Digital procurement needs major reforms

Keith Dodds

The procurement reforms recently announced by Angus Taylor, Assistant Minister for Digital Transformation and Gavin Slater, the new CEO of the Digital Transformation Agency (DTA), represent a step in the right direction for digital innovation in government – but when it comes to breaking the back of old-school technology procurement, we are only just scratching the surface.

The Australian government is the largest single buyer of IT services in Australia, spending $6.5 billion annually. It’s all taxpayer-funded and much of it is being misspent. For 40 years, big, multinational software package vendors have enjoyed procurement practices that have effectively enabled them to hold the government and its citizens ‘hostage’. Their long-running, multi-year contracts with big bang deliverables have cost government and taxpayers dearly, often with disastrous results (think #CensusFail and Queensland Health to name just two).

Limiting contracts to three years, with no extensions, and capping contract amounts at $100 million will certainly curb some of the damage. However, many applauded the reforms for their potential to open up new opportunities for the local start-up community, yet existing panel arrangements favour an old-school approach that benefits large incumbents and encourages near-monopolistic practices – while continuing to stifle younger, smaller and more innovative companies. It is not just start-ups, either, as many smaller service providers have struggled for years against the current contract and procurement system.  

When the Turnbull government promised to have a “whole of government digital transformation strategy” in place by the end of 2016 if re-elected, our team helped the DTA facilitate a process of intensive interviews and workshops to cross-fertilise thinking across a wide range of federal government agencies. The end result was a Government Digital Transformation Roadmap. The procurement taskforce report acknowledges the need for “a comprehensive ICT strategy to help guide agencies’ ICT procurement decisions in order to drive the government’s digital transformation agenda”. However, government won’t be able to truly embrace innovative digital transformation until it creates the right conditions – an environment that breeds and nurtures suppliers who are capable of delivering the innovative solutions it needs. In the meantime, the delay is costing hundreds of millions of dollars during a time of fiscal restraint. The waste must stop.

In the UK, the Government Digital Service took steps in the very early stages of its digital transformation to break the procurement stranglehold of entrenched players. A plethora of new suppliers are now serving the UK Government, and taxpayers, as a result. This is one of the reasons the UK (and other European countries) are further advanced when it comes to citizen-centric digital services.

In Australia, we need to set an aggressive, mandatory deadline for the replacement of the outdated panel system and establish a truly open marketplace in its place. The DTA’s Digital Marketplace was intended to do this, but many large agencies are barely using it (if at all).

The government must also look to expand its use of open source. The government’s Digital Service Standard mandates the use of open standards where appropriate, making all new source code open by default and measuring performance against KPI reported on a public dashboard. Yet closed, proprietary packages remain the rule, not the exception.

Finally, it is critical that compliance with these objectives is made mandatory and public. The DTA’s ‘Performance Dashboard’ aims to “make data open and accessible by measuring the performance of Australian government services” and promote government transparency, but it does not report on contract awards by vendor, longevity, open source versus proprietary solutions, etc.

Such visibility is required to make and measure demonstrable progress and to adequately serve the public interest, which at the end of the day, is the government’s primary obligation.

Keith Dodds is the director of client relations in Australia for ThoughtWorks.


Comment below to have your say on this story.

If you have a news story or tip-off, get in touch at  

Sign up to the Government News newsletter

Leave a comment:

Your email address will not be published. All fields are required