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Guest Post: Positive Changes in ICT Procurement for SMEs

by Don Easter •
Free resource

For some time, the IT Supplier Advocate has been representing Australian companies seeking changes to policy and procurement practices to increase the opportunity for Australian ICT firms to participate more widely in supply.

So as IT Supplier Advocate, I am pleased with the announcement by Special Minister of State Gary Gray on 12 December on simplification of IT procurement.

When the draft paper regarding AGIMO’s whole of Government ICT services panel (known as WISP) was released, I had the opportunity, along with industry generally, to respond. The issues I raised on behalf of SMEs have been heard and reflected in this announcement. That’s a great example of collaborative effort.

The direct benefit for the agencies will be better value for money, focused expertise and innovative new ways of delivering services by Australian ICT firms. The indirect benefit will be to reap the rewards of all the investments the country has made in education and ICT infrastructure to improve productivity domestically and position Australian ICT firms as global leaders.

Of course as IT Supplier Advocate I will continue to seek even more opportunity to raise issues on behalf of industry. I believe my appointment as IT Supplier Advocate has created a collaborative environment for supply to the Australian Government and there are other opportunities which will allow an increase in the share of market for SMEs.

Further opportunities for change SMEs consistently talk about include:

  1. Remove the $80,000 tender limit imposed by the US Free Trade Agreement (FTA). Despite gloomy predictions that “we’ll all be rooned,” the world will not end. Both buyers and sellers are interpreting the limit in a literal manner causing aberrant behaviour. An agency will not pursue a $150,000 project as the cost and time of the tender make it not worth it. Hence work gets bunched into small and large parcels to get around an inflexible rule. SMEs cannot respond to large tenders due to the cost and time and their lack of experience. The whole process excludes SMEs. It seems that a rule intended to bring opportunity across borders has in fact diminished opportunity for Australian companies.
  2. Measure the business won by SMEs and report on it monthly. Keep a track of who is getting what work. Let agencies know the allocation of work is being monitored. SMEs also complain about sub-contract work that is forecast in a tender but which never eventuates. It would be interesting to keep an eye on sub-contract partnerships to ensure proposed work is in fact allocated.
  3. This recommendation favours all suppliers. Do not allow the procurement team to push labour margins so low that quality is compromised. I know from experience that suppliers will put their best people on the highest margin work. Low margin labour gets the B-team.
  4. Break applications work into smaller bundles to reduce risk and obtain value. Large companies who win long-term contracts can supply people and sub-contract the work to increase their margins. By the customer buying direct the savings will be with the customer. In both the UK and EU there have been reports showing that the Government is missing out on savings by not breaking down work. Similarly, if a dominant player starts to win a lot of work they are stretched and the quality can decline as their resources are stretched.

These recommendations are what SMEs tell me as IT Advocate over and over again and have been consistent for years.

At a time when the Government agencies are seeking productivity each of these recommendations has the potential to deliver real short-term gains to the public sector by simplifying and streamlining processes and buying better value for money skilled resources.

As IT Supplier Advocate it is my role to speak on behalf of SMEs with the outcome being a larger share of the addressable market supplying ICT products and services to the Australian Government sector. I welcome continued collaboration with Government to progress opportunities for Australian ICT firms.


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  • Federal
  • IT Services
  • Industry & Investment
  • don easter
  • Gary Gray
  • Portfolio Panels for IT Services Policy
  • SME
  • Subcontracting
  • WISP