Request for Proposal. Provision of Fully Outsourced Payroll Services for the Schools Sector

Transcription

1 Request for Proposal December 2007

2 1 Introduction to Requirements Status of Registration of Interest Purpose of Request For Proposal Education Service Payroll Requirements 5 2 Conditions Communication No Canvassing Response Submission Late Responses Variations Rights Reserved Confidentiality Response Costs Ownership of Responses RFP Timetable and Process No Contract Information Complete and Accurate Errors and Omissions Respondent's investigations Governing Law No warranties or representations Liability Limitation Ministry Authorisation Independence of Response Response Structure 12 3 Evaluation Evaluation Process and Conditions Evaluation Criteria 14 4 Appendix A: Glossary 15 5 Appendix B: References 17 6 Appendix C: Current Situation The Ministry Board of Trustees Datacom 22 7 Appendix D: Due Diligence 24 8 Appendix E: Pricing Pricing Principles Pricing Options Finance Leases 26 9 Appendix F: Transition Project Objectives Scope Data Quality Project Schedule 29 29/01/2013 Page 2 of 36

3 9.5 Governance Roles and Responsibilities Appendix G: Ministry and Government Projects Improve Process Documentation Re-develop Website Develop On-line Form Capability Develop 0800 Number Rationalisation Improve the Network Infrastructure in Schools Use the Education Integration Service (ESIS) Develop a Strategy for Managing HR in Schools 36 29/01/2013 Page 3 of 36

4 1 Introduction to Requirements 1. The Ministry of Education (the ministry) is issuing this Request For Proposal (RFP) to select a business process outsourcing vendor for the Schools Payroll Services. 2. This document is the main document for this RFP. The RFP has four supporting documents. These are the: High Level Business Processes for the Education Service Payroll High Level IT Requirements for Education Service Payroll Contract and Relationship Management for the Education Service Payroll Instructions for Completing the Education Service Payroll Response. 1.1 Status of Registration of Interest 1. The ministry issued a Registration of Interest (ROI) earlier in 2007 to select a shortlist of business process outsourcing vendors to whom the ministry would issue this RFP. 2. The ministry is only issuing this RFP to the business process outsourcing vendors who were short-listed from their responses to the ROI. 1.2 Purpose of Request For Proposal 1. The ministry requires a single prime business process outsourcing vendor to provide fully outsourced payroll services for the Education Service Payroll in New Zealand. 1.3 Education Service Payroll 1. The Education Service Payroll provides payroll processing and personnel services for all teachers and support staff employed at state and stateintegrated primary, intermediate, area and secondary schools throughout New Zealand. It is the largest payroll in New Zealand and one of the largest in Australasia, involving some 2,600 schools and processing 26 pays per year to an average of 81,000 payees per pay run. 2. It is a complex payroll system with 18 collective employment agreements and a high number of individual employment agreements, each with their own set of business rules. 3. The Education Service Payroll covers all teaching and non-teaching staff, including caretakers and administrative staff, employed on a full-time and part-time basis, as well as casual staff. 4. Boards of trustees are the employers of staff in schools but the ministry has the responsibility for negotiating all collective agreements, promulgating individual employment agreements based on collective agreements, and providing concurrence for individual employment agreements for work not covered by collective agreements. 5. The ministry is also responsible for the payment of most teaching and nonteaching staff employed in schools. The Education Service Payroll does not include the payment of Ministry of Education employees. 29/01/2013 Page 4 of 36

5 1.4 Requirements 1. The ministry requires the Education Service Payroll to provide a low risk, efficiently operated, accurate and reliable payroll service that provides smarter services and improved access to payroll and human resources information. 2. The ministry is seeking a business process outsourcing vendor that: Business Model will work collaboratively with the ministry under a new business model can manage business processes to deliver high quality Education Service Payroll outputs uses modern IT systems to support managing payroll business processes. 1. The new business model is based on the following key principles: The vendor will be responsible for running the Education Service Payroll from receiving the payroll request to sending the payroll file to the bank, including being the single point of contact for school support staff and completing back office processing. This includes the provision of all systems and pay clerk services. The ministry will define the rules and policies for the vendor to operate within, retaining the capability to operate as an escalation point for exceptions, as defined by clear thresholds (for example ambiguity in collective agreements, interpretation of financial thresholds). A contract management framework will be in place that promotes a collaborative relationship between the ministry and the vendor. A contract and supporting service level agreements will be in place that focus on outputs required and their quality, with incentives in place to encourage continuous improvement. The ministry will complete any major changes, outside of the existing contract, under a formal change management process. The ministry will have overall ownership of the change and the vendor will provide key skills and resource expertise to support implementing the major change. The ministry and the vendor will collaboratively design a formal change management process for any business as usual changes, within the existing contract. The vendor will use modern technology and keep this updated through a long-term technology road map. There will be no surprises from the vendor. 2. Please refer to the Contract and Relationship Management for the Education Service Payroll supporting document for information on governance, relationship management, business process improvement, risk management, contract management and rewarding innovation. 29/01/2013 Page 5 of 36

