ICN links suppliers to projects, needs more resources – study

A major report marking the 40th anniversary of the founding of the Industry Capability Network (ICN) has highlighted the massive benefits of the organisation which links 100,000 Australian suppliers to proponents of major infrastructure and other projects.

The report, Industry Capability Network. Past, Present and Future by the University of Sydney’s Phillip Toner and UTS Emeritus Professor Roy Green, found that since its inception in 1984 there has been a cumulative total of $54 billion in project ‘wins’ to local firms assisted by ICN. T

In 2022-23 ICN assisted firms with $2.7 billion of project ‘wins’ nationally of which $750 million, or 28 percent of the total was transferred from the state in which the project originated to supplier firms in other states.

“This demonstrates the large inter-state flow of project funds across the states and establishes that ICN operates as an integrated national network transferring work to the most efficient supplier regardless of their location.

“In the case of the NT and WA, 53.5 percent and 35.1 percent respectively of work generated within the state was won by firms in other states.”

The ICN operates the ICN Gateway (pictured) and is an intermediary that disseminates information on project opportunities to companies, works with project proponents to structure their projects to maximise participation of domestic firms, and helps SMEs enhance their capability to satisfy information requirements, accreditations and technologies demanded by major private sector and government projects.

It meets a classic failure in diverse markets of insufficient information flows and in Australia helps overcome the difficulties SME businesses have in accessing major corporations’ supply chains.

However the study found that the level of ICN resourcing is inadequate and constrains and distorts its capacity to deliver certain current services.

“Current funding and staff levels limits ICN in activities such as assisting SMEs to form consortia to bid for larger projects; ability of ICN staff to specialise and develop greater expertise in particular industries and technologies and promoting ICN services to more suppliers and purchasers.

“Limited resources also require ICN to focus on major projects to the disadvantage of small projects. Funding also restricts ICN from developing novel products and services such as new software to meet industry need and embedding staff specialists on a full-time basis in major projects such as defence, health, and agri-food companies.

In the past dedicated federal government funding was provided for this activity under the Supplier Access to Major Projects (SAMP) programme – the study calls for this funding to be reinstated.

“ICN officers also report they are constrained in assisting those firms seeking to invest in R&D and commercialisation by co-operating with universities and government innovation promotion programmes. ”

The study made eight policy suggestions including:

• ICN engagement with all procurement programs should be mandated and it should also be mandatory for project proponents to engage the services of ICN at the pre-design stage
• Guidelines for project proponents to structure their bids to maximise local participation should be mandated and adequacy of compliance with these guidelines should be used in assessing bids
• It should be mandatory for project proponents to provide a minimum agreed standard of feedback and timing for the delivery of this feedback to suppliers on the progress of their submitted EOIs and RFTs
• The value of projects subject to procurement obligations be halved
• Consideration should be given to introducing a mandatory minimum proportion of local content and/or SME share of total expenditure
• State procurement programmes be harmonised to reduce compliance burden on purchasers
• The SAMP program should be reinstated
• And it should be compulsory for detailed public disclosure of project proponents’ acquittal of procurement obligations with potential penalties for failure to meet agreed levels of local content.

Picture: ICN Gateway at https://gateway.icn.org.au/