Set mandatory criteria for innovation

Setting mandatory criteria in a procurement helps optimise time spent on tenders. This applies both to suppliers preparing submissions and buyers evaluating proposals. Mandatory criteria set clear expectations for the requirements of a particular project and for working with the NSW Government in general. They are often legal or regulatory prerequisites but are not limited to this.

Setting mandatory criteria can lock out innovation. Any mandatory requirements included in evaluation should be true 'showstoppers'. This means a buying team would not progress or consider any alternative compliant approach in relation to those criteria under any circumstances. Non-compliance with any mandatory criteria would result in a proposal being set aside and not evaluated.

Encourage innovation with flexible criteria

Flexibility in setting criteria can be key to encouraging a wide range of solutions when buying innovation. Instead of imposing mandatory criteria from the start, consider introducing these requirements at later stages. This allows suppliers more time to meet them, keeping the process transparent and open to a broader range of participants. 

When in doubt, avoid setting mandatory criteria and use scoring instead. This approach helps narrow down preferred solutions and suppliers without locking solutions out. Scoring systems can prioritise compliance with key requirements, while still considering all proposals. This is particularly important for emerging markets where suppliers may not yet have worked with government. 

Small to medium enterprises (SMEs) are the source of much of Australia's innovation. They can also struggle to meet certain requirements upfront, such as insurance, modern slavery or cyber security measures. Buying teams should consider building compliance pathways into later stages if solutions don't initially meet requirements. This approach ensures SMEs are not excluded from the process and supports their long-term growth.

Options for pathways to compliance

The buying team can revisit the design of later stages and consider how suppliers can be supported to meet requirements. Pathways to compliance vary depending on the requirement and the maturity of the market, but may include:

• improving awareness of requirements through existing government guidance
• providing more structured education around how to meet requirements
• enforce requirements at later stages, e.g. only at the time of final agreement
• build the cost of meeting a requirement into the final contract.

When mandatory criteria can't be met

When no supplier can meet the already approved and communicated mandatory criteria, procurement teams often need to adjust them. This process can be time-consuming, delaying the entire evaluation process so changes can be reviewed and approved. In extreme cases the procurement may need to be terminated and restarted with updated criteria, adding further delays. 

A rigid approach that relies heavily on mandatory criteria leaves little room for negotiation or flexibility. It blocks innovative solutions that might otherwise emerge if suppliers were enabled to meet requirements gradually through education, support or adjustments over time. By building in flexibility, procurement teams can better support innovation while still ensuring key project goals are met.

Examples of rigidity

Default contract positions not being tailored for the project
— for example, on-shore data storage. If only overseas vendors can solve a problem but none are willing to keep data within Australia, no solution can be assessed. Market scans can help determine if this is a likely outcome and criteria can be left flexible to keep options open.

Technical requirements that are poorly defined, unrealistic or not applicable to the project
— for example, non-functional criteria from a template. 'The solution must elastically scale to meet increased demand and must de-provision instances when not in use' is included as mandatory criteria when it was not applicable for the requirements.

Requiring immediate compliance rather than pathways to compliance
— for example, insisting on full insurance coverage at the start of a contract, even if a supplier could meet the requirement over time. Consider establishing pathways to compliance enables suppliers to meet mandatory requirements over time. These could be through education, training or financial support.

How to determine genuine showstoppers

To determine which requirements are truly non-negotiable, buying teams can start by reviewing the likely form of contract and identifying any non-negotiable terms and conditions. In an ICT environment, it's important to pinpoint fixed technical constraints or requirements. Neither of these can be compromised, even though the end solution might still be unclear and based only on market research.

Next, consider whether you are willing to abandon the project if suppliers fail to meet certain mandatory criteria. This is especially critical when dealing with emerging technologies or less mature markets, where there is no guarantee any suppliers can fully comply.

If strict compliance is not possible, explore pathways to compliance.