6 1.4.2 Education Service Payroll Stakeholders 1. There are three key Education Service Payroll stakeholders: the ministry, boards of trustees and employees. The stakeholders have a unique relationship and the payroll requirements reflect this unique relationship. 2. Boards of trustees are the employers of all employees on the Education Service Payroll. A number of boards of trustees can employ the same employee at one time. However, the ministry does perform functions an employer would normally perform. These functions are: collective agreement negotiation statutory filing with the Inland Revenue Department. 3. Please note, because the ministry acts as the employer for the purposes of PAYE filing, employees who have multiple part-time jobs with different schools at the same time, receive a single pay and payslip Relationship of the Vendor with Payroll Stakeholders 1. The ministry is required under the Education Act 1989 to provide a payroll system for the boards of trustees of all schools in the compulsory schooling sector. The ministry has chosen to outsource the business process. 2. The ministry is providing the service to the boards of trustees (as employers). Any ministry contact and/or communication are with the boards of trustees or the delegated board of trustees payroll representative(s). 3. There is no direct contact by the vendor or the ministry with employees, as this can present a conflict of interest with the provision of payroll services to the employer (boards of trustees). 4. There are three notable exceptions to this. These are: applications by employees for details of personal information held under Principle 6 of the Privacy Act 1993 applications from employees for statements of service applications from employees, or potential employees who are not currently employed by a board of trustees, for salary assessments. 5. A number of boards of trustees can employ the same employee at any one time. However, the employee only receives a single pay and payslip. 29/01/2013 Page 6 of 36

7 1.4.4 Statistical Information 1. The following table summarises the key annual Education Service Payroll statistics. 2. The statistics are: projected annual statistics based on incremental growth of 3% per annum for transactions based on the assumption that the number of board of trustees payroll representatives (school support staff and principals) and Education Service Payroll team members remain constant. Statistical Subject General Information Number of schools 2,600 2,600 2,600 2,600 2,600 Average number of employees paid per 85,000 87,550 90,177 92,882 95,668 fortnightly pay run Number of boards of trustees payroll representatives Number of school support staff 4,000 4,000 4,000 4,000 4,000 Number of school principals 2,600 2,600 2,600 2,600 2,600 Total 6,600 6,600 6,600 6,600 6,600 Number of Education Service Payroll Team members (ministry staff) Business Processes 1. The success of the business model is dependent upon business processes that integrate across all the roles defined in the proposed service support model. 2. The business processes will include the vendor activities to: receive and capture payroll and employee information manage the payroll generate and forward reports and files manage business information team-up with the ministry to define service support and service delivery processes, and continuously improve the services provided. 3. Please refer to the High Level Business Processes for the Education Service Payroll supporting document for information on the business processes and the ministry s key requirements. 4. The ministry believes that there are key opportunities to improve the efficiency and effectiveness of the payroll business processes. The ministry wants to work collaboratively with the vendor to improve these processes Contract and Relationship Management 1. The ministry is proposing contractual arrangements that will reward innovation and process improvement. 29/01/2013 Page 7 of 36

8 2. Please refer to the Contract and Relationship Management for the Education Service Payroll supporting document for information on governance, relationship management, business process improvement, risk management, and rewarding innovation IT System Requirements 1. Please refer to the High Level IT Requirements for the Education Service Payroll supporting document for information on the IT system functional, non-functional, supplementary specifications and hosting requirements. 29/01/2013 Page 8 of 36

9 2 Conditions 2.1 Communication 1. All communication with the ministry regarding this RFP, including requests for additional information, must be submitted by to: Ingrid Lowrie 2. Anyone considering responding to this RFP must forward a contact name, contact address and phone number to the ministry. The ministry will use this contact name to provide any clarification information that may be distributed to respondents. Please note that the ministry will only distribute further information on the RFP directly to those who register in this way. 3. The ministry will respond to questions directly by to all respondents as soon as possible after the question is received. 4. Respondents must submit any questions about this RFP by to the ministry contact person before 20 February If a respondent provides ideas and matters of importance that are clearly stated to be confidential due to commercial sensitivities or trade secrets, the ministry will not release such information without the respondent s prior agreement, unless compelled to do so by law. 2.2 No Canvassing 1. If a respondent indirectly or directly communicates with any officer, employee, or advisor of the ministry, other than the ministry contact person, concerning any aspect of this RFP process, that respondent may, at the Ministry s discretion, be disqualified from this RFP. 2.3 Response Submission 1. Please refer to the Instructions for Completing the Education Service Payroll Response supporting document for instructions on completing the response. 2.4 Late Responses 2. In general, the ministry s policy is not to evaluate responses received after the Closing Date. However, the Ministry does retain the right to accept and evaluate such late responses at its sole discretion. 2.5 Variations 1. The ministry may vary the RFP requirements and seek further commercial and technical information from the respondents by the issue of a written amendment notice. 2.6 Rights Reserved 1. The ministry reserves the right to: issue written amendments to this RFP 29/01/2013 Page 9 of 36

