The Australian rail industry needs to reform procurement processes to bring a standardised approach to fully benefit from future rail investments, according to a trade body.
In a report the Australian Railway Association (ARA) said a survey of industry stakeholders found current procurement processes were a “key concern” because spending was delivered in a “fragmented approach”.
The report said: “Most rail investment in Australia is still planned, procured, delivered and operated by different state governments under different rules, systems and policies. This fragmented approach is ultimately inefficient, expensive, inhibits innovation and limits growth and sustainability of the local supply chain.
“A collaborative effort between industry and government should target reforms to procurement processes that will provide a more sustainable, consistent and standardised procurement process across Australia for rail projects and programmes.”
Rail investments of around $155bn are expected over the next 15 years and procurement processes must improve to support the local supply chain, drive innovation and create local jobs, said ARA.
The report said the main concerns were around lack of innovation, state-based procurement systems that create barriers to local suppliers, risks being shifted down the supply chain with harmful consequences, and Covid impacts.
As a result of state-based procurement, SMEs are disadvantaged as they often lack the time and money needed to gain the knowledge of different procurement practices across states.
The report said “procurement models used for major rail projects increasingly shift risk from public sector clients to head contractors... down the supply chain to subcontractors and suppliers of materials and equipment”.
States would benefit from making local content policies more “national”, said ARA.
Current policies, requiring firms to use domestically-manufactured goods or services local to specific states or territories, “can limit efficiencies, and growth of local suppliers”, and are often too small to achieve economies of scale, it warned.
ARA's nine critical reforms are:
1. Achieving common objectives in planning, procurement and policy.
2. Reforming procurement of rail projects.
3. Creating a national local content policy
4. Meeting the skills challenge.
5. Reviewing regulation.
6. Supporting innovation and technological uptake.
7. Promoting the capability of the supply chain locally as well as internationally.
8. Sustaining rail investment and funding.
9. Recognising the growing importance of environmental sustainability and the circular economy.
ARA surveyed and interviewed over 160 participants across the public and private sectors in the Australian rail industry.
☛ Want to stay up to date with the news? Sign up to our daily bulletin.