James Riley
August 22, 2017

$650m boost for local tech: Taylor

Procurement

$650m boost for local tech: Taylor

Angus Taylor: Breaking up large contracts into more easily accessible chunks for SMEs

The Australian Government will today unveil a raft of technology procurement reforms that aim to drive an additional $650 million in Commonwealth spending to small Australian companies each year.

Under new procurement rules aimed at the ICT sector, Government technology contracts will be capped at a maximum value of $100 million, or a maximum duration of three years. By breaking up contracts into smaller chunks, it aims to let small and medium-sized businesses better access to components of larger projects.

The changes, which are the result of recommendations of a Department of Prime Minister and Cabinet ICT Procurement Taskforce review, will be outlined Wednesday morning in Canberra by Assistant Minister for Digital Transformation Angus Taylor.

Mr Taylor will tell an industry briefing in Canberra this morning that Government is targeting an increase of 10 per cent of its annual $6.5 billion technology spend – or $650 million – being won by smaller tech companies.

“These are exciting changes that will throw open the door for SMEs and allow government agencies to bring in new and innovative services,” Mr Taylor said.

“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.”

Mr Taylor said the Taskforce had found that 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,” he said.

The Taskforce has made 10 central recommendations covering issues ranging from developing ICT-specific procurement principles, building strategic partnerships, data-driven reporting, and measures to enhance the Australian Public Service procurement skills.

The review of Government ICT Procurement was a 2016 election commitment. The Taskforce was set up in the Department of Prime Minister and Cabinet last October before being handed to the restructured Digital Transformation Agency in February.

In launching the taskforce, Mr Taylor noted that the private sector’s use of digital technology had changed Australian lives by offering consumer increased choice through competition and improving speed, productivity and consumer satisfaction of services.

“By comparison, government services often appear clunky and disconnected,” he wrote at the time.

Australian data security specialist Covata’s CEO Ted Pretty told InnovationAus.com that the best assistance government could give local technology companies is buying products and services from them.

“At the end of the day, what drives business value is revenue. And one of the best things that a government can give to a small organisation is purchase orders – and to be prepared to trial [their products],” Mr Pretty said.

He says the US and UK governments seem to be better at this, with programs that enable an easier entry-point for smaller local provider to get into government.

“In a small market like Australia, it is even more critical that government embraces SMBs as suppliers,” Mr Pretty said. “Rules should really be directed at making it easy for government agencies to purchase off small to medium sized enterprise.”

“No-one is expecting a free kick if the product is not up to scratch. But by the same token, I think it is reasonable to expect that the products are trialled, and that the tendering process through which the products are made available should be a lot simpler for a smaller organisation.”

The final report from the taskforce, together with it 10 recommendations, can be found on the ICT Procurement Taskforce website.”

Mr Taylor said work would continue over the next 12 months to deliver more pathways to improve coordination and reduce duplication of ICT procurement across government.

The Digital Transformation Agency’s increased oversight of the government’s IT investment portfolio and its work to build digital capability would address the calls for a more strategic IT procurement approach and a stronger technical workforce.

 

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