The NSW corruption watchdog has argued against government procurement policies that preference local suppliers, saying this can compromise value for money and create a potential corruption risk.

The comments are in made in a submission to a parliamentary inquiry into state government procurement practices that will begin public hearings in April.

“For a variety of reasons, the Commission does not support selection criteria or weightings that give preference to local content or local suppliers,” the ICAC says in its submission.

 “In particular, local content/supplier policies potentially sacrifice value for money by limiting competition and may prevent access to new products and innovative solutions, and create unnecessary lobbying risks.”

In particular, local content/supplier policies potentially sacrifice value for money by limiting competition and may prevent access to new products and innovative solutions, create unnecessary lobbying risks.

ICAC

Giving preference to a “local” supplier without defining what that actually means could also be used to mask a conflict of interest between a supplier and an agency decisionmaker, it adds.

The submission also highlights order splitting, wasteful end-of-year financial spending and manipulation of supplier panels as other procurement risks.

It recommends giving giving chief procurement officers more powers to monitor procurement activities and says the government should consider a debarment scheme to ban suppliers that engage in misconduct, similar to the system in WA.

Corrupt conduct in procurement remains a perennial issue for the Commission, the ICAC submission says, including schemes where public officials buy goods or services where there’s an undisclosed interest, or where they benefit from contracts.

Lowering the threshold

Meanwhile, Osmond Chiu, a Research Fellow at the Per Capita thinktank and policy and research officer with the CPSU, says the $150,000 threshold for contracts to published on the NSW government’s public register is too low and calls for it to be lowered to $10,000.

Mr Chiu’s submission to the committee provides a a comparative analysis of the dollar threshold for contracts to be published and says in NSW it’s significantly higher than the Commonwealth, which has a $10,000 threshold.

“I recommend that NSW drops its threshold to $10k,” he says.

The committee is inquiring into a range of issues around procurement including:

• The effectiveness of whole of government arrangements
• Opportunities for co-regulation and other incentives to ensure value for money and social outcomes
• Evaluation criteria used in tenders and how they are weighted in making a decision to award a contract
• Transparency and accountability
• Procurement best practice to encourage ethical conduct and promote social development

The first public hearing is scheduled for April 2.

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