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Caretaker period to impact ICT market

by Pallavi Singhal •
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The Federal Government entered caretaker mode at 5:00pm on Monday 5 August, marking the beginning of a period in which the Government traditionally avoids major decisions, procurements and transactions.

Until the election result is clear, federal caretaker conventions specify that the Government should avoid entering into major contracts or undertakings, both in terms of dollar value and linkage to specific policy. Major policy decisions, commitments and public sector appointments are also avoided during the period.

In addition, the pre-election period will see a hold on responses to parliamentary committee reports, agency reporting and most ministerial announcements.

In relation to contracting or tendering during the period, the caretaker conventions specify that where commitments are necessary “for legal, commercial or other reasons”, agencies should explain the implications of the election to vendors and include clauses for termination. This should mean that procurements that are non-contentious and required for the maintenance of ongoing administrative activities of the agency can get signed off during this period.

Despite the fact that routine administrative procurement should be able to proceed unimpeded during the caretaker period, this is unlikely to stop at least some ICT contracts from becoming stuck in the pipeline. 

“There tends to be an overreaction to Caretaker to avoid criticism, so there’s more caution exercised than is strictly necessary,” said Intermedium’s Managing Director Judy Hurditch.  A number of industry participants have observed to her that there has been a de facto Caretaker period in place in Canberra ever since then Prime Minister Julia Gillard’s January announcement of her nominated election date.

Approaches to the market that occurred between six and nine months ago, and which should therefore in theory be nearing finalisation and award of contract will be particularly vulnerable. ICT procurements that may be impacted by the caretaker period include:

  • The Department of Foreign Affairs and Trade’s (DFAT) request for tender for an ICT technical and related services panel, which closed in January 2013;
  • DFAT’s approach to market for a telecommunications expense management system, which closed in April 2013;
  • IP Australia’s request for tender for a case management system. The initial expression of interest closed in February 2013; and
  • The Australian National Maritime Museum’s tender request for an agency-wide CRM solution, which closed in June 2013. As the initial project completion was projected for November 2013, this is almost certain to be held up.

One major procurement that appears to have just scraped through prior to the commencement of the caretaker period is the Department of Agriculture, Fisheries and Forestry’s (DAFF) new contract for a range of telecommunications services, which closed in April 2013. It is understood that a decision on this has been made, although the contract has not yet been posted on AusTender. DAFF is expected to appoint a single vendor for telephony, network, contact centre, project and other services.

The caretaker slowdown strictly speaking only lasts until the formation of the new government. Under legislation, this must occur within six weeks of the election, but generally occurs within two weeks (thus likely to be the end of September). However, if there is a change of government, it will take a number of weeks for any machinery of government changes to be implemented, and for any incoming Ministers to come to grips with their portfolios and begin acting on election mandates, before government procurement processes return to more normal levels. 

However, with economic management and a return to surplus a cornerstone of policy for both major parties, irrespective of who wins the election, there will be a continuance of the current levels of spending restraint. The Labour Government’s economic statement of 3 August quietly reintroduced an efficiency dividend of 2.25 per cent, effective from July 2014, and the Coalition is on record as seeking to shed 12,000 public sector jobs over a two year period (utilising natural attrition as the mechanism).   

The 2013-14 Budget saw an almost 20 per cent reduction in ICT funding compared to 2012-13, and the outlook is a similarly lean 2014-15 Budget.

 

Related Articles:

Federal Election 2007: The Caretaker Period

The Caretaker Period: Helping you Survive the Election

Budget 2013-14: Government writes ICT wish-list, leaves funding for next time

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Tags
  • Australian National Maritime Museum
  • Department of Agriculture
  • Fisheries and Forestry (DAFF)
  • Department of Foreign Affairs and Trade (DFAT)
  • IP Australia
  • Julia Gillard