Backing local jobs will be factored in to deciding lucrative government tenders in an overhaul designed to support the ailing NSW manufacturing sector.
The state government will accept all nine recommendations from a recent procurement inquiry, which it says will make the bidding process on its contracts fairer and deliver taxpayers better value.
It will expand the definition of "value for money" so it encompasses the added benefits of job creation and local industry support.
Obstacles that stop small and medium-size businesses winning contracts will be removed in another bid to share the wealth.
The government had previously announced its agencies would have to engage with local suppliers first on contracts worth more than $7.5 million and explain their decision-making if they opted for a company outside NSW.
Procurement Minister Courtney Houssos said the government's $42 billion annual spend could be better leveraged to help the people of NSW.
"The inquiry's report made it clear there is significant reform required to ensure the effective operation of the procurement framework to maximise value-for-money for taxpayers," she said.
"By reforming the way the government spends its precious procurement dollars we can unlock new opportunities for local suppliers and small businesses."
Other recommendations included ensuring all parties involved in a competitive tender bid are given timely feedback.
The inquiry had looked into government procurement practices and what impact they are having on social development in NSW.
Unions NSW argued thousands of jobs were taken off-shore and then met with higher costs and a lower quality, with governments prioritising short-term financial gain over the long-term benefits that keeping contracts local can bring.
