NSW procurement changes will deliver boost to innovation, minister says

Changes make it easier for government agencies to conduct proof-of-concept testing using products and services offered by SMEs

Changes to New South Wales government procurement that took effect at the start of October will better enable agencies to trial innovative products and services offered by startups, according to the state’s minister for innovation and better regulation, Victor Dominello.

A direction issued by the NSW Procurement Board in late September allowed agencies to engage suppliers “through direct negotiation on short term contracts valued up to $1,000,000 (including GST) in order to do proof-of-concept testing or outcomes-based trials”, subject to a number of conditions.

(Previously, the procurement innovation stream, established in 2014, had a threshold of $250,000.)

The conditions are that the supplier is a small or medium enterprise; the supplier agrees that the agency can publish a report on the outcome of any trials; the agency publishes such a report within 21 days of the competition of a trial; and that the purchase is signed off by an agency’s chief procurement officer or agency head.

Commercially sensitive information can be withheld from the reports published by agencies.

Following a proof-of-concept trial, subsequent procurement must be through a competitive process.

“The Procurement Board recognises that there is value in permitting agencies greater scope to test the capability of goods and services to meet current or emerging business needs through innovative solutions or outcomes-based trials,” the NSW Procurement Board’s direction said. “Often these innovative solutions may require direct negotiations with a supplier.”

“This new policy brings the government into the 21st century by empowering agencies to trial innovative solutions with local startups and SMEs,” Dominello said.

“Digital innovation is transforming markets and businesses across the world. NSW is booming and it makes sense for entrepreneurs to play a greater role in decision making and the delivery of public services.”

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