10 seek clarification of any response, and at the ministry s sole discretion, accept further information. suspend or cancel, in whole or in part, this RFP at any stage without incurring any liability apply, or change, and give whatever weight to any policy or criteria relating to the evaluation of the responses negotiate with any respondent on any matter relating to the response undertake due diligence, including undertaking background checks on the financial viability of respondents consider or reject any alternative responses, at the ministry s sole discretion deal separately with any of the divisible elements of any response, unless the relevant response specifically states that those elements must be taken collectively award contracts for all or part, or any combination of parts, of the services to one or more respondents amend the Closing Date, the acceptance date or any other date in the RFP process by the issue of a written amendment notice before or after the Closing Date 2. The ministry may decline to accept any or all responses and may readvertise for responses. 3. The ministry will adopt a value for money approach and reserves the right not to accept the lowest-priced response. 2.7 Confidentiality 1. Respondents may use information provided by the ministry, whether in writing or verbally, for the purposes of preparing a response to this RFP. 2. Respondents must treat all documents related to this RFP as commercial in confidence. 3. The ministry will treat all communications, including responses from vendors to whom the RFP is sent, as confidential, subject to the ministry s obligations under the Official Information Act 1992 or any other enactment or rule of law. 2.8 Response Costs 1. The ministry will not be liable for any costs incurred in the preparation or submission of responses. 2.9 Ownership of Responses 1. Responses received by the ministry will become the property of the ministry and will be retained by the ministry. 29/01/2013 Page 10 of 36

11 2.10 RFP Timetable and Process 1. Respondents must note the following timetable and process steps: Activity Start Date End Date RFP issued 12 December 2007 RFP questions submission 13 December February 2008 RFP closes 12 noon 5 March 2008 Conduct presentations by respondents 31 March April 2008 Conduct site visits 25 March April 2008 Conduct due diligence 14 April May 2008 Complete post-tender negotiation 14 April May 2008 Respondents notified 30 May Please note that this timetable may be subject to change at the sole discretion of the ministry No Contract 1. Neither this RFP, nor any response to it, creates any obligation on the ministry to enter into any agreement with any respondent or third party. No legal or other obligations will arise between any respondent and the ministry in relation to the conduct or outcome of this RFP process unless the respondent enters into a formal written contract with the ministry Information Complete and Accurate 1. By submitting a response, respondents warrant that all information provided to the ministry in or in relation to their response (including information provided in subsequent correspondence or negotiations) is complete and accurate in all material respects. Respondents also warrant to the ministry that the provision of that information to the ministry and the use of it by the ministry for the evaluation of their response will not breach any third party intellectual property rights Errors and Omissions 2. The Ministry is under no obligation to check any response for errors. Acceptance of a response that contains errors will not invalidate any contract formed based on that response. 3. If the Ministry discovers errors and/or omissions in pricing submitted in a response prior to award of a contract, the ministry may notify the respondent as soon as practicable and may require the respondent to either confirm or withdraw the response. Unless the respondent confirms the response, the response will be treated as if it had been withdrawn. The ministry, at its sole discretion, may allow the respondent to amend the response. 29/01/2013 Page 11 of 36

