The NSW Government has changed the way state agencies can spend without going through a tender process, bringing both pros and cons to the table for channel partners.
As per the new direction, which took effect on October 1, procurement accredited NSW Government agencies can engage suppliers through direct negotiation on short-term contracts valued up to $1 million in order to do proof-of-concept testing or outcomes-based trials.
This is in comparison to the $250,000 cap that was in place before the change was made.
“The Procurement Board recognises that there is value in permitting agencies greater scope to test the capability of goods and services to meet current or emerging business needs through innovative solutions or outcomes-based trials," a procurement memo stated.
"Often these innovative solutions may require direct negotiations with a supplier. Existing procurement policies appropriately limit direct negotiations to low value, low risk and/or unique products."
This tender-free threshold is only applicable to agencies that work with SMBs instead of enterprise providers, and those that publish a report on the outcome of the trial within 21 days of its completion.
The new scheme expands the gauge of experiments possible, conceivably giving smaller local resellers the ability to avoid long-winded tender processes more frequently.
Seccom Global director, Michael Demery, said as a supplier, he welcomes the opportunity to provide a proof of concept or product trial to agencies considering them, and to undertake direct negotiations with those agencies.
For Demery, the move will prove beneficial for an agency testing the value or relevancy of an offering prior to including a particular supplier in the procurement process.
However, Demery said introducing this option to agencies raises some concerns.
“A relaxing of the guidelines for direct negotiation has the potential to give rise to an unfair playing field, and should be carefully monitored to ensure impartiality," he told ARN.
“While it is clearly stated that the proof of concept cannot alone identify the preferred procurement solution, one may argue that unless all competing solutions are given the same opportunity to provide a proof of concept of their technology, then the playing field is already compromised."
According to Demery, allowing any one supplier an opportunity to showcase technology or services while excluding others, would create an unfair advantage to those not given the same opportunity.
“If the purpose of the testing is to determine the feasibility of a product or service in meeting the needs of the agency in question, then this should apply to all parties undertaking the procurement process equally - perhaps the only exception being a case where there are several parties deemed acceptable and there is a doubt around one or more parties," he added.
NK2IT managing director, Nitin Kuchera, told ARN the change represents an encouraging move for smaller channel partners, yet doesn’t really change the way his business operates as his existing contracts currently fall under the $250,000 cap bracket.
"We’ve been working with government for the last four years and it has been a smooth sailing process thus far," he said.
"I haven’t had any difficulties in the past working with government – we never had any issues in the tender process.
"We welcome the change, but it’s too early to say if it’s positive or negative for the channel. It could be positive as the government could be targeting better infrastructure and more advanced technologies but at the same time, it also restricts competition because it’s only applicable to those that work with SMBs.”
Adactin Group CEO, Navneesh Garg, believes the move is "positive" for SMB businesses, opening the government to offerings by smaller players, instead of just those from established vendors or service providers.
“We’ve seen government agencies that were scared to try new products and new services in the past," he told ARN.
"This used to create a bottleneck for us, as a result of the competitive nature of how it used to be with big players in the industry.
“This change will allow the government to try new things and as an SMB business, it gives us opportunities to do come up with new service and product offerings."
Garg said the move will allow Adactin to seek greater traction within the government, in addition to reaching out to more customers as an SMB business.
He also said it puts SMBs in a better position to compete against enterprise businesses.
"It just helps create a more competitive environment, which the SMBs need," he added.
"With this assistance from the government, SMBs can compete more effectively in this space instead of being on the losing end."