Australian jurisdictions are increasingly questioning whether closed whole-of-government panels are the most effective and efficient way to procure IT services.
Victoria eServices dissolved
This week’s announcement by Victorian Assistant Treasurer and Minister for IT, Gordon Rich-Phillips that his Government would dissolve the existing eServices Panel and replace it with a multi-use-list-style eServices Register is the most recent step in a shift away from closed and fixed-term government-wide arrangements for ICT Services procurement.
The Victorian panel’s replacement is in keeping the recommendations of an industry and government Working Party, which found that since the last eServices Panel refresh in November 2011 only half of all ICT Services procurement in the State Government had gone through the mandatory arrangement. The remainder was contracted through non-panellist suppliers via exemptions applied for by the client agencies.
“The Working Party considers the level of exemptions to be an overall indicator of how well the panel meets the needs of government users,” said the Working Party report.
The report also criticised the:
- Administrative burden that lengthy tendering processes imposed upon government and industry alike;
- Unfairness of the eServices selection criteria; and
- Inability of the eServices panel to account for less tangible supplier attributes such as agency-familiarity (which is valued highly by agencies and suppliers alike).
The Victorian eServices Register, while still being mandatory for Victorian Budget Sector agencies, will operate along the lines of a multi-use list. Membership will be open to all companies that meet certain (non-price based) eligibility criteria, and will be continuously open to new applicants rather than being refreshed at two to three year intervals.
The new model shifts responsibility for assessing value for money away from a central authority (the Department of Treasury and Finance) to “those best placed to make that assessment” according to the Working Party – the agency project managers themselves. Thus value assessments are not duplicated, decreasing the burden on administrative resources.
The decision places Victoria on the same path as several other jurisdictions.
Federal –no to the WISP:
Following a lengthy consultation period, the Federal Government announced in December 2011 that it would not establish a whole-of-government IT Services Panel (WISP), which was to have been largely based on the Victorian eServices model.
Instead, explained Special Minister for State Gary Gray, it would implement a Portfolio Panels for IT Services Policy, aimed at halving the number of IT Services panels in use across the Australian Government by capping the number of such panels within each portfolio at three.
The option of using agency-based IT services panels was entertained by the Victorian eServices Working Party, but didn’t attract the support of members due to the perceived high administrative workload associated with the duplication of procurement arrangements. The Federal Government, however, hopes to overcome this obstacle by mandating multi-agency use or “piggybacking” clauses into the portfolio panels, maintaining supplier access to all areas of government and in turn nurturing competition.
“Over time, suppliers will be able to access all Australian Government agencies by successfully tendering for only one of the new IT services panels,” said Gray.
“The first step an agency takes in securing IT Services will be to see what IT Services are available via its existing portfolio panel, followed by what is available via panels across the Australian Government. Only then will there be a need to investigate an approach to market via open tender. This is expected to significantly reduce time and dollars spent by agencies and suppliers alike,” added the Australian Government Information Management Office’s John Sheridan.
One of the panels which will support the Portfolio-based approach is the Department of Defence’s Applications Managed Services Partnership Agreement (AMSPA).
The AMSPA model aims to leverage the familiarity that selected IT Services suppliers have developed with the complex Defence Information Environment, by appointing five Preferred Industry Partners to act as final points of contract accountability for Defence projects.
However, the architect of the panel, Defence CIO Greg Farr, views that other suppliers will still have access to the Defence market though subcontracting arrangements.
“I think that’s where a number of the companies that have done business with us over the years have actually found themselves and I know that a lot of them are already partnering with multiple of the systems integrators,” he told Intermedium.
Procurement Reform in NSW:
In NSW it is not only the whole-of-government IT Services panel, State Contract 2020, that has come under scrutiny. Finance Minister Greg Pearce has made no secret of his intention to significantly reform the State Contracts model as a whole.
“The simple answer is that I’m not very happy with the old model,” he told 300 attendees at the launch of the NSW ICT Strategy.
In May he told Parliament that, “one of the major problems with procurement under the former Government was centralised State contracts that contained provisions that ensured small and medium businesses could not supply government agencies”.
“Part of the problem is that the former Government's approach involved massive costs. This Government is establishing a new process and the sooner we get on with this reform the better off this State will be,” he said.
Update 25 June 2012: Since this story was published, the NSW Government has announced that it will open up membership of the Contract 2020 panel for IT Services through a continuous and streamlined pre-qualification process.
Western Australia and the Quarterly Refresh:
Western Australia is currently conducting the seventh refresh of its IT Services Common Use Agreement (CUA) since it was established in September 2009.
The sixth refresh was conducted in February 2011, and at the time a spokesperson for the WA Department of Treasury told Intermedium that it hoped to refresh the panel quarterly, or twice a year at a minimum.
While the option of frequent refreshes has the advantage of maintaining access to new market offerings, the administrative burden of this model is significant. This is no doubt the reason why, 16 months later, the Treasury is only just now embarking on refresh number seven.
First steps for Queensland...maybe:
Queensland has been looking into the option of a whole-of-government IT Services panel since March 2010, however a current forward procurement schedule says that it is unclear when an approach to market will go ahead. The new Queensland Government is currently conducting a comprehensive audit of its management of ICT.
Who is left?
The ACT, Northern Territory, South Australian and Tasmania have no identified whole-of-government ICT Services arrangements in place at this stage. In SA temporary IT services can be procured through a general labour procurement contract.
Update: South Australia has a non-mandatory eProjects Panel that agencies can use to procure services up to a value of $700,000.
Commodity Panels not likely to be impacted by change of heart on IT Services:
The Australian Government Information Management Office (AGIMO) has just announced $181 million in savings that have been attributed to its program of coordinated ICT buying schemes in the Federal Government.
However it is the commodity-based panels that tend to be driving this savings performance. The Federal Government’s Internet Based Network Connections panel (which covers primarily data carriage) for example, is reported to be out-performing all expectations with a saving of about 30 per cent on prior rates of expenditure.
Assessing the value for money of the different categories of IT Services, is however, in no way comparable to assessing the value for money in commoditised offerings such as desktop computers, gigabytes of storage or software licences.
The Victorian eServices Working Party said that “ICT services are not commodity products and ICT Services providers are not easily interchangeable”.
Trying to evaluate one such provider against another purely on the basis of hourly or daily rates was a misleading practice, it said, which could not take into account the quality or specialist skills in service provision, and would likely increase project risk.