Systems integrators not on the Department of Defence’s newest procurement panel need not give up hope on their business prospects with Defence, Chief Information Officer Greg Farr has told Intermedium.
Defence published the names of the five Preferred Industry Partners (PIPs) making up its Applications Managed Services Partner Arrangement (AMSPA) late in September and last week Farr outlined his procurement views to Intermedium in a one-on-one interview.
The ICT chief explained that while the vast majority of systems integration work, from major projects to day-to-day maintenance work, will be contracted through the panel, opportunities remain for non-panellists to form partnerships or sub-contracting arrangements with the five PIPs.
“This is where a number of the companies that have done business with us over the years have found themselves and I know that a lot of them are already partnering with a number of the systems integrators. Some I think are partnering with all five of them,” he said.
“There are also SMEs that are already partnering with some of the big systems integrators in areas where they have a niche understanding of Defence that has been built over periods of time.”
“Although I expect the vast majority of the work in this domain to occur through the panel there will occasionally be a need to go outside the panels,” he added.
The procurement of ICT labour hire will also be at the discretion of the five PIPs, with a few exceptions.
“Obviously will still need particular skills in those areas that we retain in-house, from time-to-time, like architecture, design, security, project and program contract management,” said Farr.
According to Intermedium’s contract database, the total value of systems integration contracts signed by the Department of Defence in 2010-11 was close to $164 million. The Defence Materiel Organisation (DMO), which can also procure through the AMSPA, signed another $241 million worth of SI contracts in the same period.
The Defence agencies’ demand for systems integration services has shown a swift and steady rate of growth over the past four financial years, with both agencies only procuring around $30 million worth of such business in 2007-08.
As reported by Intermedium earlier this month, the five PIPs making up the AMSPA are Accenture; BAE Systems; CSC; IBM and Hewlett-Packard.
The partnership model, where each of these five serves as an interface between Defence and industry and has a single point of accountability for all contract outcomes, was first utilised by Farr while he was the Second Commission of Taxation at the Australian Taxation Office (ATO).
“I don’ t particularly like models where you go out and contract labour and then try and integrate the contract labour yourself,” said Farr. “When you don’t actually engage for a particular business outcome, in my view, it adds risk to the project. It undermines the skills that system integrators can bring to the table and it provides less certainty to government on costs and schedule.”
The Defence CIO also said that he hopes the PIP model will facilitate the deployment of smaller and more nimble IT projects on a frequent basis, rather than the large initiatives that have given the department problems in the past.
“I do like the idea of keeping IT projects as small as possible while delivering frequent enhancements to business outcomes. Really, the bigger you get in an IT project the riskier it becomes in my experience,” he said.
“I have always found that for business users it is not until they get their hands on an IT system that they know what they want to do with it.”
“We don’t really want to spend a whole lot of time pretending we know what the outcome is going to be. It’s much better to get a base capability in and evolve that base capability over time.”
While there is no discreet savings target attached to AMSPA, Farr forecasts that time and resources can be conserved by returning to the same experienced parties for most of their contracts.
“What it means is that we won’t have to go through long drawn out processes of procurement, only to have people come in and spend even more time familiarising themselves with the environment...people will be ready to go from day one and can actually offer their skilled expertise to the early discussions of how we should go about a particular project,” Farr said.
The Defence CIO Group (CIOG) has identified approximately $340 million worth of projects that will have their components and maintenance procured through the panel up until the end of the 2014-15 financial year, however Farr concedes that the final amount could exceed this estimate.
He also said there is no reason why this model wouldn’t be adopted by other government agencies if it proved successful at Defence.
“The idea of having certainty around outcomes, certainty around price and having the ability to surge quickly when particular things come up, it’s a fairly attractive option for me and I have no doubt we can make this work.”