NSW agencies will need to explain why they bypassed local suppliers for significant technology deals under a new ‘if not, why not’ local content rule announced by the Minns government on Tuesday.
The rule, which will apply to all procurements above $7.5 million, comes after the state government abandoned specific targets to source almost a third of its tech buys from local suppliers.
It is part of a suite of changes by the Minns government to the state’s $42 billion procurement system that will also see more consideration of retained economic benefit, a revival of local content rules and a new body to oversee the regime.
The changes are being backed by business groups and unions.
“NSW has the most innovative and dynamic businesses in the nation. It makes sense for the NSW government to invest in those companies,” Industry minister Anoulack Chanthivong said.
Minister for Domestic Manufacturing and Government Procurement Courtney Houssos on Tuesday instructed the NSW Procurement Board to remove the current limitation on local content rules within 45 days.
To encourage agencies to embrace the switch, Ms Houssos will also direct the board with a new direction to implement an ‘if not why not’ rule from the start of next year.
The rule will require agencies to engage local suppliers — defined in this instance as NSW enterprises — before going to tender for projects worth more than $7.5 million. If a non-NSW supplier is engaged, the agencies will need to explain the decision before awarding the contract.
The rule comes alongside Labor’s election commitment to apply a 30 per cent weighting to the tenders for local content, job creation, small business and ethical supply chains, while a more “robust” interpretation of value for money is also coming, the government said.
Parliament’s current procurement inquiry warned in its interim report that there is no consistent and comprehensive definition and understanding of value for money, creating a barrier for government buyers and suppliers.
The Minns government has also pledged to establish a Job First Commissioner to monitor procurement rules, including a name and shame power for breaches. Legislation to establish the commission will be introduced before the end of the year, the government said on Tuesday.
While Labor has moved on government wide procurement policy it has walked back a specific effort for sourcing technology from local suppliers. In April, the state’s ICT sourcing lead said data on the target had not been published to focus on the broader procurement push.
The Minns government has already tweaked insurance requirements for bidding and raised the threshold for agencies to procure directly from smaller businesses from $150,000 to $250,000.
On Sunday, the government confirmed it will make several more changes to procurement, including reviewing the current accreditation framework that hands significant responsibility and oversight to individual agencies.
It followed several other procurement reforms like eTendering and disclosure improvements promised last week.
“Businesses and workers in NSW have so much to offer – not just to government but to all consumers,” Ms Houssos said.
“These changes will support our local industries and give them new opportunities to secure a larger slice of the NSW government’s $42 billion procurement spend.”
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