James Riley
August 25, 2017

Tech spending has a new regime

Policy

Tech spending has a new regime

Angus Taylor: The procurement reforms will be one of the most important thing he does

While Australian voters are unlikely to build statues to honour the architects of Commonwealth ICT procurement reform, it is incredibly important nonetheless.

The potential upside is tremendous on three fronts: better services for citizens, better value for taxpayers, and a bonus industry development windfall for Australian tech companies.

The ICT Procurement Taskforce Report launched in Canberra on Wednesday is potentially the most far-reaching strategic reform of tech procurement since the Howard era.

If there is a theme that connects the Taskforce’s ten recommendations, it is around contestability and transparency. As you would expect, the document is less about technology than it is about opening up process.

And for the first time in a couple of decades, government is upfront about using its substantial purchasing power to build the local industry (within the constraints of our trade agreements.)

This is the first time industry development initiatives have been overtly stitched into the fabric of Commonwealth tech procurement in 20 years. This is a good thing, obviously, if only because it will direct $650 million in tech spending each year to local SMEs if government hits its targets.

The proof will be in the doing, of course. At least this government is having a crack. Now that both tech policy and tech procurement have been wrested away from the dead weight of the Finance department, the Australian sector is finally getting some love.

The other obvious theme relates to metrics and targets. The strategy is to apply more rigorous measurements to tech projects and to ICT spending. It does seem slightly extraordinary that government does not have a consolidated view of its IT spending, nor a consolidated view of its IT project pipeline.

And it certainly doesn’t have a consolidated view of the project outcomes, or even user satisfaction numbers to inform decisions about future investments.

This will change, with the various metrics being fed back through a coordination authority within the DTA to enable a data-driven procurement capability.

Just as the delivery this week of its review of ICT procurement had been a 2016 election commitment, so too was the promise make public four key digital performance metrics (user satisfaction, cost per transaction, digital take-up, and completion rate).

Only eight government services’ metrics are published on the publicly available dashboard, and only one has supplied a complete set of data (and that was the DTA itself.)

The ICT Procurement Taskforce report delivers ten recommendations, all of which have been accepted by government (although two come with caveats). You can read the recommendations here.

Most significantly, the government will cap the size of projects $100 million or three years. This is a key focus, according to Assistant Minister for Digital Transformation Angus Taylor – smaller contracts should be lead to an increased number of suppliers of greater diversity.

“The report found that procurement processes inhibit the ability to innovate and experiment, to take risks and to fail quickly and to ultimately succeed,” Mr Taylor told an industry briefing in Canberra this week.

“We know in this space that we have to be able to experiment and innovate. But we need to be able to do that in a smaller scale way than perhaps we have in this past.”

The key to this, Mr Taylor says, is breaking the projects into smaller sized chunks. It is the same strategy pursued in the UK under Francis Maude and the UK Government Digital Services, not only in reducing cost, but improving service delivery and building the UK industry.

“It has had a big impact [in the UK] and we think [the $100m cap] is an important step in the direction of saying we need smaller contracts wherever we can.

“The policy is aimed at getting better overall value for the Commonwealth by dividing up larger procurements. We need to be able to do smaller parcels of work bringing in a broader range of players into the process.

Those bigger projects are now being pulled apart with the involvement of the Digital Transformation sub-committee of Cabinet, chaired by the Prime Minister. And this is where Malcolm Turnbull’s involvement is key.

These procurement reforms have been a long time coming. They have been on Mr Turnbull’s agenda since he was a Communications minister who had somehow managed to get carriage of Digital Transformation. Even after he became Prime Minister, it would take a drawn out battle with Finance to get it moving.

Mr Turnbull has long advocated for the Commonwealth to use its buying power to drive industry development goals. It’s a no-brainer. And Angus Taylor is similarly enthused.

“We are the biggest procurer of digital and IT services in Australia. We have a responsibility to create an industry – or to shape that industry – that is resilient, that is innovative and that has a broad mix of different types of participants in it,” Mr Taylor said.

If the Commonwealth can hit its target and increase its spending with local companies by 10 per cent, it will deliver $650 million to the Australian industry every year. That’s more than two and half times the entire budget for the National Innovation and Science Agenda (NISA).

“That’s a massive injection into small and medium-sized IT service providers in this country. It will have a very big impact on the industry here in Canberra, and more broadly [across Australia],” he said.

The other big focus of the reforms will be in making it easier for new ideas to get into government. This will includes things like competitions, challenges and other small-scale experimental procurements.

But will also include new processes to enable unsolicited proposals.

“If you asked me at the beginning of this what I was seeking to achieve, I would have told you the number one thing on the list would be making it easier for new ideas to come into government,” Mr Taylor said.

“That is, making government more porous [to new ideas].

“We need to bring in good ideas, clever ideas from outside about how to govern better, how to do things better,” he said.

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