Introduction

Australian governments spend almost $30 billion on information and communication technology (ICT) each year. Digital and ICT solutions are instrumental in streamlining operations, thereby improving public services and enhancing the overall citizen experience. For ICT suppliers, winning contracts with government agencies is one of the most important aspects of business. 

However, procurement in the public sector can be complex and challenging, especially since it comes with regulations, procedures, and requirements to ensure taxpayer dollars are used fairly and properly. If you are an ICT supplier looking to work with Australian governments, read on to understand the key processes, legal frameworks, opportunities, challenges, and best practices in public sector procurement. 

Overview of Government Procurement in Australia

What Is Government Procurement? 

Government procurement is the process by which public sector entities acquire goods and services from external suppliers. This process “begins when a need is identified, and a decision is made to buy to meet this need. Procurement continues through the processes of risk assessment, seeking and evaluating alternative solutions, and the awarding of a contract,” according to the Department of Finance. 

In Australia, government procurement in the digital and ICT space is a major economic activity. In 2024-25, about $6.5 billion was allocated in budgets across federal, state and territory government jurisdictions just for new digital and ICT initiatives. This ‘new initiative’ funding is in addition to the ongoing budget allocation that agencies receive to maintain operations to achieve agency objectives.  

Importance of Government Procurement 

Generally, the government procurement process is designed to: 

• Ensure the proper use of public funds 
• Achieve value for money 
• Improve the delivery of public services 
• Enable agencies to comply with a new policy direction or program requirement 
• Provide equitable opportunities for businesses to secure government contracts 

Levels of Government  

Government procurement is conducted at Australia’s three levels of government: Federal, state or territory, and local. While there are similarities among them in terms of principles and practices, each level has its own procurement policies and procedures. 

Legal and Regulatory Framework

Key Legislation and Policies  

There is a range of legislation and policies that govern procurement in the public sector. These are aimed at ensuring transparency, fairness, and value for money. Key legislative and policy frameworks include:  

• Commonwealth Procurement Rules (CPRs): These rules are issued by the Minister for Finance under the Public Governance, Performance and Accountability Act 2013 and outline the procedures and principles for conducting procurement in the Federal government. The core rule of the CPRs is achieving value for money, to ensure that public resources are used efficiently, effectively, ethically, and economically. 
• State/Territory Procurement Policies: States and territories in Australia each have their own legislation and set of procurement policies. These generally share some characteristics with the CPRs but reflect the specific requirements for each state or territory. For example, some jurisdictions place greater emphasis on using public sector procurement to support the development of local businesses and industries than others. 
• Local Government Procurement Policies: Local councils also have their own procurement policies. They may be simpler as the contact values are not necessarily as high but still adhere to principles of fairness and transparency.  

International Agreements  

Trade agreements that Australia has with other countries impact government procurement. A few examples are: 

• World Trade Organization (WTO) Agreement on Government Procurement (GPA): This agreement opens government procurement markets to international competition.  
• Free Trade Agreements (FTAs): Bilateral and multilateral FTAs with other countries include provisions related to government procurement.  

Ethical and Sustainable Procurement  

Governments in Australia are increasingly focusing on ethical and sustainable procurement. This includes: 

• Environmental Considerations: Governments increasingly expect that agencies and suppliers support environmental objectives such as minimising greenhouse gas emissions and optimising water efficiency. For example, from 1 July 2025, Federal government ICT suppliers will need to report on indicators that support sustainable outcomes under the terms of the Environmentally Sustainable Procurement Policy.    
• Social Procurement: Different jurisdictions have their frameworks for encouraging buyers to use their purchasing power to generate social value, from engaging with indigenous businesses and small and medium enterprises (SMEs) to working with organisations that promote social inclusion. Some jurisdictions have contract targets. For example, the NSW Government’s target is that 30 per cent of total ICT spending be with SMEs. To reach these targets, agencies can procure directly from SMEs under certain circumstances.  

