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What the Australian govt’s new IT procurement reforms mean for local partners

Leon Spencer | Aug. 23, 2017
The new reforms see IT contracts capped at $100 million, and $650 million set aside for smaller suppliers.

Parliament house
Photo via ARN

The Federal Government's Assistant Minister for Cities and Digital Transformation, Angus Taylor, revealed on 23 August new procurement reforms that see IT contracts capped at $100 million.

The procurement changes also see a pledge by the Australian government to inject an additional $650 million annually into local tech companies that fall into the small to medium-sized enterprise (SME) category.

Broadly, the new stance is aimed at giving smaller suppliers a leg up when competing for lucrative public sector contracts, potentially leveling a playing field heavily dominated by top tier suppliers such as IBM, Hewlett Packard Enteprise (HPE) and Dell EMC.

"Government is targeting an increase of 10 per cent of its annual $6.5 billion IT spend to smaller operators," Taylor said in a statement.

"These are exciting changes that will throw open the door for SMEs and allow government agencies to bring in new and innovative services.

"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," he said.

The new reforms came about as a result of recommendations from the ICT Procurement Taskforce report. The Government's ICT Procurement Taskforce initiative, the details of which were revealed last year, is aimed at helping to overhaul the way the country spends its $9 billion-plus annual IT investment dollars.

"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," Taylor said.

According to Taylor, the 10 recommendations from the Taskforce cover issues as diverse as developing IT-specific procurement principles, building strategic partnerships, data-driven reporting, enhancing the Australian Public Service's procurement skills, and new procurement methods.

The Government will now work to continue, over the next 12 months, to deliver more pathways to improve coordination and reduce duplication of IT procurement across government.

Meanwhile, the Digital Transformation Agency's (DTA) increased oversight of the government's IT investment portfolio and its work to build digital capability is expected to address the calls for a more strategic IT procurement approach and a stronger technical workforce.

The DTA, which has been charged with building a whole of government IT strategy, took over the bulk of the Federal Government's IT procurement duties from the Department of Finance, which had long held the jurisdiction.

From the outset, the DTA - which evolved from the Digital Transformation Office (DTO) - has had a focus on opening up access for smaller suppliers to pitch for government projects.


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