Procurement For Better Government, Social And Community Outcomes
Scroll
By Rhiana Dabboussy
Public procurement provides significant economic and policy benefits: it harbours the potential to boost innovation, increase inclusiveness and influence market decisions. A valuable lever for Government, procurement holds the power to not only make Government work better, but to achieve system-wide change.
The trouble is, the ways in which Government goes about securing contracts can be murky, confusing and largely hidden from the public eye.
So, how can we ensure that procurement activities are for the public good, and where is the future of procurement taking us?
Procurement in Government
Public procurement refers to the acquisition of goods, services or works by Government. This might look like a government department or agency funding SME research, purchasing commodities from a social enterprise or commercial business, or outsourcing work to consultants with specialised skills or services.
Because public procurement is funded by the taxpayer, governments must be responsible, efficient and ethical when making acquisitions in order to safeguard the public-interest. Governments should therefore consider the social value of any and all procurement activities before making acquisitions or outsourcing services.
To do this, governments should turn their minds to how procurement will create additional value for communities and environments and its economic, social and environmental impacts. This is what is referred to as ‘social procurement’.
Social procurement has the power to alleviate disadvantages and drive positive outcomes. For example, by awarding a contract to a company that has a disadvantaged or underrepresented background, the government can promote growth and diversity, while creating new opportunities for marginalised groups.
Similarly, by purchasing goods from sustainable and ethical enterprises, Government can minimise its environmental impact, while incentivising other businesses to use green practices (or else they might not win government contracts).
Another prong of procurement is procurement for innovation, a practice ‘that is intended to stimulate innovation through research and development and the market uptake of innovative products and services’.[1] Innovation procurement is required to ensure that solutions are fit-for-purpose as the market shifts with time.
How is Government creating innovation procurement pathways in Australia?
Innovation procurement falls into three broad categories:
1. Off the shelf, where an existing innovative product or service is bought ‘as is’ to solve a problem
2. Customisable solution, where an existing product is procured, but is intended to be customised
3. Fully customised solution, where a problem is articulated to the market and components are supplied by the contracted vendor. This is the present focus of innovation procurement.
Over the past two years, the NSW Government has launched several strategies to guide digital transformation across the State. Procurement is identified as being a key enabler of these strategies.
However, in order for procurement to support the government’s digital goals, it must be innovative – a fact the NSW Government recognised in 2022 with its announcement of Innovation Procurement Pathways (IPP).
IPP, an approach designed to make it easier to find and develop solutions to problems that people face in NSW, will ‘stimulate growth in research and development and the innovation and emerging technology sector’.[2] It will do this by using the market to solve problems and then providing opportunities to co-design and test solutions. This, in turn, will improve public efficiency, meet new needs with solutions not currently available on the market, support start-ups, and will enable better connections between government, SMEs and academia.
With the NSW Government spending over $2.5 billion annually with ICT and digital suppliers, innovative procurement can create a real economic shift when it comes to the emerging technology sector. This is not just significant for the tech sector, but for Australia’s economy as a whole.
Can AI-led solutions play a role in public procurement?
Artificial Intelligence (AI) presents a powerful opportunity to improve government processes and is being used across the world to provide automated government solutions.
For example, in the US, AI is being used to predict and monitor crime, as well as identify offenders.
But with AI comes heated debate.
The procurement of AI brings with it considerable hurdles and inherent risks, particularly for those who are vulnerable to digital society.
The Robodebt fiasco in Australia proved just how harmful automated systems can be, with the government unlawfully raising $1.76 billion in debts against 443,000 Australians over a period of five years.
The impacts were devastating, with many victims succumbing to financial hardship, anxiety and depression.
With such significant consequences, it is important that Government is responsible, transparent and open in its procurement and implementation of AI systems. To do this, Government must minimise the ‘black box’ by making sure that processes and technologies are exposed and are able to be understood.
Technology is complex by nature. The average Australian has limited understanding of the nuts and bolts behind automated systems and it is not an easy thing to explain.
By consulting stakeholders from the beginning of the procurement process, rather than explaining an already built system, Government can better assist people in understanding acquired technologies.
This makes it easier for users to learn the ins-and-outs of the automated systems they will be engaging with, while also giving them the agency to influence systems and co-design solutions.
When it comes to AI technologies, there will always be black box components. To mitigate this, a human touch point should be included at every stage of the procurement and implementation process.
This not only dispels some of the mystery behind the procurement process, but places responsibility and accountability on the person who is overseeing it.
In a world where technology is seldom trusted, shifting the responsibility from technology onto a human who will deploy and oversee that technology can assist users in feeling safe when engaging with AI-based solutions.
Government cannot outsource responsibility
The government is accountable to the taxpayer for all procurement activities, from the acquisition of simple solutions, to the building of complex AI systems. While Government is free to outsource the building of such solutions, it cannot outsource its responsibility to the Australian people.
It is therefore essential that Government carefully considers all procurement activities and their impacts on the wider community. This is especially the case when it comes to automated solutions, in the case where people won’t always have a clear understanding of the system that is being offered.
However, with rising health care costs, administrative backlogs and an increasing number of cyber attacks, procurement (and specifically AI procurement) provides an invaluable tool for Government to achieve system-wide change.
If government spends the time mitigating the pitfalls of technology and building public trust, the future of public procurement is full of opportunity.
[1] OECD (2017) Public Procurement for Innovation: Good Practices and Strategies, OECD Public Governance Reviews, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264265820-en.
[2] NSW Government (n.d.) Innovation Procurement Pathways, buy.NSW website, accessed 4 May 2023.