Procurement Processes and Procedures  

The Procurement Lifecycle  

The typical government ICT procurement lifecycle includes:  

1. Planning and Market Research: In these initial stages, governments identify needs, conduct market analyses, and develop procurement strategies.  
2. Sourcing and Tendering: Agencies issue requests for tenders (RFTs), expressions of interest (EOIs), or requests for proposals (RFPs).  
3. Evaluation and Selection: Bids are assessed based on predefined criteria and the best value-for-money offers are selected.  
4. Contract Award and Management: Steps include contract initiation, creation and negotiation, approval, execution, monitoring and management, through to renewal or termination. 
5. Contract Closure and Review: This involves resolving issues or fulfilling requirements left in the contract, ensuring all deliverables have been satisfactorily completed. 

Important for ICT suppliers: when you have the right insights into both agencies and competing suppliers, you can strategise around each step in the procurement lifecycle to increase your chances of winning your next bid. 

The Tendering Process 

Tendering is a core component of government procurement. It is through this process that an agency will be able to select the best supplier and solution for their project or initiative. 

There are several tendering methods, but the most common and favoured in government is the open tender, which involves an open approach to the market inviting all potential suppliers to respond. Sometimes agencies issue an open tender to establish a panel arrangement. A panel is a short list of suppliers who are pre-assessed as able to supply certain commonly used goods or services, and who have been added to the panel through a contractual or standing offer arrangement that lasts for a fixed period. 

The tender process is vital for securing government business but can be difficult for suppliers to navigate. Intermedium has a comprehensive guide for ICT suppliers to win tenders.  

Increasingly, jurisdictions across Australia are experimenting with fresh and innovative ways to conduct procurements and better collaborate with market participants. One such approach is by issuing a problem or outcome statement to suppliers rather than presenting a prescriptive list of required technical specifications. This approach allows suppliers to present new solutions and approaches that the agency may not have considered, but which better meet the objectives of the procurement.   

Digital Procurement Platforms  

Australian governments are increasingly using digital platforms for procurement to streamline processes and improve accessibility. 

AusTender is the Federal government’s procurement information system, which publishes business opportunities, annual procurement plans, and contracts awarded. BuyICT is also used to provide procurement information and connect suppliers with buyers, hosting marketplaces for telecommunications, cloud, data centre, hardware, software and digital. 

State and territories each have their own online procurement portal, such as: 

• Victoria’s Buying for Victoria  
• New South Wales eTendering and buy NSW 
• Queensland’s QTenders and Supplier portal 
• Western Australia’s Tenders WA 
• Australian Capital Territory’s Tenders ACT 
• Northern Territory’s Quotations and Tenders Online 
• South Australia’s Tenders and Contracts  
• Tasmania’s Government Tenders 

There are also private, subscription-based platforms that support suppliers during the procurement process. Intermedium’s Market Intelligence goes far beyond procurement data and includes analyst insights that help ICT suppliers understand agency spending and market trends to help win more government business.  

Opportunities for ICT Suppliers

Key areas 

Several areas present significant opportunities for ICT suppliers. These are just some of the top ones Intermedium has identified:  

