Introduction
Commonwealth procurement is a major economic lever. The Australian Government’s Buy Australian Plan recognises that our significant purchasing power can support businesses to:
- deliver better value for money
- grow the local economy
- strengthen our domestic industry.
This guidance will help procurement officials apply the government’s purchasing power effectively and responsibly when procuring information and communications technology (ICT) services, consistent with the Commonwealth Procurement Rules (CPRs).
Under the CPRs, procurement officials have certain obligations. When determining value for money for procurements over $1 million, officials must consider the economic benefits to the Australian economy.[1]
This guidance gives ICT sector‑specific information and advice for officials considering economic benefits in their procurement planning. Procurement officials should use this sectoral guidance alongside Finance’s guidance.
As a procuring official, you should engage with your entity’s procurement specialists and delegate early in your procurement planning to set your priorities.
Procuring officials must, subject to the CPRs, treat all potential suppliers equitably when determining value for money and economic benefits.[2] They must not discriminate against suppliers because of their size, location, ownership, or the origins of their goods and services.[3]
When considering broader economic benefits as part of your value for money assessments of suppliers, you will need to look at how suppliers demonstrate and plan to deliver those benefits.
Quick reference guide: Finding economic benefits in a procurement process
| Stage | Step | Details |
|---|---|---|
| 1. Before you start | Determine requirements |
Is the procurement:
If so, you must consider broader economic benefits. |
| 2. Planning | Identify opportunities |
Consider with your delegate and procurement team:
|
| 3. Engaging the market | Craft your questions | When going out to market, what questions should you ask to get the information you need to evaluate these benefits? |
| 4. Evaluating responses | Consider the answers |
Assess responses against the opportunities identified in planning, and against the Department of Finance's guidance on value for money. Record your evaluation process. |
| 5. Approval and contract entry | Consider your contract | Ensure what you have assessed against is deliverable, measurable and embedded in contract deliverables. |
This guidance focuses on the ‘Planning’ and ‘Engaging the market’ steps of ICT procurements. The callout boxes throughout this guidance detail how to apply the steps from the quick reference checklist in practice – see the relevant boxes in each section. Visit Finance’s guidance for more guidance on the other stages.
Using this guidance
This guidance is general and aims to help procuring officials consider the broader economic benefits presented in tenders. Each entity has its own process for planning, assessing and recording procurement decisions. Your entity’s central procurement team may have more specific guidance. You can find some examples of broader economic benefit evaluation in Finance’s guidance.
Procuring officials can choose the approach to the broader economic benefits that is most appropriate and effective for the context they are working in. Discuss your approach in the planning stage with your delegate. Your chosen approach will inform how you consider economic benefits throughout the rest of the procurement, from approaching the market to contract management.
Some potential approaches include:
- Context‑specific approach: the good or service you are procuring may lend itself to generating certain economic benefits. For example, goods with complex supply chains might offer opportunities to engage small and medium enterprises (SMEs) along the value chain.
- Aligning with entity priority outcomes or mandates: your approach to seeking and generating economic benefits could align with your entity’s broader policy goals.[4]
- Supplier‑led approach: tenderers may highlight opportunities to generate economic benefits that you had not previously considered. Remain open to looking at the economic benefits that suppliers have cultivated and may specialise in generating.
Finance’s guidance has more information on determining your approach.
Whatever procurement approach you choose, you must always record your decisions and the decision‑making process.
What is the ICT sector?
The ICT sector includes different types of communications networks and the technologies used in them. The sector combines manufacturing and services industries to fulfil or enable information processing and communication by electronic means, including transmission and display. (OECD n.da)
The Commonwealth Procurement Framework does not restrict ICT procurement to a single procurement category. For the purposes of this document, the ICT sector includes businesses that sell goods and services belonging to relevant United Nations Standard Products and Services Codes (UNSPSCs). See Appendix A for more information.
In 2023, ICT procurement accounted for around 15% of Commonwealth commitments reported on AusTender, including more than:
- $4.9 billion on computing services
- $2.8 billion on aerospace systems and components and equipment
- $1.9 billion on components for information technology or broadcasting or telecommunications
- $1.2 billion on software (Tech Council of Australia, 2022a).
Why consider broader economic benefits in the ICT sector?
The Australian Government is supporting the ongoing development of the technology sector as a critical pillar of the Australian economy. A strong ICT sector is critical to diversifying the Australian economy and creating the skilled jobs of the future. The sector is now Australia’s 7th‑largest employer with 1 in 16 Australians working in tech sector jobs (Tech Council of Australia, 2022b). These jobs are highly skilled and well‑paid roles, with an industry average salary of $132,000 (Tech Council of Australia, 2023a).
