Skip to main content
SpringerLink
Log in

Australia

Public Purchasing and Innovation: The Australian Case

  • Chapter
  • First Online:
Public Procurement, Innovation and Policy

Abstract

Over the past decade, a host of new economic challenges have fuelled calls in Australia for a more strategic approach to innovation policy, perceived by many as central to restoring the nation’s techno-industrial competitiveness. Recent reforms to this end have been promising, with public procurement emerging as a key policy instrument in the government’s quest to improve the innovative capacity of local firms. In this chapter, we document the efforts underway to redress long-standing obstacles to the deployment of public purchasing as a techno-industrial upgrading device: from an entrenched ‘buy-non-Australian’ bias and risk-averse procurement culture; to complex and costly tender processes that discourage innovative offerings; to intellectual property laws that sap companies’ innovative spirit, to name a few. But while recent regulatory and policy shifts are impressive on paper, the extent to which they will translate into meaningful changes in public-procurement practices, and thus to the innovative activities of local companies, remains to be seen.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 129.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    See http://www.heritage.org/index/country/australia.

  2. 2.

    Australia has a three-tier political structure, including the federal (Commonwealth) government (top tier) and six State and two Territory governments (second tier), each with their own budgetary responsibilities. The term ‘state government’ is employed herein to refer to both state and territory governments. The third tier is made up of more than 650 local councils, funded by a combination of state and commonwealth government grants and local land taxes. The procurement activities of councils are beyond the scope of this chapter.

  3. 3.

    For data on the changing sectoral contribution to national output, employment, investment and exports in Australia from the 1960s to the 2000s, see Reserve Bank of Australia (2010).

  4. 4.

    For example, the Prime Minister created a federal Taskforce on Australian Manufacturing in November 2011; for a statement issued after its first meeting, see: http://www.pm.gov.au/press-office/prime-minister%E2%80%99s-taskforce-manufacturing-communiqu%C3%A9. At the state level, the government of Victoria established an Inquiry into Manufacturing in Victoria, which reported in July 2010 (EDIC 2010).

  5. 5.

    For an overview of Australia’s deteriorating comparative innovation performance see Cutler (2008: Chap. 1).

  6. 6.

    See the report by the Cutler Commission, Venturous Australia, available at: http://www.innovation.gov.au/Innovation/Policy/Pages/ReviewoftheNationalInnovationSystem.aspx.

  7. 7.

    By 2012 there were eight industry innovation councils in operation in the following industries: automotive, built environment, future manufacturing, information technology, pulp and paper, space, steel and TCF industries. http://www.innovation.gov.au/Industry/IndustryInnovationCouncils/Pages/default.aspx.

  8. 8.

    This is an odd document. It is not a ‘White paper’ nor a ‘Green paper’ yet it states government intentions. It carries the signature only of the Minister for Innovation, Industry, Science and Research. I refer to it as MIISR 2009.

  9. 9.

    Including spending on technology infrastructure such as the national broadband network, direct spending on science and R&D, education and green technologies.

  10. 10.

    The most recent local figures put expenditures on goods and services at 13.3 % of GDP in 2008–2009 (Anthony and Evans 2010: 12).

  11. 11.

    The Defence Materiel Organisation accounted for 29 % and Department of Defence for 19.3 % of contracts awarded in 2009/10. Note these figures do not reflect total departmental expenditure but rather the value of contracts published on AusTender. Only contracts over $10,000 need be published under existing guidelines.

  12. 12.

    Under the FTA, procuring entities must use fair and transparent procurement procedures, including advance notice of purchases and timely and effective bid review procedures for procurement covered by the Agreement. For Commonwealth government purchases, procurement of goods and services above AUD $70,079 and construction services above $7,804,000 are covered by the Agreement. For state governments, procurements of goods and services over $554,000 and of construction services above $7,804,000 are covered. (Adjusted thresholds January 2010). Significantly for the purposes of this chapter, the procurement of research and development services is excluded from the Agreement, as is the procurement of a range of goods and services considered central to security concerns.

    See AUSFTA Chap. 15 Text: http://www.dfat.gov.au/fta/ausfta/final-text/chapter_15.html.

  13. 13.

    In 2009, the USTR noted: “Australia is the only major industrialized country that is not a signatory to the WTO Agreement on Government Procurement. However, under the FTA, the Australian government opened its government procurement market to U.S. suppliers, eliminating discriminatory preferences for domestic suppliers and using fair and transparent procurement procedures” (USTR 2009).

  14. 14.

    For example, a 1998 review of procurement reforms noted some positive changes in public servant attitudes and local firm access to projects—although much remaining room for improvement. See the full report at: http://www.aph.gov.au/house/committee/jcpaa/purchasing/CHAPTER1.PDF. A 2001 review of SAMP also showed that significant benefits had flowed to local firms (see DITR 2007: 2).

  15. 15.

    This and the following paragraph draw on Thurbon (2012).

  16. 16.

    Under the NSW Local Jobs First Plan, a 20 % discount is applied to locally made content for businesses with up to 500 workers, and every tender over $4 million is required to submit a local industry participation plan: http://www.nswprocurement.com.au/Government-Procurement-Frameworks/Goods---Services/Framework/Local-Jobs-First-Plan.aspx. Amendments to Victoria’s Industry Participation Policy in 2009 also placed local content requirements on ‘strategically significant’ purchases: http://www.dbi.vic.gov.au/projects-and-inititatives/victorian-industry-participation-policy.

  17. 17.

    See Fraunhauer Institute (2005: VII).

  18. 18.

    The Forum was co-convened by the future Chair of the aforementioned NIS Review, Dr Terry Cutler.

  19. 19.

