Is government paying too much for groceries?

News story:
Why Finance did the comparison.
A group brainstorming procurement ideas.

In 2018/2019 a survey and audit was conducted along with the consultation from a client reference group (CRG) on the Groceries Common Use Arrangement (CUA). All three activities produced outstanding results. 

Surveys and audits are undertaken on all CUAs at certain points in order to determine whether or not customers value them, and to ensure the terms and conditions and KPIs of the CUA are being met.

The Client Reference Group (CRG) are representatives of the key CUA customers.

The survey was completed by buyers from government agencies and demonstrated:

  • Overall satisfaction with CUA – 100%
  • Value for Money – 93%
  • Ease of Use – 98%
  • Satisfaction with Suppliers – 100%

The audit was completed on the CUA’s largest supplier, Sealanes and highlighted:

  • Audit findings were strongly positive
  • The supplier is well versed with their responsibilities under the CUA, has well established systems and operates seamlessly to the benefit of the agencies
  • The pricing provides Government agencies with good savings

The CRG:

  • Unanimously agreed that they want the CUA to continue
  • Happy with the current CUA as it stands

What did we compare?

We selected a basket of 18 products from the CUA categories, six fruit and vegetables and seven dairy products. 

These products were compared from a selection of the CUA suppliers, Zimbulis, Bidfood, Select Fresh and Brownes with online prices from Coles and Woolworths. The same size and measure was used across all six suppliers.

  • apple Granny Smith KG    
  • apple Red Delicious 
  • bean stringless KG    
  • cabbage red each
  • cabbage white each
  • capsicum green KG
  • capsicum red KG
  • capsicum yellow KG
  • chillies red KG
  • cucumber green each
  • ginger KG
  • kiwi fruit each    
  • mushroom button KG
  • orange naval 100s KG
  • rockmelon each    
  • spring onion bunch
  • Brownes milk 2L
  • Brownes thickened cream 300ML

What we found

The least expensive goods, based on the unit of measure stated below, were from the four CUA suppliers. In some instances the prices were almost 50% cheaper to that of the non CUA suppliers.

This CUA averages 40% savings because it focuses on buying in bulk and aggregation of volumes. 

Zimbulis Select Fresh Bidfood Brownes Coles Woolworths
$2.39
$1.50 $2.36   $4.50 $5.50
$2.39 $1.50 $2.46   $5.50 $5.50
$0.49 $0.33 $0.41   $0.70 $0.72
$1.93 $1.65 $2.05   $3.90 $3.90
$3.71 $2.22 $3.25   $3.20 $5.90
$6.70 $6.55 $7.68   $13.33 $13.75
$3.24 $1.65 $2.94   $4.00 $4.00
$1.66 $1.23 $3.42   $3.50 $4.00
$4.25 $2.75 $3.96   $7.50 $6.90
$6.93 $3.40 $3.51   $7.50 $6.00
$7.86 $6.55 $6.04   $7.50  
$10.83 $8.00 $8.82   $19.90 $20.00
$1.28 $0.90 $1.33   $2.90 $2.80
$13.76 $11.50 $23.58   $25.00 $25.00
$9.82 $7.50 $10.84   $20.00 $20.00
$1.45 $1.30 $1.66   $2.50 $2.50
      $2.13 $2.95 $3.00
      $1.40 $2.40 $2.50

The good news continues…

The contract turnover was $112 million (ex GST) from October 2014 to September 2018. That’s approximately $28 million spend per annum.

There are seven categories that together have saved agencies a staggering $40.8 million over the four years:

  • Shelf Stable, Non Perishable and Dry Goods ($12.3M)
  • Dairy Products including Yoghurt, Cheese, Milk and Eggs ($11.1M)
  • Bread and Bakery Products ($4.7M)
  • Ready-to-drink Beverages (Non-Alcoholic) ($4.1M)
  • Fresh Meat, Poultry and Smallgoods ($4M)
  • Frozen Meat, Poultry, Seafood and Savoury Products ($2.4M)
  • Fruit and Vegetables including Prepared Vegetables ($2.2M)

How are we improving?

With the current CUA expiring on 1 October 2019, Finance is working to develop a new CUA with a number of enhancements including:

  • pre-qualify suppliers and awarding their entire product catalogue, rather than award suppliers on a per-category basis. This will reduce non-catalogue expenditure by capturing a higher percentage of agency purchases through the catalogue.
  • updated and modernised reporting requirements, which will allow for more effective monitoring of sales data and KPI measurements.
  • easier identification of non-catalogue items so that commonly purchased non-catalogue items can be added to the catalogue.
  • identifying opportunities to tap into the supplier’s online ordering catalogue instead of the e-Decision Aid
  • more information

Further information

Please contact us if you have questions, comments or need support with your agencies groceries purchasing.

Page reviewed 2 September 2019

Published

30 May 2019