The ICT sector has grown significantly and now contributes 8.5% to our national GDP. In the past decade the sector has created around 100 new companies valued at $100 million or more (Tech Council of Australia, 2022b).
The Australian ICT sector is operating in a changing and increasingly competitive global market. Australia performs well in technology adoption but lags behind other OECD countries in innovation and IP creation (Tech Council of Australia, 2021). Globally, innovative businesses face significant challenges to scale up and commercialise. This can result in lost opportunities for domestic skills development, exports, tax revenue and other contributions to Australia’s economy.
The Australian Government’s annual spend on ICT goods and services is significant. This buying power is an important lever that can help build the sector’s capability and increase growth. Delivering a government contract can be transformative for businesses, giving them the opportunity to innovate, scale up and demonstrate their capability. This can create significant and wide‑ranging economic benefits for Australia.
As outlined in the CPRs, value for money assessments for procurements over $1 million must consider broader economic benefits. Assessment of broader economic benefits of ICT procurement, consistent with the CPRs, supports government aims to make sure that public spending benefits the Australian economy and community.
What are broader economic benefits?
Per Finance’s guidance, economic benefits to the Australian economy result when the goods or services being procured:
- provide broader benefits that support the development and sustainment of industry capabilities
- otherwise increase productivity (for example by adopting new know‑how or innovation, or enabling more people to acquire in‑demand skills, or ensuring that resources are allocated to sectors in which Australia has a comparative advantage); or
- make better use of Australian resources that would otherwise be under‑utilised (for example employing people who would otherwise be under or unemployed, using spare industrial capacity, or freeing government funds for other spending)
- increase productivity‑enhancing technology development and adoption.
Where do you come in?
You are considering broader economic benefits as part of your assessment of value for money – a core principle of the CPRs. Procuring officials must ensure that each procurement outcome represents value for money.
There is no single way to do this. Articulating value for money in all industries is about identifying the factors that create a clear, shared understanding of what a quality outcome looks like. This might differ depending on the context of each entity’s priorities and the outcomes it seeks.
It’s important to have a clear understanding of what broader economic benefits look like in practice when you are going out to market. By taking this approach, procurement officials can clearly communicate this to tenderers and more easily assess benefits provided by a tender to the economy.
Digital Transformation Agency resources
When buying digital products and services for government you will need to follow some rules and understand when you must use a marketplace, panel or whole of Australian Government agreement.
The Digital Transformation Agency (DTA) provides clear and simple guidance on the digital sourcing process, along with helpful tools and a collection of policies.
Visit Sourcing Guidance – BuyICT for more information.
What broader benefits does the ICT sector offer to the Australian economy?
Remember to stay flexible!
This guidance outlines some approaches to asking suppliers to demonstrate broader economic benefits in ICT procurements. However, these are not the only ways a business might provide broader economic benefits. Inflexible requirements around proving economic benefit may inadvertently disadvantage SMEs who have fewer resources to demonstrate their ability.
Allowing tenderers flexibility and creativity in how they demonstrate value for money can lead to innovations and better outcomes for supplier and buyer.
Innovation and Intellectual Property (IP) development
Businesses report the most common barrier to investing in innovation is a lack of financial resources (ABS 2024). Meanwhile, those entities that do invest in research and development (R&D) often struggle to commercialise their innovations domestically. This can mean that they either stop operating entirely or send their activities offshore where they receive support and procurement opportunities with other governments.
Procuring innovative ICT products and solutions can benefit government, society, and the ICT sector. Businesses receive the investment they need to commercialise existing innovations or develop new ones. Meanwhile, Australia enjoys broader economic benefits such as increased productivity associated with adopting innovative technologies, business growth across relevant supply chains and new potential investment opportunities for Australians (Productivity Commission 2023).
How does innovation and IP development generate economic benefits?
Innovation is increasingly critical to national economic performance, job creation and standards of living (DISR 2017). Government procurement can help boost innovation and capitalise on these benefits.
The ICT sector is Australia’s most innovative sector, with 63% of businesses reporting innovation activity across 2022–23 (ABS 2024). The ICT sector represents 18% of total business R&D expenditure, valued at $3.73 billion in 2022, second only to manufacturing (ABS 2023). Business innovations can lead to better economic outcomes. Australian SMEs are 16% more likely to experience high employment growth after filing for an IP right, compared to their peers without recent filings (IP Australia 2024).