NSW Govt looks for innovation through tech procurement

Joseph Brookes
Senior Reporter

Dozens of technology suppliers gathered in Sydney on Tuesday for a state government roundtable on “innovative procurement pathways”. The meeting is part of a push for the New South Wales government to use its annual $2.5 billion technology spend in a way that spurs R&D and supports the local sector.

“Innovation procurement” is an approach where a public buyer either buys the process of innovation – such as research and development services for a specific problem or need – or buys the outcome of innovation through a novel or emerging product or service.

In New South Wales, innovation procurement has been flagged as a lever in various state technologies strategies for digital, smart places, AI and research and development, and was recommended to the government in 2019 as an economic growth strategy.

The state’s new push is starting with innovative procurement pathways (IPP), officially announced following Tuesday’s industry roundtable. It recognises the government can become a critical first customer for technology start-ups and allow businesses to test out new solutions and deploy the successful ones at scale.

New South Wales is home to nearly two thirds of Australian tech start-ups, has Australia’s largest Information and Communication Technology (ICT) sector and produces 66 per cent of Australia’s total ICT services exports.

Sydney city
The NSW Government is looking to its procurement practices as an innovation lever

The state government this year sought more input from emerging technology suppliers on how to take advantage of innovative procurement, including dozens who had not engaged with the New South Wales government before.

Several barriers have been identified by the local sector through workshops and a survey, including the need to streamline the procurement process and introduce problem statements for when the government buyers do not know the best technology solution to their problems.

A co-development and testing phase is now underway for IPP, and the government will release results from the consultations later this year.

“We discovered solutions look different to big and small business and for those with government experience to those without,” the state’s executive director of information, communications and technology and digital sourcing Mark Lenzner said in a statement.

“Regardless of their business most of the responders wanted some value out of a tender process no matter the outcome. They wanted to see the Government running trials which scale up and they wanted problem statements used more often to give suppliers the chance to shape the solution with their expertise.”

Mr Lenzner was brought into the New South Wales government from Westpac in 2018 to modernise procurement platforms and reform policies.

In the years since, a single procurement gateway has been created and the state government has allocated billions to a Digital Restart Fund focused on building consistent, reusable platforms across government, often translating to better digital services.

Much of this work is done using the products and services of global platform giants like SAP and Microsoft, an approach Mr Lezner insists can still build local capability and support the state sector.

A New South Wales procurement taskforce established in 2020, led to a 30 per cent SME target spent for technology, which came into effect last year but encountered early problems, including global companies listing as SMEs on tendering marketplaces.

The IPP work will build on the taskforce’s progress, and fresh approaches were discussed at roundtable on Tuesday. It was attended by 50 emerging technology suppliers, according to New South Wales chief information and digital officer Greg Wells.

“As technology continues to evolve at a rapid rate the NSW Government is reaching out to its supplier ecosystem, including start-ups, to help find the best solutions and ways of delivering services,” Mr Wells said in a statement.

“We have made strides as a modern and customer-centric government and we want to continue to work with the experts in industry to try things that might be a bit out of the ordinary, to learn quickly and scale up when it works so we can find the best solutions for customers.”

In 2019 the state’s chief economist recommended the government review its procurement practices to ensure government purchasing encourages innovation. It said by 2040 the government should be “using the power of government as a customer to drive innovation and value chains by making procurement decisions strategically, rather than simply on the basis of cost”.

The state government’s much celebrated $2.1 billion Digital Restart Fund was not topped up for the first time in last month’s state budget.

Do you know more? Contact James Riley via Email.

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