Innovation is an important part of achieving value for money in Government procurement, as recognised in the Western Australian Social Procurement Framework. Through procurement, State agencies can support small to medium enterprises (SMEs) to develop and commercialise innovative solutions. In particular, State agencies can often play a key role as early adopters of innovative goods and services, boosting the growth of start-ups and SMEs and building market capacity. Innovation drives improvements in productivity and creates additional value for the community.
In order to drive the outcomes of Western Australia’s Innovation Strategy, State agencies should be aware of the steps they can take to support innovation during all stages of a procurement process. Innovation should be considered throughout the procurement process, from identification of a need within an agency through to contract management.
Innovation in procurement can be:
- purchasing an innovative solution which will be developed specifically for the procurement; and/or
- purchasing a product/service that has already been developed but is new to the market i.e. being an early adopter.
Innovation throughout the procurement lifecycle
Show moreBefore a procurement process commences, State agencies should:
- Use their State agency’s Strategic Forward Procurement Plan to identify upcoming procurements that lend themselves to innovative solutions.
- Take a holistic view by considering the wider community outcome that the procurement will contribute to, and consider how innovation may be incorporated into achieving this.
- Consider innovation as an objective of the procurement during the development of the business case.
During procurement planning, State agencies should:
- Engage with a diverse range of prospective suppliers, including SMEs.
- Determine whether an innovative solution is likely to be feasible, with respect to the value, scale, and complexity of the individual procurement. Some industry sectors, such as ICT, may lend themselves more frequently to innovative solutions. However, innovative solutions are possible in all types of procurement.
- Consider disaggregating large procurements into multiple smaller procurements, where appropriate. This can enable greater risk-taking and increase opportunities to engage with innovative SMEs. Note: In accordance with Western Australian Procurement Rule C4.1(3), a procurement must not be divided into separate parts for the dominant purpose of avoiding the relevant minimum competitive requirement.
During request development and contract formation, State agencies should:
- Ensure that any Early Tender Advice is published well in advance of a Request. Providing early notice of a State agency’s future requirements give businesses the time needed to prepare their proposals for innovative solutions and better understand any tentative timelines.
- Set out Request specifications in terms of the core performance and functional requirements of the desired outcome, rather than being prescriptive of how the outcome should be delivered, in accordance with Western Australian Procurement Rule D2.2. This may allow for more innovative or unexpected solutions to be proposed.
- Include provision in the Request allowing the agency to undertake, as required, additional due diligence and solution assessment at different stages of the procurement process and negotiations phase; for example, Proof of Concepts, Proof of Designs, and Product Demonstrations. This will allow the agency to test the ongoing suitability and robustness of proposals.
- Establish clear processes to manage Intellectual Property (IP) during the procurement process, as outlined in the Western Australian Government Intellectual Property Policy and associated Agency Toolkit. This can help to address any reluctance on the part of suppliers to disclose IP. If IP will be created as a result of a procurement process, State agencies should consider whether it needs to be owned by Government or if it can be vested with the supplier to further incentivise innovation.
- Draft qualitative requirements for Requests that provide a comparative advantage for innovative proposals. Depending on the importance of innovation during a procurement, innovation may be incorporated as either a full weighted criterion or a sub criterion that is considered as part of a proposed solution’s overall suitability. See the below accordion for examples.
- Consider whether any proposed solutions are flexible enough to adapt to changing circumstances. Information should be sought from suppliers on how to ensure a solution is future-proofed for the term of the contract.
- Hold a tender briefing for procurements which have the potential to attract innovative proposals. Tender briefings are a valuable opportunity for potential suppliers to clarify requirements and can be used by State agencies to communicate their interest in innovative solutions. Note: briefing sessions should include clear information on contacts for discussing further questions. Potential respondents may not ask questions at a briefing which could expose their intellectual property.
During contract management, State agency staff should:
- Review the performance of contractors to ensure that the promised benefits of any innovation have been delivered.
- In coordination with key stakeholders, encourage contractors to pursue opportunities to continuously improve outcomes through innovation.
Sample qualitative criteria
Show moreIf identified as a relevant community objective, State agencies may choose to incorporate innovation as a standalone qualitative criterion or include it as a sub criterion within an overarching suitability or methodology requirement. The inclusion of any such criteria will allow for innovation to be considered as part of the qualitative assessment and be a factor in the value for money decision.
To elicit the most useful responses, qualitative criteria should be worded such that suppliers understand what the intended outcome is. For example, the agency should consider whether the intent is to:
- assess how innovative a proposed solution is in a general sense;
- actively encourage respondents to submit more innovative proposals; or
- see how the solution aligns with any agency objectives related to innovation.
The wording options below, in whole or in part, may be appropriate to incorporate into qualitative criteria:
- The Respondent must demonstrate that the proposed solution will utilise either:
- A new to market Good/Service/technology;
- A Good/Service/technology that will be developed as part of the contract; or
- An innovative development/manufacturing/design process.
- The Respondent must demonstrate how small to medium enterprises and/or local industry will be engaged in the development and delivery of the solution, and outline any other benefits to Western Australia.
- The Respondent must detail the process of ensuring how the proposed solution will be future proofed or continuously improved over the term of the contract, to maintain fitness for purpose.
- [for ICT contracts] The Respondent must provide information on the development and expected future of the solution. This is to include:
- An outline of when the solution was first developed and when it was/will be made available to the market;
- A summary outlining the intention for future releases/updates/retirement of the solution; and
- An explanation of how the Customer can influence and or contribute to the future directions of the solution.
