Australia overhauls IT public procurement rules

posted by Su-San Sit
25 August 2017

The Australian federal government has announced procurement reforms to give SMEs the opportunity to bid for more contracts.

Under the reforms ICT contracts will be capped at $100m and three years in length across all departments, to encourage smaller firms to compete.

Announcing the cap, Angus Taylor, assistant minister for cities and digital transformation, said he wanted to make it easier for the government to adopt innovations from smaller IT companies, which would receive $650m annually through the reforms.

“The government needs to be more porous—many of the great ideas will come in from outside and we need to allow those in,” he said. 

“These are exciting changes that will throw open the door for SMEs and allow government agencies to bring in new and innovative services. If we are to reward the entrepreneurial spirit, a new procurement culture is necessary.”

Taylor added the reforms, which are just the first in a series the government plans adopt, come on the back of a sweeping whole-of-government probe into public sector tech spending and investment by the ICT Procurement Taskforce.

The taskforce was established within the Department of the Prime Minister and Cabinet in October 2016 to review all significant government technology projects, including all active projects over $10m in value. 

The report found that a culture of risk aversion and a lack of willingness on part of the government to move away from large entrenched supplier relationships had undermined freedom to innovate and experiment. 

The report also highlighted a lack of centralised policies, coordination, reporting, oversight and accountability had led to duplicate large contracts such as the $280m My Health Record infrastructure deal with Accenture and the $178m deal with Telstra Health for the National Cancer Register

It concluded that several reforms would reduce waste, increase transparency and avoid tech failures. 

“The taskforce has concluded that there is an urgent need for stronger controls to be applied, at least in the medium term, if ICT procurement is to contribute to achievement of the government’s digital transformation agenda,” the report said.

The report recommended the government adopt a framework that includes ICT procurement policy principles to guide decision-making and set an annual, whole-of-government cap on internal and external IT spending, as well as maximum contract amounts and lengths for all ICT procurement.

Other recommendations include establishing a comprehensive dataset of government ICT spend for greater analysis at a portfolio and project level, enhancing the Australian Public Service’s procurement skills and developing new ICT procurement pathways for catalogue-based e-procurement and small-scale experimentation procurement. 

Taylor said the government had accepted all of the recommendations set out in the report and would continue to deliver the changes over the next 12 months.

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