Agency cuts lead to tech outsourcing fears

Denham Sadler
National Affairs Editor

The key agencies tasked with delivering the government’s billion-dollar digital spend are facing staffing and funding cuts, leading to concerns the funding will flow straight to private contractors and consultants, and do little to improve expertise in the public sector.

Last week’s federal budget included a $1.2 billion digital economy strategy, with funding for a range of tech projects and digital transformation efforts.

The large bulk of spending went to ongoing projects, with more than $200 million over two years for work to develop a new version of the myGov platform, and more than $400 million for “enhancements” of My Health Record.

The government also allocated more funding for GovERP, a standardised back-end technology platform across the public sector. But the amount was kept secret for commercial-in-confidence reasons.

There are concerns that the bulk of this spending on the key digital government services projects will flow directly to private contractors and consultants, with no effort to improve APS in-house skills.

Cuts to agency budgets and staff levels have sparked fears the government’s biggest technology projects will be further outsourced.

Services Australia, the agency responsible for the myGov rebuild and the GovERP project, saw its average staffing level cut by 800 full-time staff in the 2021-22 budget.

The Digital Transformation Agency is facing a huge cut in its annual funding, with a planned drop from $98.41 million in 2021-22 to $48.22 million the following year, with an accompanying ASL cut from 255 to 227 full-time equivalents.

Both the myGov and GovERP projects have been primarily led by consultants and contractors so far rather than being built in-house, with the government showing no signs that it will bring the work within the APS.

The true test of the billion-dollar digital package will be whether the significant spending is used to build skills within the APS, Community and Public Sector Union assistant national secretary Michael Tull said.

“Review after review, from the recent Thoday review and others stretching back over a decade, have all identified the need for the APS to reduce its reliance on external private providers and rebuild public service in-house ICT capabilities – which means more APS ICT staff, and more skills development opportunities for those staff,” Mr Tull told InnovationAus.

“But what we have been seeing from the Morrison government is spending up big on expensive consultants and external providers. This has to stop. The test for the government is whether this budget spending will deliver more staff and build in-house capacity or whether it’s just more money for consultants.”

The DTA has been working on a new version of myGov to initially run alongside the existing platform and eventually replace it since the start of last year. This platform will be based on those offered by the private sector and aims to provide a better user experience for the delivery of government services.

The bulk of the work has been completed by big four consultancy Deloitte, which has so far netted more than $30 million for this work, with the new myGov still in a beta phase. Last week’s federal budget provided more than $200 million to this work, but little information on what will be completed with it and the timeframe for the proper launch of the new platform.

Services Australia now appears to be responsible for the project, with the department establishing a Systems Integrator Panel for private providers working on it, but is still yet to reveal who is sitting on this panel.

The only current contract for work on the new myGov is with Deloitte.

The GovERP project, a modernised government technology for managed accounts, resources and workforce, has been running for several years, with the Department of Finance originally responsible for it.

The new digital funding package should come with requirements that the work is kept in-house and skills are developed in the public sector, Mr Tull said.

“So far CPSU members see no evidence that the more than $1 billion announced is going to translate into any new APS ICT roles. In fact, the two agencies playing a central role in the government’s plans look to be losing staff in Services Australia’s case, or in the case of the DTA, having their budget halved,” he said.

The Department of Finance this week revealed that more than half of the funding allocated to the GovERP project in 2019-20 and 2020-21 has gone towards private contractors and consultants.

In an answer to a Senate Estimates question on notice, the department said that of the $67.1 million allocated over two years, $35.5 million has gone towards outsourced work. This is because there is not the necessary expertise within the APS, the Department said.

“The program will implement a new technology in which the APS has not yet developed expertise. The majority of contractors and consultants are engaged to provide specialised skills and services to support the program, many of which are small-to-medium enterprises, particularly with respect to ICT labour,” the Department said.

The government provided a further two years’ funding to this project in last week’s budget, but did not reveal the dollar amount due to commercial-in-confidence clauses.

More than $400 million has also been provided for the My Health Record platform and the Australian Digital Health Agency. Several contractors have also worked on this project, with Accenture winning a $571 million, nine-year contract to provide national infrastructure services, Wentworth Healthcare being paid $5.7 million to support the expansion of the program in 2017 and Allegis Group Australia also being contracted for “improvements” in 2017.

Do you know more? Contact James Riley via Email.

  1. Digital Koolaid 3 years ago

    GovERP is only a standard SAP HANA model for departments and agencies to (maybe) use. The only “new” thing about it is that the SAP suits from North Sydney said HANA. Everyone at the DTA and down the food chain said “dominant stack” and the money flowed. There’s only one ERP in town, from Germany. There’s no need to tender. There’s no competition. There’s the price SAP says you pay, and you pay it. When you’ve all migrated to the SAP cloud they will own you forever. And so you paid them another $200 million. Commonwealth Procurement Guidelines extinct.

    • michael 3 years ago

      that sounds right to me…we will end up with half the APS or more utterly reliant on one supplier and zero leverage in future contract negotiations.

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