'Australian government tenders should focus on outcomes not outputs'

Will Green is news editor of Supply Management
25 September 2014

Government tenders should focus on outcomes rather than outputs and encourage more supplier innovation, according to a review of competition policy in Australia.

In a draft report a review panel said the government could “take steps to encourage diversity” and competition principles “should be incorporated into procurement policies”.

The review, announced by the Australian prime minister in December 2013, is to ensure competition policy is “fit for purpose” to meet the challenges the country faces.

The report said: “Tender documents have traditionally been written prescriptively and with an overarching focus on value for money. While risk management and value for money are both important considerations, too narrow a focus on these factors can constrain choice, innovation and responsiveness in the government-commissioned provision of goods and services.”

The report said by focusing on outcomes tenders could encourage innovation and diversity, giving the example of a facilities management contract stating floors should be “clean and have a uniformly glossy finish” rather than specifying that “a contractor must strip and re-wax floors weekly”.

“Governments can take steps to encourage diversity, choice and innovation in procurement arrangements,” said the report. “Tendering with a focus on outcomes, rather than outputs, and trials of less prescriptive tender documents could encourage bidders to suggest new and innovative methods for achieving the government’s desired result, while education and information sessions can help a broad range of businesses understand the procurement process.

“Competition principles, particularly those promoting choice and a diversity of providers, should be incorporated into procurement policies.”

The report also recommends replacing the National Competition Council with a new independent Australian Council for Competition Policy because the country “needs an institution whose remit encompasses advocating for competition policy reform and overseeing its implementation”.

Professor Ian Harper, chairman of the review, said: “Australia’s competition policy needs to be fit for purpose and updated for the economic opportunities and challenges Australia will face in coming decades. We face forces for change from increased globalisation, population ageing and new technologies, which are rapidly changing the way our markets operate.”

A consultation on the report runs until 17 November.

 

 

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