Innovation and procurement

The current Procurement methodology used by NSW Government itself is too rigid. Because of the continual need to follow a process, and ensure that every tenderer has the same opportunity, the ability to tailor, or allow for initiatives or variances is limited. That means that solutions that are potentially less optimal are given preference because the amount of work to allow an alternative solution means that it is not given proper consideration. This is doubly impacted by the amount of time the process and associated approvals take within government. With end to end processes taking potential years in areas where the solutions are complex or technical in nature change every 6 -12 months, such as ICT, by the time a decision is reached and contracts are signed, the solution is potentially already dated.

Additionally, the procurement sysytem in its current form discourages market engagement due to potential conflict of interests. Unfortunately in todays world, change is inevitable, and market engagement is more important than ever. Balancing the concerns need to be measured against the cost of sub-optimal solutions and incorrect pricing, which would be a significant cost to government.

The proposed model of devolving contract management responsibilities to the largest spending agencies is unlikely to encourage much in the way of innovation. It merely reinforces incentives for the largest spending agency to act in its own interest, which means more silos, less transparency and more information asymmetry.

Real innovation is looking at procurement through a completely different lens – one of a public service economy. This means moving towards commissioning services (with incentives), not just buying standardised goods and services in a traditional purchaser / provider model. I refer you to the 2011 Spann Oration by Gary Sturgess and the Open Public Services White Paper from the UK Cabinet Office as a starting point.

I would encourage the NSW Government to look at new ways to encourage innovation in their procurement practicies. Too often the definition of requirements is far too restrictive and offers little room for innovative approaches. A professional approach to early engagement of suppliers under non-competitive terms would be one way to achieve this. I would also suggest that reviewing the recent UK Government approach of a certified ICT apps store (see www.govstore.net) could provide some good pointers on how to provide greater access to Govt business for local SMEs and more agility for Govt agencies.