Initiating innovative procurement processes: from startups to sustainability

By Shannon Jenkins

Wednesday July 17, 2019

Source: Getty Images

Procurement experts have come together to discuss a range of innovative ways to improve procurement processes.

The Procurement of Community Practice Forum was held at Melbourne’s Treasury Theatre on Tuesday, and was moderated by Steve Robertson, manager at the Victorian Government Purchasing Board Secretariat in the Department of Treasury and Finance (DTF), and Con Chara, director of construction policy at the DTF.

“My team and I see these forums [as] important in a number of ways. First, as a way to develop to help you keep abreast of policy developments in procurement. Second, for you to have an opportunity to raise questions, and identify practical issues and impediments that are impacting operations on the ground. And importantly, for us to listen to you to position us better to support you in project delivery,” Chara said.

Speakers included Rob Patrick from the public sector innovation team in the Department of the Premier and Cabinet; Matt Genever from Sustainability Victoria; and Matthew Taylor, Aimee Esselmont, Mark White and Athena Rozenberg, all from the DTF.

Working with startups

Patrick discussed CivVic Labs — an initiative to bring the state government and startups together to solve challenges in the public sector and get value for money.

CivVic Labs — partnered with LaunchVic — looks at new ways of working to overcome barriers to innovation and achieve outcomes.

Patrick addressed the pressure on public servants to get procurement right.

“I’m sure there’s a real diversity of experience in the room … but, often when we’re thinking about procurement approach it can be quite lengthy in terms of the preparation and planning that goes into it. And then when we step through and develop and roll out a solution, we can sometimes end up with mixed outcomes.”

He noted that it can be disappointing when things don’t go as planned, which is “compounded by the reality that we’re asked to over-specify when we go to market”.

He said that sometimes that understanding comes when a provider has already been “locked-in”.

CivVic wants to “really leverage that potential” of using dynamic technologies to solve public sector challenges in the pre-commercial procurement space, where solutions may not already exist.

Patrick said startups are a good option because they are diverse, have “high impact growth potential” and “tend to view the world differently”.

 “Victoria has a really thriving startup ecosystem. And it’s ranked in the top five ecosystems globally,” he said.

He emphasised that while CivVic labs is a procurement initiative, it’s about problem-solving and creating “smarter technological solutions” in an alternative way.

Some of the benefits of working with startups include smarter tech solutions in a de-risked environment, as it offers a more transformative process and is capability-building. The benefits for startups include receiving funding, giving them access to procurement contracts, and allowing them to better understand processes.

The growing global gov-tech movement is worth around $400 billion, according to Patrick.

CivVic Labs is currently running three rounds of its program over two years, giving the opportunity to address 16 public sector challenges. The first round is already underway, dealing with health and transport challenges. The second round is due in September, and the third in February next year.

Patrick said the initiative is aimed at projects that could involve technology-enabled solutions in the broad sense, from software to hardware. He emphasised that it isn’t suitable for things where there is already an “off the shelf solution available” — rather, it targets areas where solutions do not yet exist.

The Social Procurement Framework

Taylor explained how to incorporate the Social Procurement Framework (SPF)  into procurement documents. He previously worked on the Banking Royal Commission as a commercial lawyer, before he joined the state government as a policy advisor to help develop and implement their social procurement framework. 

The SPF “imposes mandatory requirements on departments, agencies and government buyers,” he said.

READ MORE: Australia’s first social procurement policy redefines value for money

He said there are two key things to remember when framing requirements to deliver social and sustainable outcomes in your procurement documents: they should define what the outcome is that’s required, rather than specify how that outcome should be delivered; they should also establish measurable performance indicators. 

“Put simply, to consider social procurement opportunities means to think carefully about how the SPF applies to the specific circumstances of your procurement. It is not a box-ticking exercise.”

Taylor offered several key takeaways:

“First, government buyers must consider opportunities to deliver social and sustainable outcomes in every individual procurement activity.

“Secondly, when you’ve identified a social procurement opportunity, requirements to deliver social and sustainable outcomes should be determined on a case-by-case basis, to ensure that they are proportionate and achievable.

“Thirdly, the SPF model clauses are there to make your life easier. They are found in Appendix A to the SPF guide to individual procurement activity requirements. You can modify and tailor these clauses as required. And the same is true for the social procurement information schedules in appendices B1 to B10.

“Fourthly, make sure you use terminology that is consistent with the SPF. The model clauses will actually help you achieve this.”

He said anyone who is struggling to apply the SPF model clauses in their procurement activities should contact the Buying for Victoria hotline.

Being sustainable

Genever spoke about the growing implementation and potential of using recycled content in public construction as a way to deal with pressure on the waste and resource recovery sector, brought about by the Chinese government’s decision to stop importing recyclables.

READ MORE: Are NSW and VIC rubbish at recycling?

“Essentially, we had a very easy market where it was possible for us to collect our recyclables, bail them up into different packages, like plastics and paper, and send them off and China was very, very keen to buy them of us to feed its emerging and booming manufacturing sector. It has since said ‘we don’t want to do that anymore,’ and instantly had a really dramatic impact on the value of these commodities.”

Australia and other nations must make sure they have strong, well-functioning markets to manage the waste that they generate, he said.

Genever argued that within the SPF, there is a clear pathway for governments to “see greater uptake of recycled materials and products” in its procurement activities.

The three sustainable procurement objectives:

  1. Environmentally sustainable outputs.
  2. Environmentally sustainable business practices.
  3. Implementation of the climate change policy objectives.

VicRoads is currently using recycled materials in major projects, including crushed rock, while recently there has been a “strong push” for using recycled glass as a sand-replacement product. Genever argued that if this push continues, then “in the next couple of years, we’ll be able to consume all of the post-consumer glass that gets generated in Victoria”.

“That’s an amazing story in terms of being able to talk about the circular economy; if we can say Victoria actually has a really good example in practice of how the circular economy might work.”

He said using recycled materials is also much more cost-effective than using virgin materials.

“This isn’t about a bunch of greenies running around saying you need to pay a huge premium to use these recycled products. This is about saying, can we get to the point where we have a market that is creating high value, high-quality recycled products that can compete both on price and on quality with their virgin alternatives.”

He noted that not every part of the market is at the same point in the journey. For example, Victoria generates 600,000 tonnes of plastic a year, which now need to find a home.

One solution that is currently being trialled at Richmond station is using recycled plastic in railway sleepers.

He urged anyone involved in the procurement and manufacturing space to respond to opportunities in the market and help initiate a more sustainable practice.

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