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Revised procurement model to replace NSW 2020 panel for IT Services

by Paris Cowan •
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The NSW Government plans to follow in the footsteps of its Victorian counterpart by freeing up the process by which vendors become members of its mandatory whole-of-government IT Services panel, State Contract 2020.

Speaking in Parliament yesterday, Finance and Services Minister Greg Pearce said that a permanently open pre-qualification process would replace the tender requirements which currently determine membership of the panel.

“Businesses will see the changes with a new, simplified, online registration and application process, reducing the time and effort taken for small to medium enterprises to become eligible to provide their services to Government,” he said.

The Government also intends to move away from a one-size-fits-all approach to project risk which can make procurement processes unnecessarily complex for smaller jobs.

“A two-tiered accreditation approach will be adopted, based on contract value and client assessment of contract risk, whereby suppliers may register to conduct low-value, low-risk contracts or high-value, high-risk contracts.

“Simplified contract terms and conditions will be introduced to reduce the complexity of procurement arrangements between industry and the Government,” he told Parliament, adding that the plan had been developed in consultation with the Australian Information Industry Association (AIIA).

Suppliers who are currently members of the panel will automatically be accredited under both tiers of the new arrangement.

Intermedium is awaiting confirmation of when the changes are expected to take effect and will provide an update once this information becomes available.

Pearce has made no secret of his dislike for the State Contract model in the past, and said that the new model will give the Government the flexibility to ensure it always has access to new products and capabilities that the fast-paced ICT market makes available.

The latest NSW Budget, handed down on 12 June, shows that the annual value of transactions through State Contracts dropped between 2010-11 and 2011-12 by $174 million, from $3.727 billion to $3.553 billion. This figure is also $347 million below the Department of Finance and Services’ (DFS) target of $3.9 billion worth of transactions in 2011-12.

Budget Papers say that the shortfall has come about due in part by agencies spending outside of State Contracts, as well as a longer lease period for motor vehicles and costs reductions attributed to procurement initiatives.

The Contract 2020 announcement comes just over a week after the Victorian Technology Minister Gordon Rich-Phillips revealed that very similar changes would be applied to his State’s whole-of-government eServices panel. Together the reforms add to a snowballing movement against restricted whole-of-government arrangements for IT Services procurement in Australia.

It is also the second procurement hurdle that the NSW Government has cleared this week.

On Wednesday the Parliament passed legislation formally abolishing the State Contracts Control Board (SCCB) and replacing it with a NSW Procurement Board to be chaired by Director-General of the DFS Michael Coutts-Trotter.

The bill also gives NSW Government agencies the power to procure goods and services on behalf of other agencies at the direction of the Procurement Board, paving the way for a scheme under which some State Contracts could become managed by lead agencies rather than a central procurement authority.

A public discussion paper on procurement reform, released in January, suggested that those agencies with the highest spend in each category of procurement are best suited to overseeing the running of the relevant State Contracts.

While the procurement of some commodity-based categories of ICT is likely to remain under the authority of a central procurement body within the DFS, Intermedium’s market analysis suggests that NSW Health would be the most appropriate cluster to take responsibility for other ICT State Contracts, as the biggest spending cluster in this procurement category.

Related Articles:

End of an era for whole-of-government IT Services Panels?

Industry welcomes NSW Government decision to scrap supplier fee for State Contracts

Contract 2020 extended by 12 months

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