A Marketplace milestone that is without meaning


James Riley
Editorial Director

It is important to mark milestones and to celebrate successes. This is how most of us maintain forward momentum in important work. But when the ‘success’ is so lame and the supporting evidence so disingenuous, the milestone itself becomes pointless. It is completely without meaning.

It is in this spirit that I ask Australia to please stand and join me in a slow hand clap for the federal government’s Digital Marketplace. Well done, and ho hum.

Government Services Minister Stuart Robert and newly appointed Digital Economy Minister Jane Hume issued a media release on Friday to mark the $3 billion milestone. That is, the marketplace has delivered $3 billion worth of contracts since it was established five years ago.

Stuart Robert
Stuart Robert: The Minister for Government Services is celebrating the wrong milestones

It’s a double milestone, the minister’s say, because more than $2 billion of those contracts were awarded to small and medium-sized businesses.

These are shallow claims and certainly no cause for celebration. An inch-deep dive into the tech procurement numbers quickly reveals the depth of the misinformation that underscores the Digital Marketplace milestones.

Over the six years it has taken the Digital Marketplace to reach its $3 billion milestone, the federal government has spent a total of between $48 billion and $54 billion on ICT products and services. That’s six years of $8 billion to $9 billion spent on federal ICT. So, there’s some perspective.

I raise these numbers merely to state the obvious: The main game in terms of tech procurement – including for digital consulting and delivery services – happens outside of the Digital Marketplace. The hundreds of millions of dollars the Commonwealth spends with the Big Four management consultants annually is a digital-focused testament to that.

The Digital Marketplace does not operate as a online marketplace. It is rather simply a panel contract that is used primarily by recruitment companies, by tech industry body shops.

According to the Digital Transformation Agency’s numbers, ten out of the top ten sellers on the Digital Marketplace in the past financial year were all recruitment companies. That’s ten out of ten.

Six of those body shops in the top ten sellers were SMEs. It is laughable that recruiters supplying individuals into the bureaucracy is being chalked up by this government as a win for local digital SMEs. What a jolly jape.

If the aim of the Digital Marketplace was to make it easier for digital SMEs to get access to government work and to build digital capability and capacity for the nation, then it’s not working. It’s a farce.

When ten out of ten of the top sellers are providing nothing more than warm bodies into the bureaucracy – albeit warm bodies with specialist skills – what chance is there that these small players can develop IP, build growing and commercially successful businesses?

Just 28 per cent of the opportunities listed on the Digital Marketplace since 2016 have been open to all sellers. The proportion of these open opportunities on the Digital Marketplace has been trending down.

The fashion these days, it seems, is for government buyers to restrict opportunities to invited sellers only. Sometimes this involves an invitation to a single supplier, which does make you wonder why it’s called a marketplace.

This practice makes the procurement process more opaque, not less. And these single supplier arrangements involve huge amounts of money.

All of this reminds me of the InnovationAus Selling to Government survey, published just four months ago (even if it feels like forever ago).

Nearly three-quarters of the individuals participating in that survey reported that the process for selling into the federal government was neither simple, nor transparent.

And 90 per cent of the respondents believe that the federal government favours larger multinational providers over Australian providers of technology.

The results of the InnovationAus survey do not easily square with Digital Marketplace milestone celebrations of Stuart Robert and Jane Hume. It’s like we are accessing the experiences of completely different sets of suppliers.

Because the damning assessment of the SME technology providers who responded to the InnovationAus survey simply don’t believe that the government process for buying tech is either fair or transparent.

Do you know more? Contact James Riley via Email.

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