12 2.14 Respondent's investigations 1. Respondents must examine this RFP, and make all other investigations they consider necessary (including as to information provided by the ministry in relation to this RFP), before submitting their response. 2. The Ministry accepts no responsibility for any error or mis-description in this RFP, or any associated documents. Any amounts and quantities set out in this RFP are estimates only and no guarantee is given that these quantities will be purchased, nor will any claim be recognised which is based on these estimates Governing Law 1. New Zealand law governs this RFP. The New Zealand courts have nonexclusive jurisdiction as to all matters relating to this RFP No warranties or representations 1. The ministry makes no representations and gives no warranties other than as set out in any contract that may be entered into as a result of this RFP Liability Limitation 1. The ministry, its agents or advisors, will not be liable in contract or tort or in any other way for any direct or indirect damage, loss, or cost incurred by any respondent or other person in respect of this RFP process Ministry Authorisation 1. With regard to this RFP process, the ministry will not be bound by any statement, written or verbal, made by any person other than the ministry contact person noted within this RFP document. The ministry contact person (or any other person authorised by the contact person) is the only person authorised to make representations or explanations to respondents in relation to this RFP Independence of Response 1. By submitting a response, respondents certify that: the prices/rates in the response have been arrived at without any consultation, communication or agreement for the purpose of restricting competition they have not knowingly disclosed the prices/rates in the response to any competitor prior to the closing date they have not made and will not make, any attempt to induce any other person or firm not to submit a response for the purposes of restricting competition Response Structure 1. Please refer to the Instructions for Completing the Education Service Payroll Response supporting document for instructions on completing the response. 29/01/2013 Page 12 of 36

13 3 Evaluation 3.1 Evaluation Process and Conditions 1. The Ministry will evaluate responses based upon the questions, and the information required, in the Instructions for Completing the Education Service Payroll Response supporting document, including the pricing offered. 2. If third parties are delivering any components of the proposed services, the evaluation process will assess such components as if they were to be delivered by the prime vendor alone. 3. The ministry may provide Respondents with the opportunity to present to the ministry. The presentation will include answering any questions the ministry has. The questions may be provided to the Respondent in writing before the presentation, and additional questions may also be asked during the presentation. 4. The ministry may conduct site visits as part of the evaluation process. 5. At the ministry s discretion, the ministry may complete due diligence on any or all organisations that are involved in delivering a proposed service to assess the response, the accuracy of the information provided, and the Respondent s capability and capacity to deliver the services. The ministry is not obliged to contact referees provided by Respondents and may seek further information on any issue from sources other than the referees provided, but is not obliged to do so. The ministry may utilise internal and external resources to complete due diligence. The ministry may also take into account knowledge of any Respondent it already has. Please refer to the Instructions for Completing the Education Service Payroll Response supporting document for the due diligence information the ministry requires. 6. Based upon: the evaluation of the responses any site visits the presentations the ministry s reference checks and due diligence exercise. the ministry may select a preferred Respondent or Respondents with which the ministry may enter into contract negotiations. If a written agreement has not been signed within 28 of days of the ministry commencing negotiations with that Respondent or Respondents (or such longer period as the ministry and the Respondent(s) may agree), the ministry may terminate its negotiations with that respondent and that respondent s involvement in the RFP process. 7. This RFP and the Respondent s response may form part of the final contract agreement. 8. Using the contact information provided within the responses, the ministry will notify in writing each respondent individually of the outcome of the evaluation process. 29/01/2013 Page 13 of 36

14 3.2 Evaluation Criteria 1. The ministry s evaluation process may include, but is not necessarily limited to, consideration of the following: the Respondent s ability to be a prime vendor for the scope of work required the Respondent s ability to meet and deliver the ministry s requirements the Respondent s experience and capability the Respondent s corporate structure and stability, financial resources, facilities management skills and human resources; an assessment of ideas presented in the response the pricing and the overall cost to the ministry of the response, including cost-effectiveness and the ability to create savings or add value at minimal or no cost to the ministry; the Respondent s compliance with these RFP conditions and requirements, and any material conditions or qualifications affecting the response; the risks of affecting a business transaction with the respondent. 2. The above criteria are not exhaustive, are not in order of importance, and are for general guidance only. 29/01/2013 Page 14 of 36

15 4 Appendix A: Glossary 1. In this RFP, unless the context other wise requires, the following terms shall have the following meanings: Term Board of trustees (BOT) Board of trustees (BOT) payroll representatives Business process outsourcing vendor Closing date Collective agreements Education Service Payroll Individual employment agreement (IEA) Principal Definition Employing authority of a school; elected by parents and caregivers to govern the school Individual or individuals delegated by a board of trustees to provide payroll information on behalf of the school to Payroll Centres. Board of trustees (BOT) payroll representatives are support staff in schools and principals. Vendor to deliver the Education Service Payroll by providing: staff to perform business processes that achieve outputs the ministry requires modern IT systems that support completing business processes on-line access for ministry staff to complete some business process activities. The ministry does not require an application service provider (ASP) to deliver applications and related services that would otherwise have been located at the ministry noon 5 March 2008, or any extension to that date as notified by the ministry at its sole discretion Conditions of employment for employees in state and state-integrated schools defined in the agreement The delivery of payroll and personnel services for all teachers and support staff employed at state and state-integrated schools throughout New Zealand, and the Correspondence school Employment contract for an individual who is not party to a collective agreement Professional leader of the school; manages day-to-day activities within policies established by board (see board of trustees) 29/01/2013 Page 15 of 36

