Australia seeks to break stranglehold of big government IT suppliers

By on 25/08/2017 | Updated on 24/09/2020
Angus Taylor, assistant minister for digital transformation

The Australian government has unveiled radical reforms designed to force federal agencies to end their dependence on big IT suppliers, whilst opening up major new markets to smaller technology firms.

Effective immediately, new government IT contracts will be capped at a maximum value of AU$100 million (€67m or US$79m) or three years’ duration.

The measures are intended to give small and medium-sized suppliers the opportunity to bid for government IT contracts.

A leg-up for little firms

According to a report by the ICT Procurement Taskforce, which was published alongside the reforms, the labyrinthine tendering process for government IT contacts has tended to favour larger vendors, excluding smaller firms that might offer better value or more innovation.

One submission to the taskforce’s inquiry argued that tenders “are often overly long, complex, duplicate the same information and require responses to be in exactly the desired format. This does not provide a good basis for suppliers to actually show what they have on offer, and favours large vendors who have mastered the dark art of responding to government tenders.”

When the taskforce published a consultation paper in November last year, it highlighted how between 2010 and 2015, around 50% of the value of government IT contracts went to 20 vendors, with almost half of this going to just five: HP, IBM, Telstra, Lockheed Martin Australia and Optus Networks.

Fear of the unknown

“The taskforce found [that] a culture of risk aversion in government procurement had undermined the freedom to innovate and experiment. If we are to reward the entrepreneurial spirit, a new procurement culture is necessary,” said Australia’s assistant minister for digital transformation Angus Taylor as he announced the reforms.

The cap is aimed at breaking IT contracts into smaller chunks that can be delivered by smaller suppliers. To back up the cap, Taylor said the government would aim to target an additional AU$650 million (€436.5mn or US$514.3mn) of its annual IT spend at smaller operators, representing 10% of its AU$6.5 billion (€4.4bn or US$5.1bn) total annual IT procurement bill.

Taylor sews up reforms

“These are exciting changes that will throw open the door for SMEs and allow government agencies to bring in new and innovative services,” Taylor added.

Taylor said Australia’s Digital Transformation Agency (DTA) will also work over the next 12 months to improve coordination and remove duplication of IT procurement across government.

The DTA was formed last October to provide strategic oversight of the federal government’s IT investment portfolio.

About Ben Willis

Ben Willis is a journalist and editor with a varied background reporting on topics including public policy, the environment, renewable energy and international development. His work has appeared in a variety of national newspapers including the Guardian, Daily Telegraph and Times, as well as numerous specialist business, policy and consumer publications.

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