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Wednesday, October 27, 2010

Australia innovates with same old local preference plan

As has often been cited in this blawg, local preference is as common around the world as another beautiful day on Guam. In broader contexts, it's called protectionism, but I have recognized that, in small doses carefully applied, it does make local economic sense.

Govt urged to include local firms
The government should introduce procurement rules that mandate main parties involved in government tenders have a local business element in their bids, according to a report by the Innovation Review Steering Committee.

"While there is widespread acknowledgement that governments are legally prohibited from biasing procurement decisions towards local providers, a strong expectation remains that government contracts should provide a key source of revenue for innovating businesses," the report said.

The review participants decided that a change to government procurement practice would best foster local innovation.

"The overall aim of the amendment would be to support the conditions for innovative local enterprise to flourish at the SME [small- to medium-sized enterprise] level ... this could be achieved by requiring prime contractors (regardless of their nationality or size) to specify a 'local content inclusion' plan in their bids," the report suggested.

The content inclusion plan would explain how the prime contractor, if it was successful, would partner with local small- to medium-sized enterprise to deliver the needed service or product.

Making a condition of inclusion, but not "picking a winner", would help ease concerns about scale, according to the report.

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