16 Term Respondent Response RFP The ministry Vendor Definition Organisation submitting a response to this RFP (including that organisation s employees, contractors and agents) Respondent s response (proposal) for this RFP This Request for Proposal The Ministry of Education Organisation who is successful in being selected as the business process outsourcing vendor for the Education Service Payroll services 29/01/2013 Page 16 of 36

17 5 Appendix B: References 1. The following documents support this RFP: Supporting Document High Level Business Processes for the Education Service Payroll 1 of 4 High Level IT Requirements for Education Service Payroll 2 of 4 Contract and Relationship Management for the Education Service Payroll 3 of 4 Instructions for Completing the Education Service Payroll Response 4 of 4 Description Outlines the high-level business processes the ministry has designed to support the Education Service Payroll business processes. Outlines the ministry s high-level system requirements to support the Education Service Payroll business processes. Outlines the relationship and contractual management arrangements the ministry is proposing to enter into with the vendor. Defines the mandatory instructions and suggests how to complete and provide a response to this RFP. The document includes instructions for presenting the response. Included as part of the documents provided to respondents Yes Yes Yes Yes 29/01/2013 Page 17 of 36

18 2. The following references support this RFP: Reading Description Included as part of the documents provided Datacom/TM4 Data Quality Issues Education Authentication and Authorisation (ESAA) Briefing Paper Education Integration Services (ESIS) Briefing Paper Holidays Act Ministry of Education Project Management Guidelines New Zealand e- government All-ofgovernment Authentication Programme New Zealand e- government Domain Name Moderation Current Datacom Education Service Payroll website that provides information for Board of trustees (BOT) payroll representatives. Summary of data quality issues with existing IT system. Outline of ESAA which is an identity management, authentication, authorisation and single sign-on service for the Education. ESAA supports the e-government authentication for the Education only. Outline of ESIS which is an Education communications and integration platform. Act provides employees with minimum entitlements to: annual holidays public holidays sick leave bereavement leave. The document outlines the ministry s approach to managing major projects. The guidelines are based on the Prince2 project management method. An all-of-new Zealand government approach to authentication, which is establishing, to the required level of satisfaction, the identity of one or more parties to a transaction. Defines the Principles for approval of Third Level Domain (TLD) names within.govt.nz. No Yes Yes Yes No Yes No No 29/01/2013 Page 18 of 36

19 Reading Description Included as part of the documents provided New Zealand e- government Interoperability Framework (NZ e-gif) Version New Zealand e- government Locator Service Metadata Element Set Version New Zealand e- government Strategy New Zealand e- government Web Standards and Recommendations v1.0 New Zealand Equivalent Accounting Standard 17 The e-gif is a collection of policies and standards endorsed for New Zealand government information technology (IT) systems. It has the following benefits: It helps government agencies more easily work together electronically. It makes systems, knowledge and experience reusable from one agency to another. It reduces the effort required to deal with government online by encouraging consistency of approach. New Zealand government standard for cross-domain resource description. The e-government Strategy is an allof-government strategy, which enables a system of State Services serving the government of the day and meets the needs of New Zealanders. Web Standards that apply to public sector websites in New Zealand. Their major focus is accessibility enhancing on-line access. New Zealand Government Web Standards and Recommendations v1.0 applies to any website that is intended for the public and financed by the public through the crown or through public agencies. Explanation of financial and operating leases in paragraphs 8 to 10. No No No No 29/01/2013 Page 19 of 36

20 Reading Description Included as part of the documents provided New Zealand International Financial Reporting Standards PROCUREMENT A Statement of Good Practice June 2001 Office of the Controller and Auditor-General Privacy Impact Assessment Handbook Privacy Commissioner Security in the Government Department of the Prime Minister and Cabinet gs Ministry of Education Statement of Intent 2007 to 2012 Sustainable Government Procurement Project Category Reviews Adoption of New Zealand Equivalents to International Financial Reporting Standards for the Financial Statements of the Government of New Zealand. Procurement guidelines or benchmark for public sector organisations. This RFP process will comply with these guidelines. A systematic process for evaluating a proposal in terms of impact upon privacy. Outlines protective security of both information and equipment comprising physical, personnel, document and information technology communication security measures. The manual is mandatory for the ministry. The manual assists the ministry in meeting its obligations under the Official Information Act 1982 and the Privacy Act Sets out how, over the next five years, the Ministry will achieve its vital outcomes and how it will act to achieve the Government's wider sector goals. Provides an overview of the Sustainable Government Procurement Project as well as guidance on what core public service departments must consider when purchasing paper, timber and wood products, travel and light-fittings. No No No No No Yes 29/01/2013 Page 20 of 36

