Innovation through contemporary procurement practices

- October 2020

As industry procurement specialists, we focus our capability on delivering solutions to government and are intimately aware of the challenges facing the public sector. This focus allows us to centre our expertise on understanding the unique challenges for government and provide tangible benefits. By drawing upon previous sector experience, we develop procedural, functional and technical solutions to familiar problems. The real value-add comes from experience gained when solving problems for different clients across the public sector.

Through competition and other factors, many services in Australia have become highly commoditised; there is often little distinction between providers. This is driving innovation as market players seek to differentiate themselves and new providers are drawn into the market. However, current approaches to government procurement are complex and costly for industry participants and can be an impediment to an open dialogue between government and industry. As a result, some providers, particularly new or smaller providers, may be effectively excluded from a procurement exercise because they cannot afford to participate and government may be inadvertently missing out on potentially innovative solutions to the services it seeks.

Panels or multi-user lists offer the greatest efficiency savings for procurements where the procurement process is highly repeatable or where the services can be described with sufficient specificity. Where a service is not easily defined, or a government department is seeing a new approach to delivery, a more flexible approach is needed when engaging with the market.

Designing and implementing innovative procurement frameworks within the bounds of Commonwealth Procurement policy is possible. Innovative procurement frameworks can facilitate a more coordinated industry effort and remove major barriers to working with government. It can also stimulate innovation in the market, identify government-industry partnership opportunities, and provide the public sector with access to the latest industry developments to support existing and future policy objectives.

Employing new or diverse approaches to procurement do not need to be stand-alone activities, they can simply be an adjunct to existing formal procurement processes. To understand market capability and trends as well as inform public sector capability requirements and priorities, the Australian Government can engage with industry in meaningful ways. Utilising early supplier involvement during policy and procurement strategy development can help focus industry advancement on the direction its government clients are moving.

By embracing new and better ways of developing policy, delivering services, and managing information, the Australian Government can use its procurement powers to stimulate innovation in the private sector and subsequently address specific market failures. This stimulus enables industry to justify investing in research and development programs to meet the demand of public customers and collaboration between government and industry through joint research and development efforts.

Engaging with industry and encouraging new providers into the market by rewarding innovation facilitates competition, increases choice and reduces costs to the Australian Government.

Leigh Redman is a multi-skilled consultant with procurement and contracting expertise and experience in strategic review, business improvement and strategic sourcing.