Parliamentary Committee calls for procurement reform to lift sovereign capability

In March, the House of Representatives Standing Committee on Infrastructure, Transport and Cities table in Federal Parliament its report titled Government procurement: a sovereign security imperative.

What’s interesting about this report, and what differentiates it from similar reports, is its focus on the community’s growing concern regarding Australia’s sovereign security. 

The Committee’s chair John Alexander OAM states in the report’s forward:

 “Sovereign security has in recent times become an important issue for our country, as tensions with great trading partner countries come into sharp focus, with real concern for the impact this has on our exports and the flow-on effects to our economy.

 These concerns have escalated suddenly and violently, with fears of trade wars now being supplanted by the hostile Russian invasion of Ukraine, and the dramatic impacts that this conflict has had, even as far away as Australia.

 Over decades, sovereign security has been compromised because there has been no one on the ‘watch tower’ looking out for the clear and present risks that have emerged from our expedient choices in seeking the lowest price for our procurement.

 At first glance these choices are hard to fault, however on a deeper and broader analyses of all of the elements that come into play, these choices contain real and possibly devastating consequences.

 Decades of choosing the lowest price, as opposed to the ‘best value’, has diminished our capacity to deliver fit-for-purpose infrastructure, which now is presenting as a danger to our sovereign security.”

The report includes several recommendations aimed at increasing access to Commonwealth funded projects for tier 2 and tier 3 companies, including by:

• unbundling projects into smaller contract packages;

• where unbundling isn’t possible, requiring or encouraging tier 1 companies to joint venture with tier 2 and tier 3 companies;

• giving greater weight to non-price factors, including the development of sovereign capability, when assessing which tender provides the best value.

The report doesn’t represent Federal Government policy.  Rather, it makes recommendations to the Federal Government that can be accepted or rejected.  It remains to be seen whether any of the Committee’s recommendations will be accepted and implemented by the newly elected Federal Government.

The ACA has included increased sovereign capability as a potential key reform in its FAIR initiative, despite its membership being dominated by foreign owner tier 1 companies.

The AFR has also recently noted calls by Australia-owned contractors for the federal government to develop stronger policies to ensure they are included in our biggest infrastructure projects.

You can access the report here