21 Reading Description Included as part of the documents provided Ministry of Education Application Access Security Policy Ministry of Education Application User Account Policies Ministry of Education Internet Domain Names for Web Sites and Ministry of Education Standard hardware available Policies for user names and passwords. Application security policies for user account access, violation monitoring and application user access reviews. Outlines the procedures that must be completed before domain names and addresses can be allocated. The document describes the standard hardware available for purchase by the Ministry. e-government information & resources. ISACA is an information governance, control, security and audit organisation that authors COBIT. Ministry of Education National Office website. General information about the Ministry of Education. The Privacy Commissioner website. Information on protecting and respecting personal information. Yes Yes Yes Yes No No No No 29/01/2013 Page 21 of 36

22 6 Appendix C: Current Situation 1. The following diagram illustrates the current service support model: Boards of Trustees Payments Access by: - Fax - Phone - Web access -Policy -Resourcing -Communications Payroll Centre Ch ch (School Support) Payroll Centre Wgtn (PayServ) Payroll Centre Auck (Multiserve) Datacom Employer Services -Vendor management -Outcomes Salary Assessment Unit -Escalation -Policy Ministry Of Education DATAPAY Data Centre / TM4 Payroll System Web Site -Reports -Data -Payments 6.1 The Ministry 1. The ministry currently has a payroll team of approximately 15 staff. The key activities the team is responsible for are: ensuring that relationships with key customers and service providers are managed effectively and that any actions taken comply with all legal and governmental requirements resolving payroll issues that are outside the expertise of the payroll provider Datacom and the sub-contractors managing contractual arrangements for the ongoing commercial management of payroll providing ongoing quality improvement initiatives, which also include legislative changes, collective agreement changes and policy changes ensuring that processes and procedures have adequate controls in place across the payroll functions. 6.2 Board of Trustees 1. Boards of trustees are responsible for: providing payroll information to Payroll Centres checking their school s payroll data and reports. 2. Boards of trustees communicate with Payroll Centres by fax, phone and Datacom 1. Datacom delivers a total payroll service, including providing and managing the operations of the payroll system and supporting infrastructure. 29/01/2013 Page 22 of 36

23 6.3.1 Payroll Centres 1. The Payroll Centres are the communication liaison point for the Education Service Payroll. Their primary responsibility is to complete the business processes that pay state and state-integrated teachers and support staff. 2. There are three Payroll Centres located at Auckland, Wellington and Christchurch and they employ approximately 150 staff Salary Assessment Unit 1. The Salary Assessment Unit is a specialised Datacom team that assesses teachers salaries based on qualifications, length of service and childcare credits. 2. There is one Salary Assessment Unit located in Christchurch that employs approximately seven staff IT Systems 1. Datapay and TeacherManager are the current payroll IT systems that support Datacom managing the Education Service Payroll. 2. Datacom stores all payroll information that relates to current employees and employees that have left employment for the past 11 years. The ministry has concerns about the quality of the data. Please refer to Appendix F: Transition Project-Data Quality section. 3. The Datacom Education Service Payroll Website ( provides information to schools and enables administrators to download payroll forms. The website does not meet the ministry s requirements. A project is currently underway to improve this website. Please refer to the Re-develop Website project in Appendix G: Ministry and Government Projects. Please note this is only an interim solution until the vendor implements the IT systems to support payroll staff and schools. 29/01/2013 Page 23 of 36

24 7 Appendix D: Due Diligence 1. The ministry will undertake a due diligence process on any or all organisations to examine and evaluate the risks of effecting a business transaction with the respondent s organisation. 2. Please refer to the RFP Timetable and Process section for the anticipated timing of the due diligence process. 3. Please refer to the Evaluation Process and Conditions section for further information. 4. Please refer to the Instructions for Completing the Education Service Payroll Response supporting document for detail on the information the respondent will need to provide. 29/01/2013 Page 24 of 36

