If the federal government’s Digital Marketplace was supposed to provide windfall gains to smaller local businesses by making it easier to win Commonwealth contracts, then it has disappointed.
More than a year after the Marketplace was launched into beta service, the platform is adrift. It has not met with the Digital Transformation Agency’s own expectations, and there is no clear path from the DTA on how it will address the perceived shortcomings.
Some 72 per cent of registered small business sellers on the marketplace surveyed by InnovationAus.com say they have won no business through the Marketplace, despite 60 per cent of companies saying they are already an existing supplier to the federal government.
Of the companies that have won business through the marketplace, more than half are for contracts valued at less than $100,000 – and 90 per cent are valued at less than $500,000.
The full details of the Digital Marketplace survey will be unveiled at InnovationAus.com’s Open Opportunity Canberra forum being held at the National Press Club on Thursday November 30 and will be available for download shortly thereafter.
InnovationAus.com contacted sellers on the marketplace via email two weeks ago with a simple set of 10 quick questions, and giving each the opportunity to provide a more detailed anonymised commentary on their experience with the Digital Marketplace.
There are caveats. Of the 700 sellers on the site, we removed the recruiters and body shops, as well as the multinational companies, meaning we sent emails to more than 400 SME companies. Our focus is unabashedly on the views of local SMEs and startup sellers.
Of the 400 companies contacted, 62 companies responded – of which nearly 50 provided specific additional comments, invaluable direct feedback on the working of the platform.
The survey is indicative only. But the strong response rate – particularly the passionate voluntary commentary from respondents – demonstrates a highly motivated and engaged cohort of SME sellers on the platform.
The survey provides important public feedback to what has been a black box operation in relation to the Digital Marketplace. From a media perspective, the DTA is a secretive organisation that is difficult to deal with. Media outreach and engagement is non-existent, with the DTA preferring a one-way communications channel through very often patronising blogs.
The survey comments reveal that local SMEs feel the same way. Transparency issues are a chief concern, but the real gripe is about poor engagement, poor communication and a lack of feedback.
Most troubling for government is how local SMEs rate the Commonwealth as a customer. When as asked to compare dealing with other customers, more than 64 per cent rated the Australian Government is Difficult or Very Difficult and 31 per cent were Neutral.
Less than 5 per cent said it was Easy. Literally no-one said the government is Very Easy. This is precisely the issue the Marketplace was meant to address.
But it’s not all bad. The survey provides a mixed bag of feedback for the folk at the Digital Transformation Agency, which has now been charged with fixing the Marketplace’s rocky start. There were some positives to take away.
When asked whether the Digital Marketplace made it easier for startups and SMEs to sell to government, respondents were evenly split – about 50 per cent either agreed or strongly agreed, while the other 50 per cent either disagreed or strongly disagreed.
Of the extensive comments from SMEs left on the survey, the sentiments were divided roughly into two camps. The first was characterised by frustration and reflecting an endemic cynicism at the ability of government to deal with small business, and the second also characterised by frustration, but reflecting optimism that the Marketplace had the potential to be improved.
The single biggest complaint about the Marketplace by the SMEs was the poor engagement and poor communications through the platform. With no feedback to their bids on the site, SMEs felt they had wasted their time, which is consistent with the existing narrative for doing business with government.
Asked whether they had faced any specific barriers to meet a project tender requirement, only a small number (17) of SMEs responded (the result putting lack of document experience; insufficient customer references; and unorthodox approach to technology roughly equal in numbers), but 38 SMEs left a specific comment, most of which said they did not know what happened. No feedback.
A second related theme of complaint relates to a lack of transparency around decision-making and a perception that the Marketplace is being used as a cover for existing processes and pre-existing relationships.
A third theme across the complaints was that the Marketplace was simply a bodyshop for contractors and recruitment companies, and was not used for anything complex in procurement. The opportunities are looking for individuals with almost no requests for actual project work, making the Marketplace look more like a government job site.
The fourth theme across the complaints related to vague and poorly constructed tenders, and an inflexible Marketplace that did not allow for creative responses.
While the federal Cabinet has approved a series of procurement reforms to improve the performance of SMEs – including changes to the Marketplace – the Digital Transformation Agency has not yet indicated how the platform will be reformed, nor whether it intends any formal consultation with its sellers on improving the marketplace.
