4. Potential Value for Money Advantages of Local Supply
The Government expects its agencies to be fair but demanding buyers, who will purchase from internationally competitive domestic suppliers where they offer best value for money.
This requires due consideration of potential commercial and practical advantages in purchasing locally produced goods and services. These may include:
- a better price and total or whole-of-life ownership cost;
- better through-life support (e.g. better availability of spare parts and after-sales service);
- shorter supply lines and/or delivery lead times;
- reduced inventory costs;
- reduction or elimination of exchange rate risks;
- easier and cheaper communications/transport;
- simpler and cheaper contract administration and dispute resolution;
- greater scope for cooperative and innovative product development and influence over the supply base;
- continuity of supply and more direct control over orders;
- goods/services better adapted to local conditions; and
- better knowledge of the producer's reputation and reliability.
In general, it will often make good business sense, in terms of value for money and a reliable supply base, that goods and services should be sourced from local suppliers where the necessary standards of competitiveness, quality and availability are met.
The Government's procurement policy does not give preference or weighting to local content in itself. Similarly, there should be no discrimination on the basis of ownership of a supplier or preference for domestic equity in itself. Having given domestic suppliers full and fair opportunity and assessed any commercial and practical value for money advantages associated with local supply, agencies should buy from the best source available, according to their own judgement of all costs and benefits.
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