Startups and smaller tech firms wanting to break into the federal government market will have to wait another six months to do so after the Digital Transformation Agency pushed back plans for its replacement Digital Marketplace.
The marketplace, which was established break down barriers to entry for small and medium-sized enterprises, is currently undergoing the biggest update since it was introduced in 2016. The DTA says the redesign will make it more attuned to the needs of both buyers and sellers.
As work ramped up on the redesign in March, the DTA closed the existing marketplace to new sellers, removing one of the main avenues for new companies to seek government contracts.
At the time, the DTA expected the new marketplace would be established in early 2024, with the agency plotting an approach to the market for sellers in late 2023, limiting the new seller freeze to a year or less.
But on Friday, the DTA provided a new timeline that shows it will now approach the market for sellers to join the new Digital Marketplace by March 2024, before establishing the new marketplace by June 2024.
It has also extended the existing Digital Marketplace standing offer to the end of July 2024 due to “significant user feedback received to date and work required to implement this feedback into a new panel”.
“We understand the need for buyers and sellers to have certainty and continuity of services under the current Digital Marketplace and avoid the busy end of financial year,” DTA director Peter Rymasz said, adding that the extension will provide time for sellers to apply to the new marketplace.
The Tech Council of Australia (TCA) has previously criticised the decision to close off the Digital Marketplace to new entrants, saying it “could lock-out new or existing startups seeking to enter the government market” in a submission to a Senate inquiry earlier this year.
TCA chief executive Kate Pounder told InnovationAus.com that with the marketplace now expected to be closed for 16 months, small to medium-sized enterprises that weren’t already on the marketplace or another panel will “struggle to sell to the government”.
Ms Pounder said the marketplace, although not perfect, fills “a really important gap”, allowing smaller firms to get approved and begin selling to government more quickly than traditional panels, which are long-winded and require “exhaustive applications”.
It also provides a “real lifeline” for new companies looking to work with government, as traditional panel open at set periods every couple of years, making it “very hard to get a foothold” in the intervening years.
“The sooner that it can be up and running, the better that’s going to be for those younger startups and SMEs that weren’t already on the marketplace or might have been founded in that more recent period,” Ms Pounder said.
According to its updated timeline of program deliverables, the DTA is planning to finalise the discovery phase of user research and testing by October and release the key changes for consultation by November.
Changes being considered after considering the view of over 1200 users include creating a better sourcing experience for digital and ICT services and labour hire, improving transparency, and achieving better value through a strong commercial construct.
“While we are nearing the end of testing key concepts with our users, we still need to build new functionality in BuyICT.gov.au to support the new marketplace,” DTA digital sourcing branch director Anthony Conway said.
Despite being designed to support startups and SMEs, data released earlier this year shows a relatively small group of suppliers – just 12 per cent – have won 80 per cent of contracts over the past seven years.
The number of contracts awarded to SMEs through the marketplace has also dropped since it was established, falling from 82 per cent to 60 per cent between 2017 and 2020, according to the most recent publicly available data.
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