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ICT Strategy: NSW Minister casts doubt over the future of State Contracts

by Paris Cowan •
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NSW Finance Minister, Greg Pearce, told industry delegates at the launch of the State’s ICT Strategy to expect major changes to the way that the Government procures ICT, as just one part of a transformational plan aiming to provide NSW with a “modern, agile government”.

“We are working, as one of our priorities, on the State Contracts model, and I guess the simple answer is that I’m not very happy with the old model,” he told 300 attendees at the Strategy’s Sydney launch.

“We have made a lot of progress in getting to a better procurement approach and I guess I would say watch this space, it won’t be long before you will see a lot of change in this area,” he said.

Pearce’s comments, and concerns raised in the NSW Procurement Reform discussion paper released in February, suggest that alternatives to the whole-of-government panel model are being sought out in NSW, as they are in other jurisdictions as well.

At present NSW is one of the most prolific users of whole-of-government panel arrangements, or State Contracts, in Australia, channelling $3.8 billion of a total $12.7 billion worth of procurement expenditure through the contracts in 2010-11. More than $670 million of this total was procured through ICT State Contracts.

The ICT Strategy 2012 outlines plans for a whole-of-government Service Catalogue which will cover technology requirements that are common across the Government, using an ‘as-a-service’ provision model.

 “Delivering services though a whole-of-government service catalogue will leverage NSW Government purchasing power to secure the most effective pricing, and support consistent service delivery across government,” the document says.

The catalogue will list the essential characteristics of each of its offerings, including the cost, the vendor and any contractual considerations. Examples of services given in the Strategy include email, business applications, Infrastructure-as-a-Service, Platform-as-a-Service, and Software-as-a-Service. The Service Catalogue is due to be established by Q4 2012.

The release of the Strategy has also revealed the Government’s plans to pilot Australia’s first whole-of-government cloud, to be launched as early as Q4 2012, leading to agency migration to a fully operational private cloud in Q2 2013.

Pearce hinted that the private cloud project would be enabled through the consolidation of all of the Government’s data centre needs into two purpose built facilities, for which a contract announcement is conspicuously overdue following the announcement of shortlisted tenderers in July 2010.

“We’ll have some announcements about the data centre project soon,” he said. “But I think it’s fair to say that when you read the strategy it essentially anticipates data centre reform. One of the projects for the first year is a cloud pilot project. We will be looking at how we will transition to an appropriate level of private government cloud as we go forward.”

The Government hopes that the establishment of a private cloud service will pave the way for agencies to eventually move across to more cost effective public offerings, in keeping with a broad outsourcing ethos that prevails across the Strategy as a whole.

This preference for outsourcing, or ‘Service Orientation’ also extends to ICT labour. In a significant departure from anti-contract labour policies in jurisdictions such as the Commonwealth, the ICT Strategy acknowledges that it will have to embrace labour hire in order to meet its outcomes.

“The Government recognises that it may be more cost efficient and practical to buy in skills in specific areas on an as needs basis,” it says.

However, industry members expecting to find the ICT Strategy directly funded in the NSW Budget handed down on 12 June are likely to be disappointed.

 “Importantly, there is no additional money in the strategy as we aim to reduce unnecessary and ineffective expenditure on the applications, hardware and technologies used by Government in its day-to-day operations,” said Pearce.

However industry can also be assured that ICT is unlikely to become a target for budget cuts either.

“We’ve got about the right proportion of our total budget being spend on ICT – we can’t be in the business of constantly drumming up cost reductions. We need to be in the business of investing in transformational change,” said Director General of the Department of Finance and Services, and NSW Government CIO Michael Coutts-Trotter.


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