Innovation procurement

Updated: 12 Apr 2024
Discover how NSW Government is making it easier to buy innovation. Join us in the co-development of the Test and Buy Innovation model and learn about our journey to a digital experience.


The role of innovation in ICT/Digital procurement

Innovation is an objective that must guide all procurement decisions.

Innovation also becomes increasingly important as the rate of change in the technology sector and the role of ICT/Digital technology in service delivery both grow.

Innovation can be encouraged by:

  • effectively framing the problem to be solved
  • understanding what’s on offer from the market
  • working more closely with suppliers
  • trying out unfamiliar or less mature solutions
  • evaluating diverse solutions
  • having a plan to implement them if they succeed.

Innovation procurement is when buyers need to turn to the market, but don't know the best solution. Accelerators and innovation programs across the NSW Government are adopting innovation-friendly procurement methods to access the latest market expertise and technology solutions.

For NSW Government buyers who don’t have access to this expertise, it can be hard to know where to start, or how to balance the risks and rewards of doing things differently.

About the program

The NSW Government is making it easier to buy innovation and ultimately find the best solutions for the problems NSW communities face.

Test and Buy Innovation is the result of several years of work from Digital NSW investigating and addressing barriers to buying innovation and was previously known as Innovation Procurement Pathways (IPP).

Access the first set of innovation procurement web-based practical guidance.

We’re taking a 'crawl before you walk' approach. Using design thinking and agile methodologies, we’re co-developing an innovation procurement model and the comprehensive support needed to apply it. The model will help us address the challenges we’ve heard from buyers and suppliers through:

  • a central test and buy innovation advisory team
  • self-service resources
  • supporting policy frameworks.
Take part in the co-development

Help us test innovation-friendly procurement methods in NSW Government. We’d love to hear from:

  • suppliers of emerging technologies
  • buyers of innovation for NSW Government.

If you’re interested in sharing your experiences or getting involved, email the program team at innovationprocurement@customerservice.nsw.gov.au

Where we’re at: crawl stage

We’re in the 'crawl' stage of our program. In the crawl stage, we create supports for guided use and testing with real projects.

  • We set up the program team and kicked-off our first sprint focused on 'setting up for success' in late July 2023.
  • During sprint 1 we co-designed self-service resources with buyers of innovation for NSW Government, as part of the overall support model. These have been published as web-based practical guidance to make it easier for NSW Government buyers to adopt innovation-friendly procurement methods. This means we jump ahead to the 'walk' stage for many of the supports, while a handful will stay at crawl stage for guided use while we continue to test them.
  • We kicked off sprint 2 in March 2024 and showcased its findings in Sep 2024. Sprint 2 picks up from sprint 1 and delivers supports for the last part of the plan stage of the buying innovation journey. Supports will guide buyers through completing a digital innovation buying strategy and getting it approved. This sprint exceeded its aim by also delivering a framework for agile public sector procurement.
  • The publication of sprint 2 supports is expected in mid-2025.

The program team is:

  • supporting selected projects within our capacity in a controlled testing environment (our program 'sandbox')
  • providing ad-hoc advice to other projects seeking our expertise
  • resource building - we're creating resources (such as checklists and guides) for sandbox projects, and for non-sandbox projects for supervised use
  • conducting research to identify policy changes we might need to make, including risk, intellectual property and probity.

Next steps

Walk

Resources will be made available when we get to the 'walk' stage. We’ll make a case to scale up the support team to meet needs across NSW Government, beyond sandbox projects.

Run

Our goal is to 'run' by transitioning to a digitised experience, with embedded policy, automated steps and personalised content.

What you’ve told us

Our consultation has told us we need to review procurement processes. They should be streamlined and able to respond to change.

The NSW Government could become a critical first customer for start-ups. Businesses can test out new solutions and, when successful, deploy them at greater scale.

Findings from consultation

In late 2021, we held a series of workshops with buyers of innovation across NSW Government. We wanted to understand the pain points and barriers in innovation procurement.

We identified 4 key barriers:

  1. How much time is given to buyers to plan and conduct procurements, and how much time is needed.
  2. How much effort is involved, given the complex policy environment and procurement documentation.
  3. Whether buyers have the right skills, understanding of the emerging technology sector, or procurement help early in the process.
  4. Whether buyers are confident enough to balance risks and rewards while interpreting the policy levers available.

Participants put forward 13 recommendations:

  1. Procurement recipe book.
  2. Innovation support team.
  3. Proof-of-concept-to-scale decision tool.
  4. Fast-track innovation procurement pathway.
  5. Innovation procurement risk framework.
  6. Innovation procurement intellectual property framework.
  7. Unsolicited proposals store.
  8. Simplified procurement policy.
  9. Enhance appetite for risk and reward of innovation.
  10. A NSW government innovation community of practice.
  11. Emerging technology education for procurement teams.
  12. Approvals and accountability improvements.
  13. Innovation procurement pathway sandbox.

Buyers also wanted to see a transition towards a digital and automated platform to bring many of these recommendations together.

Throughout 2022, we engaged with over 100 suppliers of emerging technology. Most of them were SMEs with no experience with selling to government. SMEs can increase supplier diversity and the range of innovative solutions for NSW.

Suppliers agreed on a 'recipe for success' that includes:

  • well-formed challenges and problem statements
  • an interested buyer with an established need
  • an opportunity to participate in a trial
  • a plan to scale following success
  • strong agile project management and co-design methods.

We narrowed down what would give suppliers the most value to (in order of value):

  • a problem-based or outcomes-based market approach that includes early market engagement or research
  • communication channels to connect NSW Government problems with supplier solutions
  • trials where participants are compensated and successful outcomes implemented at scale
  • an advisory team with commercial and industry knowledge
  • clear instructions on the procurement process and requirements for tenders at all stages
  • ways to get value from the tender process even if unsuccessful to continue to improve, including better communication and feedback
  • collaboration across departments so that solutions can be re-used.

Watch a summary of the roundtable event.

Why this is important

Innovation should guide all procurement decisions, especially given the rapid changes in the technology sector.

Innovation procurement leads to benefits for both buyers and suppliers.

Benefits for buyers

  • Confidence engaging with industry for cutting-edge ICT and digital products and services.
  • Compliance with probity, value and transparency principles.

Benefits for industry

  • Better clarity around opportunities and processes.
  • Lower barriers to entry.
  • Sector growth.

Strategic alignment

Several NSW Government strategies highlight innovation procurement as a catalyst for progress:

Who to contact

If you’re interested in sharing your experiences, accessing support, learning more or getting involved, email the program team at innovationprocurement@customerservice.nsw.gov.au