NSW bumps up procurement leeway for 'innovative' trials

The NSW government has radically hiked the amount it will let state agencies spend on testing new ideas and concepts with smaller IT partners before they need to embark on an arduous tender process.

Since October 2014, the state’s top procurement authority has relaxed normal tender rules to allow government entities to run short-term proofs-of-concept via direct negotiation with a single supplier.

The original cap on PoC expenditure was $250,000, but since the procurement caveat went under its scheduled review at the end of last month, the NSW procurement board has decided to lift the maximum spend to $1 million - dramatically expanding the scale of experiments possible under the scheme.

“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,” it said in a memo circulated to public servants this month.

To take advantage of the tender-free threshold, agencies still have to work with small to medium businesses rather than enterprise providers, and must submit a report on the outcomes of the proof-of-concept within 21 days of its completion.

However, this is a small ask compared to the comprehensive market analysis and risk profiling usually required to get sign-off to skip an open approach to market.

The NSW government has been working hard to bring start-ups and small businesses into its fold, where trade is often dominated by larger players with the kind of cash flow needed to cover lengthy and resource intensive bidding processes.

It recently gave agencies the green light to engage suppliers through the federal Digital Transformation Office’s digital marketplace, a portal where SMEs can bid for design briefs posted by government buyers.