A new study from World Commerce & Contracting (WorldCC) and OneAdvanced has highlighted an urgent need for an overhaul of public sector contracting in Australia and New Zealand, citing fragmentation, skill gaps and technology bottlenecks.
The Public Sector Contracting in Australia and New Zealand: 2025 Benchmark Insights report draws on insights from more than 30 public sector agencies and interviews with 10 contracting leaders to uncover capability gaps and the transformation opportunities that will shape the future.
Confirming that the sector is being held back by structural challenges and limited adaptability, the report reveals deep dissatisfaction on both sides of the ditch, noting that the overall satisfaction with the quality of the contracting lifecycle sits at just 2.8 out of 7 in Australia and 3.5 out of 7 in New Zealand.
Adaptability falls short of the international cross-industry average of 4.2 – coming in at 3.4 out of 7 in Australia and 3.8 out of 7 in New Zealand – while uncertainty levels are reported at 4.6 out of 7 in both countries, which is 15 percent higher than the private-sector average and nearly 40 percent above what is considered normal.
Sharon Morris, Group Regional Head, Asia Pacific at WorldCC, said public agencies across both countries are feeling the strain.
“The public sector in Australia and New Zealand is facing unprecedented pressure to deliver greater value at lower cost and faster, driven by a mix of market, economic, regulatory and technological factors,” she said.
While New Zealand demonstrates a higher level of adaptability and readiness to experiment, driven by more focused reform efforts and the introduction of a formal Head of Procurement with national responsibility, the report reveals Australia’s focus on capability uplift is newer and less structured, which is leading to wide variations in performance.
Structural barriers dominate the picture, emerging as the biggest impediments to value delivery, comprising operational overload, unclear organisational ownership, weak data flows and late involvement in the process.
Data immaturity, which limits the ability to generate or consolidate data, remains a core limitation, while technology is noted as another critical gap and a contributor to the sector’s resilience and adaptability struggles.
More than half of respondents (57 percent) said their dedicated budget for contract management systems is non-existent, while nearly two-thirds (62 percent) have no plans to implement or upgrade contract management technology within the next 12 months.
“This cautious, budget-driven approach creates a technology adoption bottleneck, limiting basic implementation and the use of advanced tools like AI. Addressing the skills gap is equally important, as the public sector shifts toward insight-driven delivery,” notes the report.
Elsewhere, the majority of respondents (77 percent) said they recognise the need to be adaptable and encourage this as the most important development area over the next five years.
This is followed closely by technological proficiency and communication skills, each identified by 69 percent of respondents as essential for future success.
As procurement and contract management teams battle with ongoing and unprecedented market disruption, contracting is increasingly viewed as a barrier to meaningful reform, which underscores the need for a move from a control-based model focused primarily on compliance and risk transfer to improving productivity and supporting organisational transformation – which the data shows is already emerging.
When it comes to Environmental, Social and Governance (ESG), integration is currently transitioning from policy aspiration to accountability.
Hadi Rezaei Vandchali, ESG and Procurement Services Consultant, Local Government Procurement, said priorities are shifting.
“The focus is now on establishing consistent measurement practices and monitoring environmental and social impacts. Very often, though, ESG capabilities and reporting will not be embedded in the contract management process,” she said.
Senior leaders, who took part in the study, stressed that adaptability and value are dependent on a shift from a gatekeeping role to one that prioritises strategic enablement, with a focus on delivering outcomes.
World-class public contracting, notes the report, demands a balance between stability and agility, compliance and collaboration, and people and technology.
Adam Bowles, Country Director for Australia and New Zealand at OneAdvanced, shared his take on what success looks like for the sector.
“The future lies in transforming procurement and contracting from a process that controls to a system that enables, anchored in trust, guided by data and powered by people who understand where that true public value comes from,” he concluded.