25 8 Appendix E: Pricing 1. The ministry wishes to establish a long-term and collaborative working relationship with the vendor. The respondent s pricing is to reflect this philosophy. 2. The ministry has developed a set of principles to support the ministry s pricing philosophy and identify, and from the ministry s viewpoint, a list of appropriate Education Service Payroll pricing options. 3. The Public Finance Act does not allow Departments to enter finance leasing arrangements. 4. To price the response the respondent can use the suggested pricing options, or use their own pricing options. If the respondent does choose to use their own pricing options, they must be clearly defined and still support the pricing principles. 5. The respondent will need to clearly identify pricing in a separate document for: the transition project business processes IT functions the IT hosting requirements contract and relationship management. 6. Please refer to the Instructions for Completing the Education Service Payroll Response for information on preparing pricing. 8.1 Pricing Principles 1. The following are the ministry s Education Service Payroll pricing principles: Pricing will reward innovation and continuous improvement and will not drive behaviours that reduce the quality of service to increase vendor revenue. Different pricing options will reflect the different nature of the individual Education Service Payroll services. Charges are to enable a good commercial return over the medium term, based on efficient investment and a long-term relationship with the ministry. The implementation of business processes and IT systems are to be carried out in a commercially practical manner. Overhead charges may reflect the costs of adhering to relevant standards and best practice frameworks. Pricing structures are to take into account fixed costs, variable costs and future growth. 29/01/2013 Page 25 of 36

26 8.2 Pricing Options 1. The following table outlines the pricing options that the ministry has identified and the ministry s preference when they are used to price the ministry s requirements. Pricing Option Description Ministry s Preference when to be used Pay on performance Based on performance metrics Examples of metrics might be level of debt generated, customer satisfaction and process maturity Typically used for pricing key services that deliver payroll services Pay on results Based on results achieved Typically used for pricing services that deliver payroll services Pay per use Based on number of transactions being processed Typically used for pricing services that indirectly deliver payroll services to the Ministry Pay per activity Fixed fee for a service Typically used for custom work that is not repetitive and has less than a 12-month timeframe business processes business processes IT requirements transition project improvement initiatives 8.3 Finance Leases 1. The Public Finance Act does not allow Departments to enter finance leasing arrangements. Therefore the ministry will test for such an arrangement as part of its evaluation process and due diligence exercise. 2. As a guide the ministry will apply the following criteria to test for a finance lease arrangement: 8. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. 9. Because the transaction between a lessor and a lessee is based on a lease agreement between them, it is appropriate to use consistent definitions. The application of these definitions to the differing circumstances of the lessor and lessee may result in the same lease being classified differently by them. For example, this may be the case if the lessor benefits from residual value guarantee provided by a party unrelated to the lessee. 29/01/2013 Page 26 of 36

27 10 Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form of the contract. Examples of situations that individually or in combination would normally lead to a lease being classified as a finance lease are: (a) (b) (c) (d) (e) the lease transfers ownership of the asset to the lessee by the end of the lease term; the lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised; the lease term is for the major part of the economic life of the asset even if title is not transferred; at the inception of the lease the present value of the minimum lease payments amounts to at least substantially all the fair value of the leased asset; and the leased assets are of such specialised nature that only the lessee can use them without major modifications. 1 1 New Zealand Equivalent Accounting Standard 17, Leases (NZ IAS 17), Issues November and incorporates amendments up to January /01/2013 Page 27 of 36

28 9 Appendix F: Transition Project 1. The purpose of this section is to outline the ministry s proposed approach to move from the current Education Service Payroll environment to the new Education Service Payroll environment. 2. The ministry will govern and lead the project. 3. Please refer to Appendix C: Current Situation for the current state of the Education Service Payroll. 9.1 Objectives 1. The objectives of the transition project are for the vendor to: 9.2 Scope implement the new Education Service Payroll business processes set up the IT systems and infrastructure that supports the Education Service Payroll business processes implement the new IT hosting processes that support the IT systems and infrastructure convert data from existing IT systems to the new IT systems define and implement service support, service delivery processes and supporting IT systems. 1. The proposed scope of the transition project for the vendor is to: set up the Service Desk and Payroll Centres deliver new business processes, including training ministry staff and BOT payroll representatives implement and host a modern payroll system or systems receive a data extract from the existing IT system, then transform, clean and load data into the new payroll system or systems define and implement new service support and service delivery processes, including supporting IT systems. 2. The vendor will need to report to the ministry s project manager using the Prince2 project management framework. 3. The ministry will review the current Education Service Payroll IT systems, or business processes where the project requires further information (for example audit quality of data). 4. The ministry will complete a baseline assessment of all business and IT processes as part of closing the transition project. 5. Out of scope is to: manage the current Education Service Payroll service through the transition process simplify the collective agreements and industrial regime of the compulsory education sector 29/01/2013 Page 28 of 36

