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Government Moves to Centralise Federal ICT Purchasing and Cut Spending

by Staff Writers •
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During a speech last week to the National Press Club, the Treasurer and Minister for Deregulation, Lindsay Tanner confirmed the Government's intention to centralise control of its ICT procurement with the express aim of reducing expenditure.

Announcing an overhaul of procurement, he said, "The Liberals treated departments and agencies as individual private companies with the government as a kind of giant holding company. This radical decentralisation of government has created widespread inefficiency. There is very little centrally shared information about what different agencies are doing in procurement, let alone co-ordinated purchasing. ... rarely if ever making use of the buying power that a coordinated government approach to purchasing could deliver."

While keen to emphasise that there would be no "excessive" centralisation, he pointed out that as the Government was such a huge purchaser, "even small improvements will deliver substantial dividends."

The Minister (who's also head of the Rudd Government's "Razor Gang") singled out the Government's computing and communications spending as part of this overhaul of procurement. He announced that a new approval and monitoring process would be introduced for major IT projects in an attempt to reduce costs and introduce "rigour".

A detailed article on Mr Tanner's announcements was published in the Financial Review (written by Emma Connors) on 5 February.

It’s likely that the large agencies will try and resist these new restrictions, but it’s unclear how the proposed changes will affect major projects including those in DIAC, ATO and Centrelink. Tanner’s comments suggest there will be strong pressure for agencies to share back office systems, and to rationalise other services such as HR and financials. All this will lead to an enhanced role for AGIMO which in the past has had a largely advisory role in relation to ICT procurement.

According to Kevin Noonan, Intermedium’s Head of Consulting, we can expect a much greater focus on process from the new government and greater use of common use contracts.

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