Public procurement is a major driver of economic activity, constituting 15 per cent of GPD – higher than the OECD average of 11 per cent. Through competitive tender processes, governments in Australia have awarded 13 per cent of all public procurement expenditure to international bidders.
In awarding tenders for major projects, governments must balance public expectations with the need to ensure that major expenditure commitments represent value for money. Often, the purported cost-savings associated with ‘offshoring’ major procurement is cited by policy-makers as a rationale for awarding international bidders with major contracts instead of domestic bidders.
This report considers the merit of this argument, examining six major public procurement decisions by the NSW Government to determine whether the decision to offshore these projects was, ultimately, value for money after considering the broader economic benefits associated with domestic procurement.
It examines six major transport procurement decisions made by the NSW Government. It then examines the forgone domestic economic activity and jobs creation that has resulted from offshoring these projects.