There is a massive prize for small Australian tech businesses through changes to Commonwealth ICT procurement being wrought by the Assistant Minister for the Digital Transformation and Cities Angus Taylor.
Over the next several years, he wants to increase the proportion of the Australian Government’s $5.6 billion ICT spend to go to smaller local players by 10 percentage points, or $560 million in new business to smaller suppliers every year into the future.
Currently smaller suppliers – of less than 20 employees – take home 11 per cent of that spend. Mr Taylor has set a target of another 10 per cent through the simplification of procurement processes in government.
This is a gigantic industry development lever. In scale, that additional $560 million is more than twice the size of the annual spending on the Commonwealth’s entire National Innovation and Science Agenda (NISA).
Better government services, delivered more efficiently while helping underwrite the development of a stronger local tech industry. Sounds like a good idea to me, and unwinds the preposterous thinking that somehow government procurement cannot be used as an industry development lever.
“If we can simply increase the proportion of our budget going to innovators by 10 percentage points, [then] we have a program that is double the size of the National Innovation and Science Agenda,” Mr Taylor told the InnovationAus.com Open Opportunity forum in Canberra.
“And that’s what I want to see, because that innovation alongside the much more traditional vendor relationships [is] absolutely crucial to delivering the sorts of results that I think we can deliver.”
The Australian Government’s newly-appointed Chief Digital Officer Paul Shetler says the ambitious target for SME participation in tech procurement very achievable.
Mr Shetler cites the experience in the UK, where small local companies grew their share of the government tech spent from similar levels currently in Australia to 25 per cent through the UK Government’s reform of procurement practices and the introduction of a digital marketplace.
The Digital Transformation Agency’s Digital Marketplace will be a central to growing local tech sector’s share of the Australian Government’s technology spend.
Mr Taylor is expected to unveil a discussion paper development by Prime Minister & Cabinet on proposed changes to ICT later today.
He says in relation to procurement and the way government makes investment decisions, there are three main problems to solve – the governance, the rules and the technical delivery.
“The DTA is our answer to governance. The ICT [Procurement] Taskforce is our review of the rules, and our answer to the technical delivery or procurement is the new Digital Marketplace. “We will be guided by three simple questions in the way we think about IT procurement.”
“When do we have to own the solution? And there’s times when we do, whether it’s for security reasons, or because of expectations out there in the community.
“[Secondly] when can we partner for a solution? And there’s many cases where we do and will need to continue to partner in the solution.
“And [thirdly] when can we actually just let the private sector solve the problem for us? When can we release high quality data, knock down regulatory barriers and actually let the private sector do the job for us. This is non-traditional procurement.”
Mr Taylor is encouraging the local sector to provide feedback to the discussion paper on ICT procurement.
“If the government is going to deliver a faster, smarter and better services to the public, a system that’s open to SMEs to access the $5.6billion ICT spend, and the biggest reform to government technology use in recent memory, and the ICT procurement review is right at the heart of this, then we need an open and frank conversation about the current industry and how we’re going to get there,” he said.
“The ICT Procurement Taskforce discussion paper serves as a snapshot of the current process and gives a chance for all stakeholders to provide a submission. I strongly encourage people in this room to make submissions.”
“When you’re engaging on this please, consider not only the current rules, but how the rules of IT procurement can help us deliver the future we should all expect from the way Government interacts with IT service providers and citizens and businesses more generally.”