14 financial year. Air travel spend is Airline spend GST included. International Air travel includes Trans Tasman. Air travel volume is the number of one way sectors.
Top City Pairs (by volume) (2)
Domestic: / International:Sydney to Canberra / Perth to Christmas Island
Melbourne to Canberra / Sydney to Los Angeles
Canberra to Brisbane / Sydney to Singapore
Sydney to Melbourne / Port Moresby to Manus Island
Canberra to Adelaide / Sydney to Dubai
Sydney to Brisbane / Brisbane to Port Moresby
Melbourne to Brisbane / Sydney to Abu Dhabi
Perth to Canberra / Cairns to Port Moresby
Melbourne to Adelaide / Melbourne to Singapore
Sydney to Darwin / Brisbane to Honiara
2. Top City Pairs is the number of sectors between the cities. Domestic is originating from both cities.
General Profile:
Approximately 150 Government entities and 100,000 travellers access the whole of Australian Government travel arrangements.
The Australian Government has office locations in all Australian capital cities and a large number of regional areas. Most travel originates from Canberra, Sydney, Melbourne and Brisbane.
The Australian Government’s travel requirements are wide-ranging. In addition to the standard domestic and international booking services, they can include (but are not limited to) services such as:
· VIP bookings· Group travel
· Travellers requiring assistance
· Excess Baggage and small freight
· Limousine transfer and services / Local transportation services / · Specialised travel booking services (transport of dangerous goods, transport of prisoners, witnesses and/or asylum seekers, secure hand delivery, freight, unaccompanied baggage, disabled support services)
Attachment B - Draft Statement of Requirement for Air Travel Services for the Australian Government
Overview:This draft Statement of Requirement (SOR) is anticipated to form part of a contractual agreement (deed) that will also include the terms and conditions under which the arrangement will operate.
Tenderers will have the opportunity to state their compliance with the SOR and draft deed as part of their tender submission.
In order to give this draft SOR some context, Finance note that there is likely to be several other schedules which will also form part of the deed. These other schedules primarily include:
· Pricing – Fares and fare conditions
· Service Level Agreement
· Due Diligence Information
About this SOR:
Comments are sought where appropriate on this draft Statement of Requirement and the points raised in the discussion paper.
This draft SOR is supplemented by:
· Appendix 1: Reporting and Data specifications.
· Appendix 2: Glossary
Table of Contents
Introduction 9
1 Establishment of the arrangements 9
2 Proposed structure of the panel 9
General 11
3 Overview 11
4 Whole of Government objectives 11
5 Seamless service 12
6 Continuous improvement 12
Air Travel Services to Participants 13
7 Overview 13
8 Compliance with travel policies 13
9 Loyalty Reward Programmes 14
10 Fares 14
11 Fare conditions 15
12 Ticketing 15
13 Customer service 16
Special Travel Requirements 17
14 VIP services 17
15 Children and other vulnerable people 17
16 Special Needs 17
17 Other special requirements 17
18 Emergencies 17
19 Marketing and traveller incentives 18
20 Carbon emissions 18
21 Technology 18
22 Value add services 19
Management Services to Finance 19
Contract and Account Management 19
23 Liaison and meetings 19
24 Escalation of issues to Finance 20
25 Participant satisfaction survey 20
Information Management 21
26 Business continuity 21
27 Security of information 21
Management Services to Participants 22
Account Management 22
28 Liaison and meetings 22
29 Operational issues resolution – Participants 22
Appendix 1 – Reporting Specifications 23
1 Overview of the reporting specifications 23
2 Reporting Requirements – Finance 23
Appendix 2 – Glossary 27
Introduction
1 Establishment of the arrangements
1.1 The Department of Finance (Finance) intends to establish a panel of airlines to provide Domestic and International Air Travel Services to the Australian Government (the Government).
2 Proposed structure of the panel
Explanatory note: Finance is considering a two-tier structure of the panel that aims to enable a positive and collaborative arrangement with the Australian Government and apportions the administrative effort for panellists and Finance to align with government travel patterns.Organisations are invited to comment on the structure set out in this paragraph 2.
2.1 Finance is considering a two tiered approach to the structure of the panel. It is proposed that successful Tenderers would be selected as either a Tier 1 or Tier 2 airline.