The federal government’s Digital Marketplace should be celebrated for the role it has played in driving new digital workforce skills into the public sector. But it has failed in its core purpose of providing a leg-up for local tech companies in selling to government.
The key metric for the Digital Marketplace must be the extent to which it has helped to improve access of smaller Australian tech companies in selling products and services into government as prime contractors.
By this measure, the marketplace has had little impact and needs a rethink.
The Digital Marketplace was set up as a part of the National Innovation and Science Agenda, taken on as an initiative of the original Digital Transformation Office (now Digital Transformation Agency.) Its focus under NISA was to improve outcomes for local SME’s in supplying to government.
NISA correctly identified a huge opportunity for local technology companies in supplying to government. The marketplace was specifically set up to make it easier to find innovative local suppliers and buy from them.
As a lever to industry development, this would have the twin benefit of giving these local companies an important revenue stream and an equally important referenceable customer site.
Unfortunately, the Digital Marketplace has veered from this original mission. The marketplace has become dominated by body shop providers. As a marketplace for skills, it has been very successful. It has played to the Commonwealth’s aversion to building in-house capability based on full-time job places.
But as a marketplace to give smaller Australian tech companies better access to government buyers and in the process help underpin innovation outcomes for the Australian industry, it has not met its intended promise.
Government Services Minister Stuart Robert recently issued a press release to celebrate passing the $500 million milestone in the total sales through the Digital Marketplace. Two-thirds of this, or $300 million, went to SMEs (some Australian, some from offshore).
It is good to mark milestones. It’s just that this one does not tell us anything. The $500 million that Mr Robert celebrates being spent through the marketplace took place over its three years of operation.
During that period the Commonwealth spent somewhere between $6 billion and $9 billion annually on ICT goods and services (or between $18 billion and $27 billion over the three years).
Of that $500 million, just $300 million was spent with the Digital Marketplace’s intended SME buyers. And once the body-shops and recruitment agencies are removed, the amount spend directly with Australia technology suppliers is very modest.
Yes it is worthwhile acknowledge the milestone. But it is wort noting also that the Digital Marketplace is not acting as the industry development lever it had been intended to be.
There remains a good opportunity for ICT procurement reform in Australia, to drive better outcomes for Australian industry.
The last ICT procurement reform, as if anyone needs reminding, was less than three years ago, carried out by a PM&C taskforce, no less. In announcing the recommendations of that ICT procurement review, the then assistant minister for digital transformation Angus Taylor set an aspirational target of increasing the ICT procurement spent with local SMEs by a further 10 per cent of the total.
At the time, in 2016, that spend was $5.6 billion. The target was to deliver a further $560 million annually to Australian SMEs. Given the entire NISA budget was $1.1 billion over four years, this goal would have delivered considerably more than double the NISA commitment to local tech companies.
That would be a significant industry development boost for the Australian industry. Are we there yet? Well, it’s impossible to know. It’s not measured, and the goal – even if aspirational – seems to have dropped off the radar.
Federal ICT procurement must be tied to Australia’s industry development goals. And to sovereign capability concerns within areas of technology considered strategically important to the national interest.
We need to be smarter about the way we buy our tech.