• Artificial Intelligence (AI)  A surge of AI contracting is expected over the next 12 to 36 months based on government technology adoption trends. Intermedium’s review of Federal government AI-related contracts found that AI spending has doubled in the last three years. There are regulatory challenges, but 2024 is emerging as a defining year when the governance environment for AI becomes clearer for agencies, spurring confidence and greater investment in AI technologies.  
• Cyber SecurityCyber security will remain a government priority over the foreseeable future. Australian governments have invested billions of dollars into Whole-of-Government (WofG) and agency initiatives to protect operations and safeguard citizen and agency data from cyber-attacks, not only during the pandemic (with the rise of work-from-home arrangements) but also subsequently.  
• Data Management Data is crucial for ensuring that policy development and service delivery are effective and efficient. NSW and VIC’s digital twins, QLD’s shared Data Analytics Platform, and WA’s WofG data linkage and analytics capability PeopleWA are a few examples of data infrastructure developed to support data sharing and visualisation. Data analytics centres are also a feature in data strategies to bolster WofG capability, including in QLD, NSW, SA, and ACT.  
• Digital Transformation Governments are transforming operations to create more simple, convenient and personalised public services for citizens and businesses. These efforts present a plethora of opportunities for suppliers whose domain is in workflow automation, personalisation, and customer experience optimisation.  
• Emerging Technologies As technology is always evolving, it is critical for agencies not just to stay on top of current developments but to get ahead of future challenges as well. Some agencies are now actively adopting and experimenting with emerging technologies like blockchain, quantum computing, and machine learning to improve decision-making, optimise security, and enhance service delivery. Noteworthy agencies that are on top of emerging technologies include the Digital Transformation Agency, the Australian Taxation Office, and the Department of Defence, just to name a few. 

Challenges and Barriers

Navigating Complexity 

Procurement regulations and procedures are complex and intensive with different requirements at federal, state, territory, and local levels. ICT suppliers need to familiarise themselves with requirements well before foraying into the public sector market. To address this necessity for our subscribers, Intermedium regularly publishes analyst articles on government requirements and priorities in its Knowledge Base, one of the core features of its Market Intelligence platform. 

Competitive Bidding  

Suppliers need to invest time and resources in preparing high-quality bids that stand out, besting the competition in terms of value for money and innovation. Intermedium's Market Intelligence Platform allows you to identify where your competitors are active and determine where your strengths are in comparison, saving you hours of laborious and frustrating research.  

Understanding Buyer Needs  

This requires thorough market research and meaningful engagement with government agencies and their decision-makers to tailor solutions effectively. Intermedium's Market Intelligence Platform provides the information you need to know about agencies in one convenient online dashboard. Use it to identify key people, ICT budget, addressable and funded projects, ICT environment, current contracts and direction. 

Best Practices for ICT Suppliers  

Building Relationships and Networking  

Developing strong relationships with government agencies and procurement officials can enhance understanding of upcoming opportunities and requirements. Networking events, industry forums, and participation in government briefings are valuable for building connections. Intermedium’s long-established post-budget breakfast briefings are feature events for the ICT and digital industry, with senior executive service-level officers from the government sharing their views on ICT and digital budgets. 

Market Research and Intelligence  

Investing in market research and intelligence helps suppliers identify opportunities and tailor their offerings. Understanding government priorities, upcoming projects, and procurement trends is essential. Intermedium’s Market Intelligence platform is a powerful tool many of the top ICT companies in Australia use to have a competitive edge in the government ICT market.  

Preparing High-Quality Bids  

A successful bid requires clear, concise, and compelling documentation. Key elements include:  

• Responding to the Requirements: Thoroughly read and understand tender documents and requirements. Do not submit generic marketing material and remember that mandatory means mandatory!  
• Value Proposition: Clearly articulate the value your solution brings, emphasising benefits, innovation, and alignment with agency priorities and government architecture.    
• Compliance and Risk Management: Demonstrate how your proposal complies with all requirements and effectively manages risks. Risks may include data security, privacy, workplace health and safety, and environmental impacts.  

Conclusion

With almost $30 billion spent on ICT and digital every year, Australian governments present rewarding opportunities for suppliers. However, overcoming the challenges of government procurement requires thoughtful navigation. By understanding the legal and regulatory frameworks, procurement processes, and best practices, suppliers can position themselves for success in this competitive landscape. Building strong relationships, conducting thorough market research, preparing high-quality bids, and leveraging digital platforms are key strategies to enhance one's chances of securing government contracts.  

Intermedium helps suppliers with those strategies through its Market Intelligence platform and advisory services. Book a demo with us to see how we can help you navigate the complex process of government ICT and digital procurement.