Issue 167: 22 Dec 2008

2008:  A rollercoaster ride

As we approach the end of another eventful year, we take a look back at what has happened in the Federal ICT market during this year. We’ve covered most of the events in the medium, so we’ve provided links to the relevant articles.

This time last year in the medium, we looked at 2007: The year that was.  What a difference a year makes! 

• At that start of 2008, we were still assessing the impact of the change of Government.  Although there were considerably fewer machinery of government changes than we expected, there appeared to be a new, more strategic approach to ICT within the Government.  In particular, the new Minister for Finance and Deregulation, Lindsay Tanner appreciates the significance of ICT.
• A key focus of the new Government was the move towards more decentralised procurement.
• Lindsay Tanner singled out ICT for cuts announcing the Government's 'razor gang' was targeting IT spending with proposed cuts worth hundreds of millions of dollar a year. 
• In March, the first round of applications opened for funding of computers in schools - the Government's Digital Education Revolution.
• In April, Sir Peter Gershon was appointed to head the most wide-ranging review of the Federal Government's use and management of ICT for more than a decade.
• A tender was released for the roll out of a national broadband network.
• An extra 2% productivity dividend was imposed on Federal agencies for 2008-09, and was particularly onerous on smaller agencies.
• A quiet revolution occurred in how the Federal Government purchases certain ICT commodities, using Volume Sourcing Arrangements and leveraging its whole-of-government purchasing power to drive down prices.
• While reviews were underway in relation to coordinated contracting arrangements, Department of Finance  instructed agencies to hold back from major procurements (ie any type of contract longer than 12 months) for certain items.
• As forecast by Intermedium, after a slowdown in the lead-up to the election, we saw a continuation of the reduced activity during 2007-08 as the new government settled in.
• A range of cuts were announced in the May budget that affected ICT, but as Intermedium reported, the cuts were not all bad news for ICT.
• In late August, Sir Peter Gershon handed the report of his review to Lindsay Tanner, with the statement “My recommendations involve a major program of both administrative reform and cultural change within the Australian Public Service.”
• The new Peoplebank Intermedium Labour Hire Index was launched amongst much publicity of a downturn in the market for ICT contractors. 
• In September, a report of the Defence Procurement and Sustainment Review (the Mortimer Review) was handed to the Government, providing an independent review of the Defence Materiel Organisation (DMO).
•  In early October, Lindsay Tanner released subtle, but powerful changes to
  Commonwealth Procurement Guidelines (from 1 December) that would significantly change the way Government agencies manage future procurements.
• Amongst the changes was the emergency of Coordinated Procurement Contracting arrangements, making it mandatory for agencies to use procurement arrangements, and Cooperative Agency Procurement ("piggy backing") that enables agencies to procure goods and services based on existing contracts of other agencies, rather than through separate RFT processes.
• On 16 November, the Government released the long-awaited Gershon Report to the public, uncovering serious underlying failures in governance at all levels.
•  On 24 November it was announced Cabinet had accepted Gershon recommendations and would implement them in full.

Amongst other developments that impacted the market during the year:

• Green IT continued to gain momentum, although no firm policies for Government IT have yet been announced.
• The Global Financial Crisis hit commercial sectors, and the Government was under pressure to increase its spending.
• Intermedium research shows the significant cutbacks to Government ICT spending in 2007-08 continued in the first 6 months of the current financial year.