Public Services > Central Government

Australia caps new government IT contracts at A$100m

David Bicknell Published 23 August 2017

Canberra follows Whitehall’s example of trying to involve more SMEs in government IT; contracts to be capped at a maximum value of A$100m or three years’ duration

 

The Australian government is taking a leaf out of Whitehall’s book with a major shake-up of how it procures IT services.

It follows the government’s response to the conclusions of an ICT Procurement Taskforce established as part of Canberra’s Policy for Better and More Accessible Digital Services launch last year.

From today, Australian government IT contracts will be capped at a maximum value of A$100m or three years’ duration to allow small and medium sized businesses the opportunity to bid for smaller components of larger projects.

Australia’s assistant minister for digital transformation Angus Taylor told an industry briefing in Canberra the government was aiming to inject an additional A$650m annually into small Australian tech companies.

“Government is targeting an increase of 10% of its annual $6.5 billion IT spend to smaller operators,” Taylor said. “These are exciting changes that will throw open the door for SMEs and allow government agencies to bring in new and innovative services,” he added.

“A cap is now in place to limit the term and value of government IT contracts. We are reducing the number of IT panels to make it easier for small players to supply services. We are actively encouraging small innovators to sell us their ideas.”

Taylor said the reforms followed the recommendations from the ICT Procurement Taskforce report.

“The taskforce found a culture of risk aversion in government procurement had undermined the freedom to innovate and experiment. If we are to reward the entrepreneurial spirit, a new procurement culture is necessary.”

The taskforce was asked to make it easier and less expensive for businesses to contract with the Australian government, and to deliver better government services at a lower cost.

Its report said that makes it clear that while the Australian government’s procurement model is robust and meets most needs, more can be done for ICT procurement and SMEs.

The taskforce made ten recommendations, all of which the Australian government accepted, with the odd rider. They were:

Recommendation 1

The taskforce recommends adopting a framework for ICT procurement that includes ICT procurement policy principles to guide decision-making.

ICT procurement in the Australian government will:

  • encourage competition
  • be innovative – iterate often – fail fast
  • be structured in a way that enables SMEs to compete fairly to directly provide components of significant ICT projects
  • be outcomes focused
  • use open standards and ‘cloud first’ approaches
  • minimise cyber security risks
  • not duplicate the building of platforms that have been built by other agencies.
  • All agencies will be required to report on compliance with these principles as part of their annual report performance statements.

Response:

The government accepts this recommendation.

In consultation with agencies, the government will develop a set of principles, policies and guidance to agencies on how best to carry out ICT procurement, consistent with our international obligations.

Recommendation 2

The taskforce recommends setting annual targets for ICT procurement. An initial set of annual targets could comprise:

  • an annual, whole-of-government cap on internal and external ICT spending, with a target to reduce total annual ICT spending by 10% over the next four years
  • maximum contract amounts and lengths for all ICT procurement
  • metrics on the quantum and timing of benefits realisation for all significant ICT projects
  • a measurement of the amount of ICT spending on agreed government priorities
  • a metric on the number of agencies that are using/building common platforms.
  • a metric on the percentage of annual ICT spending on significant projects going to Australian businesses, including a breakdown of the amount going to Australian SMEs.
  • All agencies will be required to provide an annual report to government on their contributions to achievement of targets.

Response:

The government accepts this recommendation.

Initially, the government will establish an initial annual cap for agencies on ICT contracts and exceptions will require approval from the Assistant Minister for Cities and Digital Transformation and the Minister for Finance.

Recommendation 3

The taskforce recommends establishing a comprehensive dataset of government ICT spend that will allow greater analysis at a portfolio and project level, including forward projections of ICT investment levels.

Response:

The government accepts this recommendation in principle.

The government acknowledges that current datasets are limited in their ability to inform significant forward investment decisions. At a minimum, medium term trends of more robust data will be required to effect this recommendation.

Recommendation 4

The taskforce recommends developing a public dashboard of significant ICT projects and spending that will allow the government and public to see the status and outcomes of its ICT investment decisions.

Response:

  • The government partially accepts this recommendation.
  • The government will develop a dashboard of ICT spending which will be accessible to government and government agencies.

Recommendation 5

The taskforce recommends developing a comprehensive and contemporary ICT strategy to guide procurement approaches. This would seek to update and incorporate relevant existing policies, such as the government’s cloud strategy and the Digital Service Standard.

Response:

The government accepts this recommendation and will implement it consistent with our international obligations.

Recommendation 6

The taskforce recommends developing a medium-term strategy for building the Australian Public Service’s ICT procurement capability and culture.

Response:

The government accepts this recommendation.

Recommendation 7

The taskforce recommends that a coordination process be mandated for significant ICT procurements and significant ICT vendor relationships to:

  • provide a clear definition of ‘significant’ procurement and relationships
  • apply a strategic business partnerships model
  • develop an annual ICT procurement ‘pipeline’
  • identify an oversight body that will develop a platform for the secure sharing of information and data across government and advise government on APS procurement performance
  • include incentives for the building, funding and use of whole-of-government platforms
  • develop shared procurement approaches to market where efficient

Response:

The government accepts this recommendation.

Recommendation 8

The taskforce recommends immediate simplification of a range of ICT procurement practices for agencies, including reforms to ICT procurement panel arrangements

Response:

The government accepts this recommendation.

Recommendation 9

The taskforce recommends developing new ICT procurement pathways for:

  • catalogue-based e-procurements
  • innovative and small-scale experimentation procurements

Response:

The government accepts this recommendation, and will implement it consistent with our international obligations.

Recommendation 10

The taskforce recommends regular review and renewal of the ICT procurement framework and ICT policies so they continue to reflect contemporary best practice in a rapidly changing technology environment.

Response:

The government accepts this recommendation.

The government will conduct rolling review and update as necessary the ICT procurement framework to reflect contemporary best practice, and will implement it consistent with our international obligations.

 








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