    Recommendation 10.6 of the NIS Review was devoted entirely to the issue of PPI, stating that: “The Australian Government should[:] recognise its role as an active participant in facilitating innovation through procurement practices[;] … actively manage its ability to enable and demand innovation in procured services and products given its significant presence as a major purchaser; in procurement, be open to participating in risk sharing in relation to innovation demanded; explore the use of forward purchase commitments as a means of fostering more innovative approaches to government procurement; and work with the State and Territories to implement a pilot Small Business Innovation Contracting program based on the US SBIR design principles, to strengthen the growth of highly innovative firms in Australia.” (Cutler 2008: r27).

  20. 20.

    ‘Risk aversion’ was cited by all local participants in the aforementioned 2007 forum on Innovation and Procurement Policy in Australia as a major barrier to PPfI. For example, John Stamford, former Bureaucrat (Prime Minister & Cabinet) noted “Bureaucrats are very, very nervous of picking winners. In the government purchasing area there are no prizes for innovation; it really is safety first.” Cited in Cutler and Dodgson (2007: 12).

  21. 21.

    For an overview of industry complaints see the report of the independent evaluation of the government’s implementation of the Gershon Review’s recommendations (specifically, Reinecke 2010: 27).

  22. 22.

    The 2010 review of the implementation of the government’s ICT reform agenda noted that industry holds some reservations about the government’s ability to implement its reforms: “(industry) has questioned the consistency with which the new arrangements will be applied through legal and contractual units, especially in smaller agencies.” (Reinecke 2010: 28).

  23. 23.

    Namely, automobiles, future manufacturing, aerospace, ICT, pulp and paper, steel, built environment, and TCF.

  24. 24.

    Although there are some important exceptions to this rule; the Collins Class Submarine project, for example, which ran from the 1980s to the early 2000s, sought to locally build a submarine designed specifically to Australian requirements and was far more inclusive of local industry than most other defence projects. See Yule and Woolner (2008) for a comprehensive analysis of this project and (amongst many other things) its developmental implications.

  25. 25.

    PICs are reviewed on a regular basis in consultation with industry and subject to update and amendment in line with changing strategic circumstances. For a full list of current PICs see the DoD PIC website:http://www.defence.gov.au/dmo/id/dcp/html_dec10/PriorityStrategic/index.html.

  26. 26.

    The government has also been introducing wider local industry participation programs, such as the 2011 Australian Industry Capability Program (AICP). Under the AICP, all firms bidding for government contracts will need to demonstrate how they intend to foster local industry development through the mandatory inclusion of an AIC Plan (see the AICP website at: http://www.defence.gov.au/dmo/id/aic/). Since 2011, any tenderer for a government contract directly relating to a PIC must include an AIC Plan. Australian industry participation is assessed under the ‘value for money’ criteria of the procurement and the AIC Plan forms an enforceable provision of the contract of successful tenderers. However the AICP is not an innovation program explicitly, but rather an industry participation program.

  27. 27.

    For an overview of eligible projects see the DoD PICIC Fact Sheet available at: http://www.defence.gov.au/dmo/id/pic/PIC_Factsheet.pdf.

  28. 28.

    See (DoD 2010: 71) for an overview of CADF operations.

  29. 29.

    For a balanced examination of the Collins Class project and its contribution to local industry development, see Yule and Woolner (2008).

  30. 30.

    See the full Guidelines at: http://ict.industry.qld.gov.au/industry-support/244.htm.

  31. 31.

    From the DoD’s CTD Program website, available at: http://www.dsto.defence.gov.au/collaboration/3743/page/3693/. The CTD program is open to both Australian-owned firms and Australian-based subsidiaries of foreign firms, as well as universities and public-sector research organisations.

  32. 32.

    See the DoD statement at: http://www.dsto.defence.gov.au/collaboration/3743/page/3685/.

  33. 33.

    The program is also important in terms of showing which technologies are not viable: it has been reported that two failed CTDs saved the government more than $100 million by demonstrating that certain technologies were not able to deliver capability (Ferguson 2011: 28).

  34. 34.

    For example, in 2006, Melbourne-based SME Sentient Vision Systems was granted a CTD to develop a real-time Video Motion Target Indication system that would track small, moving ground targets from the air. By 2008, the technology (dubbed ‘Kestral’) had been successfully tested in an operational environment by the Maritime Patrol Group of the Royal Australian Air Force. Sentient was thus awarded a CTD Extension grant to further refine the technology and render it a deployable solution in both air and sea-based environments. Under the CTD program, Senitent also received significant support to help it link with both partner companies and potential end-users within Defence—the kind of connections that are difficult for a SME to engineer independently (Ferguson 2011: 30).

  35. 35.

    Larger firms can also bid but must have R&D facilities in Victoria and partner with a SME that leads the project.

References

Download references

Author information

Authors and Affiliations

  1. School of Social Sciences, Faculty of Arts and Social Sciences, The University of New South Wales, Sydney, NSW, 2052, Australia

    Elizabeth Thurbon

Authors
  1. Elizabeth Thurbon
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Elizabeth Thurbon .

Editor information

Editors and Affiliations

  1. Tallinn University of Technology Ragnar Nurkse School of Innovation and Governance, Tallinn, Estonia

    Veiko Lember

  2. Tallinn University of Technology Ragnar Nurkse School of Innovation and Governance, Tallinn, Estonia

    Rainer Kattel

  3. Tallinn University of Technology Ragnar Nurkse School of Innovation and Governance, Tallinn, Estonia

    Tarmo Kalvet

Rights and permissions

Reprints and permissions

Copyright information

© 2014 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Thurbon, E. (2014). Australia. In: Lember, V., Kattel, R., Kalvet, T. (eds) Public Procurement, Innovation and Policy. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-40258-6_3

Download citation

Publish with us

Policies and ethics

Search

Navigation