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Gershon Report with Minister: Challenge for Government to Act on Recommendations

by Staff Writers •
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Last Thursday, Sir Peter Gershon handed his report to Finance Minister Lindsay Tanner. The challenge is now in the Government’s hands to take action on his findings and recommendations.

A key feature of Gershon’s previous UK reports has been the extent and detail associated with implementing his recommendations, making it difficult for government and agencies to ignore them.

Delivering his report to the Minister, Sir Peter Gershon said (quoted in a Ministerial press release): “My recommendations involve a major program of both administrative reform and cultural change within the Australian Public Service.”

All will be revealed as they say – perhaps as early as this Thursday (4 September) when Lindsay Tanner is scheduled to address a breakfast meeting of the ACT Branch of the institution of Public Administration Australia on the topic of ICT Procurement. It will be hard for him not to reveal at least some of the Report’s content (and the Government’s response to it) to an audience of public service professionals, especially when recommendations cover “administrative reform and cultural change” directly affecting that sector.

Intermedium will hold a briefing on the Report and its implications for ICT vendors as soon as it is available. In the meantime, the following is a summary of what we know is associated with the Review, and some considered speculation about other issues that might be addressed.

First, what we know:

As Ann Steward (GCIO) revealed at the Technology in Government Summit in Sydney two weeks ago, the Government is pursuing Coordinated Procurement Contracting, and has established a dedicated unit within the Department of Finance and Deregulation under Division head John Grant. This unit is undertaking a range of scoping studies to determine the feasibility of government-wide contracts for certain goods and services. As a result, agencies have been instructed not to enter into contracts of more than 12 months without Finance approval, pending completion of the studies for accounting services, travel, desktops, and office machines (printers/MFDs). In addition, a Volume Sourcing Arrangement for Microsoft products and services is being lead by the Department of Defence.

Steward indicated similar VSAs would be pursued with other suppliers, naming IBM, SAP, Oracle and Sun, as well as for telecommunications services external to existing whole-of-government arrangements. We speculate that other items falling into this model include notebook systems and smart phones increasingly favoured within agencies.

A Two Pass Cabinet approval process has also been announced, affecting programs and new policy proposals involving $30m or more in expenditure, of which $10m or more is ICT-related. A key issue with this concerns the point at which the sponsoring agency will go to market to obtain pricing. Logic dictates this should happen before the second pass in order to present accurate costings, but suppliers will be concerned about participating or offering best pricing at this stage, given the risk of the project not proceeding. Suppliers who participated in the previous Government’s Access Card project are likely to be especially “gun shy” where there is not a solid commitment. The Two Pass process was a recommendation of the 2003 Kinnaird Review of Defence Procurement; five years later the reports on outcomes are “mixed”.

A Two Pass process might imply more frequent two stage procurement, such as RFI followed by RFT. This has potential to increase bid costs for both agencies and suppliers. Secondly, we speculate the following as “obvious candidates”:

  • Formalisation of the Gateway Review process. This is one of Gershon’s “babies” from his time as CEO of the UK Office of Government Commerce, which has been under trial for some time. A strengthened Gateway Unit within Finance will emerge. There may be mandates around use of methodologies such as PRINCE2, COBIT and MSP.
  • More mandatory standardised frameworks and processes around architectures, investment management, program planning, governance and reporting, enabling “rolling up” of status reports (perhaps to the Cabinet level) and drill-down to the project level. But a residual issue remains in determining accountability and responsibility, due to differences between the public and corporate sectors.
  • Data centre consolidation and investment strategy. The extensive data collected for the Review together with a number of key agency and supplier submissions, gives the Government a comprehensive view of the looming problem in this area. Significant investment will be required to overcome physical space, security and environmental issues associated with the Commonwealth’s existing data centres. Outsourcing has not resolved any of these problems, and the challenge is further heightened by the growth in data-sharing for health, welfare, education and taxation, and national security.
  • Attempts will be made to standardise certain business applications – ERP, FMS, HRMS, EDRMS, and CMS – with a view to reducing costs associated with customisation and integration.
  • There will be a heavy rationalisation of grants management business processes and systems.
  • Everyone prays for a single standard security clearance process (or mutual recognition) across government agencies!
  • While there is no specific term of reference, we would expect the report to comment on the need for a green ICT strategy and, given the Garnaut Report coupled with the recent UK Government’s announcement, the report may well recommend a target date for carbon neutrality.

Thirdly, some “desirable changes”:

One of the key issues here relates to the future role of AGIMO, its relationship with other parts of Finance, units such as the Cabinet Implementation Unit in PM&C, and the Audit Office. Enhanced “coordination” of these relationships should improve overall efficiency and effectiveness while preserving a high level of agency autonomy.

All indications are these relationships have strengthened during the Review. This may be formalised by recommendations from Gershon urging:

  • Stronger “conformance” with AGIMO frameworks as part of CEO’s instructions (exception reporting to ANAO where not followed?)
  • Clear process integration between and within key agencies and divisions, such as Finance-AGIMO, PM&C-CIU (will there be a “Delivery” Unit?), Finance-Gateway Review, Finance-Procurement, Finance-Budget Group, Attorney-General’s-PSCC, DSD and the Auditor-General.

We hope the following are avoided, due to failings in the past:

  • Single, “one size fits all” shared services model – this is a big temptation, but evidence from the UK and the states shows significant costs and inefficiencies can arise with an incorrect shared services model.
  • Creation of inefficient or expensive procurement arising from a Two Pass process; an RFI followed by RFT increases the bid costs of both agencies and suppliers with little added efficiency.
  • Creation of “pre-qualification” panels or multi-use lists that subsequently require additional extensive tender responses for statements of work. Suppliers bear an obvious inefficiency cost with this model, but it is often “hidden” from government because the costs may be borne by different agencies.
  • Creation of a whole-of-government single purpose procurement agency (DAS resurrected, and its infamous PE contracts, which were large and unwieldy – with agencies undertaking further competitive processes).
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