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State Govt to loosen tender rules, promises to back innovation

Business

The Marshall Government will loosen some procurement rules and recruit the state’s anti-corruption body to oversee a less “risk-averse” approach to spending taxpayer dollars.

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The Government will also give its ministers free reign to sign off procurement contracts within Cabinet-approved budgets, as part of its response to a Productivity Commission report.

Premier Steven Marshall ordered the review into the efficiency and effectiveness of public procurement processes late last year.

He argued that small businesses were often locked out of government contracts because of the high cost and complexity of competing in tender processes.

This morning the Government said it had accepted all 30 recommendations of the review, including that the State Procurement Board develop new guidelines to “mitigate unnecessarily risk-averse approaches by agencies to engaging with the market and businesses”.

The Independent Commissioner Against Corruption will be consulted on the changes and be asked to sign them off before they are implemented across the bureaucracy.

The Government is also promising to be the first customer for untested businesses, products and services, in an effort to encourage commercial innovation – and to remove the need to businesses to pass an Economic Contribution Test for contracts valued at up to $550,000.

Currently businesses must complete the Economic Contribution Test – an extended questionnaire on the local employment and supply-chain benefits of a tender application – for all contracts between $33,000 and $4 million (or $1 million in regional South Australia).

The Government will also:

Treasurer Rob Lucas said the Government spends more than $5.1 billion dollars on goods and services each year.

He said taxpayers “expect us to make the best procurement choices that represent value for money and also support local business and industry”.

“These reforms will not only reduce red tape and promote greater understanding of procurement processes, but further support entrepreneurial start-ups and scale-ups by encouraging them to test their ideas and concepts or conduct trials with the Government as their first customer,” he said.

“We have already made a good start, by reviewing aggregated contracts to identify procurements that can be broken into smaller contracts, where possible, and we expect most of the recommendations will be implemented by the end of the year.”

The private sector outlaid about $70 million tendering for government contracts valued at $5.1 billion in 2016-17, according to an analysis of the Commission’s draft report on procurement, released earlier this year.

Visiting research fellow at the University of Adelaide’s South Australian Centre for Economic Studies, Darryl Gobbett, who conducted the analysis, said at the time that “this is likely an underestimate, depending on the size distribution of non-reported contracts and the number of bids per contracts”.

“However, it would still suggest potential savings of over $20 million to the private sector per year if the possible time reductions noted by private contractors could be achieved.”

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