29 9.3 Data Quality change the funding regime of teachers and other school employees remuneration implement human resource management functionality described in Appendix G: Ministry and Government Projects. 1. A key risk to the transition project s schedule and budget is the current quality of data. The ministry has previously performed analysis on the current Education Service Payroll data. The analysis did identify a number of issues that indicate the quality of the data is poor. 2. The number of inaccurate records is unknown. However, indicative evidence suggests 30% to 40% of the data records are inaccurate. 3. The key data issues can be categorised as: non-contract salary rates title dates of birth incorrect leave balances. 4. There has been inaccurate record keeping to enable schools to pay employees above the minimum rates defined in the collective agreements. 5. The current title data has spelling errors and duplicate records. 6. The current date of birth data is unreliable due to no current validation on this field. 7. Leave information is inaccurate, including no leave being captured at all for some employees. 8. Please refer to the supporting Datacom/TM4 Data Quality Issues Briefing Paper for further information 9. The transition planning and pricing is to reflect the project risk that is normally associated with poor data quality. 9.4 Project Schedule 1. The ministry is proposing that the transition project starts in October 2008 and finishes in December The following table outlines the high-level activities and the proposed project transition key dates: Activities Start Date End Date Establish project October 2008 January 2009 Establish Payroll Centres January 2009 October 2010 Manage change January 2009 November 2010 Establish data centres and hosting January 2009 December 2009 Convert data January 2009 December 2009 Configure system/s January 2009 September 2009 Undertake user acceptance testing May 2009 November 2009 Roll out November 2009 December /01/2013 Page 29 of 36

30 Activities Start Date End Date Implement on-line capability October 2010 September Governance 1. The following diagram illustrates the proposed governance structure for the Transition Project: Project Board Senior User Project Manager Ministry Project Team Vendor Project Manager Vendor Project Team 29/01/2013 Page 30 of 36

31 9.6 Roles and Responsibilities 1. The following table outlines the proposed transition project roles and responsibilities: Roles Responsibilities Vendor Work collaboratively with the ministry and Datacom, the incumbent vendor Manage and execute the project scope for the vendor Report to the project governance committee Define requirements and design business processes Define requirements and design IT systems Manage and complete testing Manage roll out Develop process documentation Conduct training Provide support Participate in baseline assessment The ministry Work collaboratively with the vendor Manage and execute the project Approve key project communications to boards of trustees Provide governance of the project Provide input and review of analysis and design deliverables Approve testing strategy Participate in user acceptance testing Approve implementation plan Review and approve process documentation Attend training Conduct baseline assessment Board of trustees (BOT) payroll representatives Independent Quality Assurance Participate in user acceptance testing Attend training Provide an independent view as to the health of the project to the key stakeholders Provide advice and guidance as required Assess the key risks to the ministry and make recommendations to resolve these risks 29/01/2013 Page 31 of 36

32 10 Appendix G: Ministry and Government Projects 1. A number of payroll-related initiatives are planned, or currently underway, in the ministry or other government agencies. These initiatives may influence the delivery of the Education Service Payroll. 2. The initiatives are included in this RFP because of the extended transition period. 3. The ministry is interested in any thoughts or ideas the respondent has for assisting the ministry to progress the initiatives. 4. The key ministry and government payroll related initiatives are to: improve process documentation re-develop the website develop on-line form capability develop 0800 number rationalisation improve the network infrastructure in schools use the Education Integration Service (ESIS) develop a strategy for managing HR in schools Improve Process Documentation 1. The ministry will retain ownership of all Education Service Payroll documentation. 2. The ministry estimates the accuracy of the Education Service Payroll documentation is 90% to 95%. 3. To effectively and efficiently manage the documentation an initiative is under way to: update the documentation to reflect the future environment develop frequently answered questions documentation identify how an Electronic Document Management System (EDMS) could assist the ministry to manage the documentation. 4. The ministry plans to complete this initiative by December Re-develop Website 1. Datacom currently provides a payroll website to the ministry and BOT payroll representatives ( 2. This website is a key communication channel with schools and an increasing number of schools are visiting the site on a regular basis. 3. The website uses old technology and has limited capability. 4. The ministry has investigated the role and effectiveness of the website. Following discussions with Datacom, a proposal has been received to update the website. The ministry is currently considering the proposal. 29/01/2013 Page 32 of 36

33 5. If the ministry does proceed with updating the website, it will be a tactical decision only. The website will not meet the requirements outlined in this RFP. Therefore, it is not to be included as part of response for this RFP Develop On-line Form Capability 1. The ministry is considering the risks and benefits of capturing payroll information by using on-line form technology. 2. If this initiative proceeds, the architecture will only include extracting a payroll file from the on-line forms and manually loading it into the payroll system. There would still be a number of issues associated with this. These include: no capability to transact business on-line and in real-time no verification of captured payroll information poor design and use of old technology that does not meet the ministry s non-functional requirements no e-government compliance high delivery and hosting charges. 3. The ministry has a vision to deliver a significant on-line e-business capability to the BOT payroll representatives, including developing an automatic interface with the payroll system. The response should support this vision. 29/01/2013 Page 33 of 36