James Riley
September 19, 2016

Grant competition to attract SMEs

Procurement

Grant competition to attract SMEs

Industry Minister Greg Hunt: Will overses the competitive, grants-based procurement through local SMEs

The federal Department of Industry steadfastly refuses to call it a procurement policy or an industry development program, but the Business Research and Innovation Initiative (BRII) is a new way of thinking from government on both, and it should offer opportunities for small Australian companies.

The initial BRII program is a pilot, announced as part of the National Innovation and Science Agenda (NISA) in December last year. You can read more BRII details here.

The launch of the first five challenges under BRII went largely under-the-radar. It was lost – like many innovation agenda policies – in the stasis of a long election campaign and its incumbent caretaker mode of government.

But here we are on the other side, with Industry seeking to whip up interest in the grants-based program through a national roadshow to highlight the needs of the government’s first five challenges.

The Business Research and Innovation Initiative is a competitive problem-solving process. It is simple enough. The government defines a problem and publishes it online. Small businesses can then respond with an innovative solution.

These bids can ‘win’ an initial $100,000 to fund a feasibility study, and to build out a business case for the solution. As part of the next phase, the small business is eligible for a further grant of up to $1 million to build out a proof-of-concept product.

So here’s the thing with the BRII. As a model it is not particularly new, with similar programs in the US (called the Small Business Innovation Research program) and the UK (Small Business Research Initiative) having been underway for several years.

But it is very new in Australia, and should the pilot program achieve what it hopes, is likely to be rolled out more broadly across government.

According to AusIndustry acting general manager for Innovation Programmes Frank Tonkin, BRII has two fundamental objectives.

First, the program aims to “change the government mindset” on how it engages with small business in procurement, and secondly to apply new ideas to government and provide a runway for commercialising those ideas.

It is effectively a grants-based procurement competition. (This gets slightly confusing. Industry is at pains to say this is not a procurement program, because the participating departments and agencies are under no obligation to buy the product or service that they have, in effect, helped commercialise through the initiative. The BRII projects are not exempt for broader government procurement rules.)

The first five challenges under the BRII are
• On-the-spot technology for measuring pyrethoid surface residue
Tracking the effect and value of information products
Digitally enabled community engagement in policy and programme design
• Improve transparency and reliability of water market information
• Sharing information nationally to ensure child safety

The Department of Industry, Innovation and Science had called for applications to the program from across government early in the year, with a deadline that closed just before the election being called. It received 14 potential projects, from which five were selected.

The projects are posted as problems, rather than as a specification for a product or a service. For government, this is an upside-down way of thinking about procurement. The five clearly defined problems are designed to attract new thinking, and to encourage new ideas.

“We were quite happy with the response we got, given there was only a short period to apply, and that this is such a new way [of engaging suppliers],” Mr Tonkin said, “where they are putting a problem they want solved out there, rather than a product or service they want to buy.”

There is clear overlap between what the Industry Department is doing now and what the Digital Transformation Office is planning to build into its Digital Marketplace platform in the future. In fact, Mr Tonkin says Industry has been working closely with the DTO, and is now watching closely to see what functionality is built into the marketplace.

Industry had also been working with state governments to better understand the grants-based procurement challenges used in Victoria and Queensland, and to see how they could be translated for the Australian Government situation.

Procurement is a huge industry development lever that governments can use to help build Australian small and medium sized companies.

The BRII program follows the logic of the whole National Innovation and Science Agenda, of starting small and moving fast.

We’ll check back when the proof-of-concept grants are made, and again when (and if) any of these companies become suppliers to government. But it is a genuinely exciting development for local tech companies.

Incidentally, a BRII-like grants program was pitched as one of the ideas during Wyatt Roy’s PolicyHack late last year. Seems government was already on it, although delivery has taken somewhat longer than expected.

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