Digital Transformation Agency chief executive Gavin Slater has conceded he is “not satisfied” with the performance of its Digital Marketplace and has signaled an expansion of the scope of procurement offered on the platform to SMEs.
Appearing at Senate Estimates hearing on Tuesday morning, Mr Slater also revealed that the DTA’s near-$11 million cyber security office had been shifted to the Prime Minister’s department against his wishes.
The DTA Digital Marketplace was a National Innovation and Science Agenda (NISA) initiative that aimed to make it easier and less expensive for small businesses to bid for government work via an online platform.
The Digital Marketplace was launched in beta in late 2016, and fully in February last year, although the further development of the platform has appeared dormant for at least eight months.
The effectiveness of the platform in helping SMEs and startups access government contracts has been questioned. While government has been crowing about the marketplace having facilitated contracts worth $50 million by November – of which $37.5 million went to small business – this was against an annual ICT spend of more than $9 billion.
An InnovationAus.com survey late last year found more than 70 per cent of registered small business sellers on the platform had won no business through it, despite 60 per cent saying they were already an existing supplier to the federal government.
When questioned on this by Labor Senator Jenny McAllister, Mr Slater admitted he was unhappy with the performance of the Digital Marketplace.
“In terms of the level of performance, I’m not satisfied with where it’s at. Looking at a couple of the metrics like the number of sellers and companies registered on the Digital Marketplace and connecting that to the value of the contracts that have been awarded, you’d say the conversion rate is pretty low,” Mr Slater told the Estimates hearing.
“When we engage with industry, unsurprisingly those companies that haven’t done business with government want to do business with government, and those that are doing business with government want to do more. The question for me is still how can we increase the participation rate?
“The feedback from SMEs is that they’ve been able to register on the marketplace but it’s been doughnuts. They don’t get any business coming out of it.”
The DTA has undergone a number of internal changes since the Digital Marketplace was launched, with head of Digital Marketplace Catherine Thompson departing the organisation mid-last year, after she had been overlooked for a position n the agency’s leadership team.
The DTA recently hired former Westpac executive Anthony Vlasic as its inaugural chief procurement officer, and he will be overseeing much of the Digital Marketplace.
While little development of the Digital Marketplace has taken place since Ms Thompson’s departure last year, Mr Slater did signal a number of short and long term actions he would implement to improve its effectiveness, including the standardisation of contract terms, and a prototype around dynamic pricing.
The DTA also wants to broaden the scope of procurement work being posted on the marketplace.
“We do have an ambition to expand the scope of the types of products and services that get procured there. Most of what gets procured is around skills and labour, as opposed to software-as-a-service or hardware procurement,” Mr Slater said.
He said the DTA was working with the Queensland and ACT state governments to increase the number of jobs posted in the marketplace for SMEs.
The DTA would also work more closely with those within government agencies making the procurement decisions, he said.
“My view is there’s a significant amount of work still to be done with those individuals making the purchasing decision in the agencies and educating them around who’s available out there, and encouraging them to experiment and try some different providers of a service rather than defaulting to someone that has provided that service for a decade.”
“The key for me though is we’re going to have a significant amount of focus on input and activity. The thing I’m interested in is the outcome and input – has it led to a material change in SME participation?”
Last year former digital transformation minister Angus Taylor announced an aim to drive an additional $650 million in Commonwealth spending to SMEs each year, with plans to cap contracts at $100 million. The goal is still only 10 percent of the government’s overall $6.5 billion spend on tech procurement.
According to InnovationAus.com’s survey, procurements that SMEs were gaining through the Digital Marketplace were significantly smaller, with more than half of them valued at less than $100,000, and 90 per cent being less than $500,000.
It was also revealed at the DTA’s Senate Estimates appearance that the organisation’s internal cyber security team has been relocated away from the agency.
The DTA was allocated $10.7 million in last year’s budget to establish an internal cyber security office to work with agencies to ensure that cyber security was a core focus.
But due to a changes in government organisation, this team has now be moved out of the DTA to be under cyber security adviser Alastair MacGibbon, Mr Slater revealed.
“Recently under a machinery of government change with the centralisation of the cyber security function under Alastair MacGibbon, that team has been mogged out of the DTA,” Mr Slater said, referring to a Machinery of Government change.
“The role of that team was so when agencies were thinking about transforming the way their services are delivered digitally, to ensure they were thinking about security not as an afterthought but as a key design criteria,” he said.
Mr Slater said he “absolutely” would have preferred to keep the team within the DTA.
“We certainly still have access to those skills and capabilities as we collaborate with agencies on a range of things. I wouldn’t say it has weakened the government’s cyber security capability but certainly in terms of the skills and capabilities we have within DTA,” he said.
“A lot of the work we’re doing with agencies around transforming the way services are delivered, you need cross-functional teams to be effective.”
“It’s much easier having people right there that understand the security access of it. Co-location drives increased collaboration and more efficient collaboration. Having small, cross-functional teams working on things together you tend to get better results.”