Govt encouraged to pull strategic procurement lever


The strategic use of government procurement has once again been recognised as a sure-fire way to improve Australia’s performance as an innovation powerhouse.

Small and up-and-coming firms remain a focal point in the Innovation and Science Australia’s (ISA) recently released plan for innovation in Australia, with the report recommending a target of 33 per cent of contracts (by dollar value) being awarded to Australian Small to Medium Enterprises (SMEs) by 2022.

The much-anticipated Australia 2030: Prosperity Through Innovation also suggests the creation of a ‘government as first customer’ program for high-growth firms, such as start-ups. The chosen companies would be trialled by two of the major procurement departments before being rolled out across all government departments.

ISA also recommends expanding challenge-based programs like the Small Business Innovation Research for Defence program, as well as simplifying contract frameworks.

In response to the report, the Minister for Jobs and Innovation Michaelia Cash stated that “[t]he Government will carefully consider ISA’s recommendations and how it can build upon existing measures including those implemented under the National Innovation and Science Agenda.”

“The Government will continue to support Australian small and family businesses as part of its innovation and science agenda. Small businesses are the engine room of job creation and a key part of the innovation system so it’s important they can grow and diversify”, said Cash in a media release.

Although not aimed specifically at ICT-related SMEs, the recommendations in the report echo the thinking that inspired the August 2017 reforms attempting to improve procurement outcomes for SMEs supplying ICT goods and services.

Last year, the government committed to targeting a 10 per cent increase of its annual IT spend to smaller operators, as well as a cap for government contracts at a maximum of $100 million or three years’ duration. This is to break up what would have previously been a large ICT project into smaller, more manageable components that SMEs are more capable of delivering.

Seemingly, the cap is already affecting the government’s top ranking suppliers, with only six contracts published with a value higher than $100 million in the first half of 2017-18 (but 17 contracts have a duration of three years or longer) out of all contracts signed by the top five suppliers so far this year.

Further championing of an SME-friendly agenda, even one that extends beyond ICT, will likely continue reshaping the government ICT marketplace.

Particularly in the highly-specialised ICT industry, a more nuanced approach to SME-friendly policies is gaining traction, with SMEs recognised as the appropriate choice in some instances, but not others – like when the government simultaneously wants to lower spending on procurement. This has been addressed somewhat in the government’s recent procurement reforms that advocated a “targeted re-centralisation” approach – a model that grants agencies autonomy to operate their own ICT procurement to achieve their individual business goals, but also encourages them to consider centralised channels where suitable.

ISA’s innovation report also takes on Australia’s regulatory ecosystem – promoting greater collaboration between governments in an effort to achieve a regulatory environment open to innovation. The report highlights ‘anticipatory regulation’ – an approach identified by the National Endowment for Science, Technology and the Arts in the United Kingdom – as a way of adapting regulatory frameworks to achieve innovation. Anticipatory regulation encompasses multiple concepts, including open dialogue with innovators and incumbents, iterative rules, and regulatory testbeds and sandboxes.

A number of these methods are already being tested in Australia, including regulatory sandboxes. Sourcing initiatives that encourage better communication between innovators and government are also emerging, like GovPitch, which connects suppliers with senior government officials to increase take-up of innovative ICT solutions. The program closely resembles some of the work undertaken in New South Wales through the WofG Innovation Strategy, including the NSW Innovation Concierge (NIC) that will function as a “front door” for innovative ideas.

Along with tweaks to procurement mechanisms, the Digital Transformation Agency (DTA) could soon have more on its plate, with the report suggesting new service digitisation targets for the agency – achieving half of the projected 12 per cent of savings from digitising service delivery by 2022, and the balance by 2026. This must be done at the same time as improving citizen satisfaction with government services.

Adding to the momentum building behind more meaningful reporting and benchmarking in all aspects of ICT use by government, the report also recommended keeping better tabs on the effectiveness of digital technologies and their impact on government service delivery. The report suggests doing so through automation, advanced analytics, and service delivery dashboards to monitor and evaluate the impact of spending.

The need for “much more horizontal or cross-sectoral collaboration” in the creation and delivery of government services also emerged as a common theme.

A total of seven recommendations in the innovation plan are aimed squarely at the public sector. 

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