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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.

Indeed, as of May, SMEs had picked up 82 per cent of the estimated $15.3 million worth of contracts tendered via the DTA's Digital Marketplace online procurement portal, which was created specifically to give smaller players greater access to government jobs.

Yet large providers have continued to dominate the engagements on big ticket projects, such as the Department of Human Services' leviathan welfare payments system overhaul, which is tipped to top at least $1 billion over its life.

For this project, only the largest of integrators have so far been engaged, including Accenture, Capgemini, HPE and IBM.

There has been some progress, however. The Government revealed late last year that it had seen an increase in SMEs taking part in public sector projects across the board, with smaller providers representing 18 per cent of the contract wins in the IT, broadcasting, and telecommunications category during the 2016 financial year.

At the same time, government is an industry vertical that, in many cases, handles extremely large, monolithic IT projects. As such, it often needs to partner up with IT service providers that have the resources needed to undertake such far-reaching, broad projects.

This is despite efforts thus far from the DTA to give more of a share to smaller players.

While the new $100 million IT contract cap could conceivably be worked around by simply breaking up larger deals with a single supplier into smaller pieces that handed to that one partner, the $650 million that is being set aside for SMEs could make a difference.

Certainly, most of the funds allocated for procurement via the Digital Marketplace have gone to smaller players. If that trend is repeated with the new funding pledge from Taylor, it could, indeed, see smaller players take a larger portion of the Government pot.

Regardless, top tier players are likely to continue to dominate top tier projects.

Taylor has previously conceded as much his presentation at the Tech Leaders forum in early March, suggesting that not all projects can be small and that the government would need to continue relying on contractors to fulfil many of the large projects which remain.

"We need to be in control of it and across it, that's crucial. It is not to say that every small project is going to go to an SME, in some cases a big player will have the best solution," he said at the time.

That said, if the Government's new procurement reforms are as effective as hoped, Taylor's wish to see at least 10 per cent more public sector projects go to SMEs.



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