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Number of Federal ICT contracts lowest in five years

by Staff Writers •
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The Federal Government ICT market slowed dramatically in 2007-08 as major projects in key spending agencies like Centrelink and Immigration ran down, although the outlook for vendors isn’t entirely glum.

Intermedium’s preliminary analysis of Federal ICT market results for 2007-08 shows both Centrelink and DIAC spent well under $150m each in 2007-08, compared with around $600m each in 2006-07.

On a brighter note, Defence spending remained consistent, although this reflected a number of major multi-year contracts agreed in 2007-08 and appears to have tailed off towards the end of the financial year.

This downturn is independent of the broader economic climate. But while some areas have been severely impacted and vendors have suffered, others have fared quite well, according to Intermedium’s preliminary analysis of AusTender data.

Last year’s research showed the Federal government ICT market was steady - with growth of 0.22% - despite a significant downturn in spending within the Department of Defence. While the total value of ICT contracts reported by Federal government agencies increased in the 2006-07 financial year, the number of ICT contracts fell by approximately 15 per cent. This led to a rise in the average value of contracts to more than $229,000 in 2006-07, compared with $196,000 the previous year.

There was also a drop in the number of suppliers who secured Federal ICT contracts in 2006-07, from around 2,200 in 2005/06 to just over 1,800. This year our preliminary analysis shows that in terms of contract activity, 2007-08 had the lowest number of contract transactions since Intermedium began analysing Federal Government spending in 2003-04.

In part, this reflects a logical shift towards fewer, higher value transactions as agencies move to more strategic sourcing approaches. Equally, fewer contracts mean reduced opportunities for suppliers.

Despite this, Intermedium’s preliminary analysis of this year’s results indicates that, at around 1,970, the number of suppliers vying for Federal business remained around the same level in 2007-08 as in the previous year, although well below the peak of 2,220 suppliers in 2005-06.

Intermedium expects ICT spending to pick up as we move into the second year of the electoral cycle and the various reviews conclude.

Intermedium will announce the full results in its Year in Review 2008 comprehensive annual briefing on the Federal ICT market, to be held in Canberra on 30 October and Sydney on 4 November. We'll announce the Top Suppliers overall and in specific categories and also present the Froggy Awards, recognising up and coming suppliers. This is an event not to be missed for anyone involved in the Federal ICT market!

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Jurisdiction
  • Federal
Sector
  • Policy
Tags
  • Centrelink
  • Contract
  • Defence
  • Federal Government ICT
  • Immigration