While the Digital Marketplace passed a milestone of sorts two weeks ago when it surpassed $50 million in contract value having passed through the platform, the celebration rang a little hollow when measured against an Australia Government ICT annual ICT spend of more than $7 billion.
This number is literally within the margin of a rounding error.
Of that $50 million, less than $38 million – according to the government – went to SMEs or startups, and of this, by extrapolation, a large portion went to bodyshop-style skills acquisition that would have been required/hired through other channels anyway.
The Marketplace is still an exciting project, but has not progressed as tech SME’s had hoped. From the outside, it looks to have been left to stagnate without a roadmap for improvement. Nothing the DTA has said publicly, which is characteristically as little as possible – changes that view.
But now that the Digital Transformation Agency has been given its marching orders from government – in the form of its ICT procurement reform agenda – SMEs should reasonable expect to see a strategy for change start to form on the horizon.
The shame would be if too many companies have already disengaged from the process, because the procurement reforms are the most far-reaching – and for SME’s the most exciting – to happen in public sector ICT in a generation.
These results will be discussed in more detail at the Open Opportunity Canberra forum on Thursday October 30 at the National Press Club. You can reserve your seat here.
Of the companies that responded to the InnovationAus.com Digital Marketplace survey, 35 per cent employed less than five people, 25 per cent employed five to ten people, and 40 per cent employed between ten and 50 staff. Just two companies employed more than 50 staff.
Of the respondents, 42 per cent of companies were based in NSW, 20 per cent in Victoria, 15 per cent in the ACT, 11 per cent in Queensland, and about five percent each in South Australia and Western Australia.
The SME sellers on the platform are – of course – only one side of the Digital Marketplace. Anecdotally at least, the buyer side of Marketplace has its own set of frustrations, both with the platforms and with the Digital Transformation Agency.
InnovationAus.com will be surveying the Buy side of the Digital Marketplace in the coming months.
Any readers who have direct or confidential feedback that they want to add to this issue, please contact me directly at the james@innovationaus.com email address.
Survey feedback
“[The DTA] are a secretive anti-industry group who are utterly untrustworthy with almost every promise they make. They regularly promise to engage with industry but never do. They publish all kinds of PR material on their marketplace which is blatantly false and/or misleading. . . They have public comment forums, but they systematically censor every critical comment that is posted.” – SME feedback
“The gov tender team needs to have the skills required to do the job. Astonishingly. A proposal that would save government departments millions of dollars was not considered relevant because the person running the tender said ‘it’s not my job to save other departments money’.” – SME feedback
“The digital marketplace is streets ahead of any procurement platform I have seen, and does valuable work in getting buyers to articulate their problem in a way that makes it easy for us (as sellers) to respond to.” – SME feedback
“I am very disappointed with the Marketplace. Half the jobs are aimed at contractors, the other half at big business. Tenders are badly defined and vague and no effort is put into follow up on proposals.” – SME feedback
“The DTA as an organisation is not appealing to work with. We look for strong and aligned sponsorship in our engagements. The DTA leadership continues to fail to meet this criteria. The intent of the Digital Marketplace is admirable. However, in our experience the responding to briefs and pitching for work in general continues to be a one-way conversation, rather than collaboration on how we might work together to maximise value to [the] end-user.” – SME feedback
“Anecdotally, the companies who are successful at getting business through the Digital Marketplace already know the people posting the bids. Since there is no way for anyone else who are the key personnel at agencies, it places other companies at a severe disadvantage and raises suspicions that the Digital Marketplace is yet another way for government agencies to pass ‘probity’ requirements of going to market, while in reality reusing suppliers they are already comfortable with. But again the lack of feedback on reasons for not being shortlisted, or any requirement to make public any prior relationship with companies who are bidding makes this impossible to evaluate beyond mere suspicion.” – SME feedback
“I think the DTA is a great concept, the departments just need to release larger work packages through it.” – SME feedback
“The Marketplace allows for practices that should not be supported – [for example] allowing agencies to release opportunities that are open to only one company.” – SME feedback
“In many cases it appears that the incumbent is already chosen and the requirements set such that only the incumbent qualifies.” – SME feedback
Do you know more? Contact James Riley via Email.