For the third year in a row the same five agencies have topped the ranks of Federal Government ICT Labour purchasers, together accounting for half of the total value of the Labour Hire market.
Over the same period the total value of the ICT Labour Hire market has declined steadily, and is down from $874.4 million in 2009-10 to $811.0 million in 2011-12.
The top five agencies for the past three years were:
- Department of Immigration and Citizenship (DIAC);
- Department of Human Services including Medicare and Centrelink (DHS);
- Australian Taxation Office (ATO);
- Department of Defence (Defence); and
- Department of Education, Employment and Workplace Relations (DEEWR).
The overall market decline is a result of falling contract values among these top five agencies, which fell 10% from a combined total of $472.5 million in 2009-10 to $405.4 million in 2011-12. The remainder of the market saw very modest growth up 1.4% to $405.7 million in 2011-12.
While DIAC and the ATO saw some growth in contract value this was more than offset by declines at DHS, Defence and DEEWR.
DIAC and DHS were well ahead of the pack in terms of the value of their Labour Hire contracting, each spending well over $100 million per annum on Labour Hire contracts over the three years. The combined value of ICT Labour Hire procurement by DIAC and DHS made up a third of the Federal ICT Labour Hire market in 2011-12.
DIAC was the highest spending agency in 2011-12 with $132.5 million worth of contracts for the year, just $3.1 million more than the previous year.
The agency’s Labour Hire requirement is driven by an ongoing need for contractors to support its core Systems for People ICT infrastructure, which received a $169.7 million funding allocation for ongoing maintenance in the Federal Government’s 2010-11 Budget.
DIAC has also made a strong start in terms contracting ICT professionals for the 2012-13 financial year, with $77.4 million worth of contracts already appearing on AusTender for services commencing on or after 1 July 2012. Quarter one is typically the period of the highest activity for Labour Hire contracting.
The top supplier of Labour Hire to DIAC in 2011-12 was Paxus.
DHS was the second ranked ICT Labour Hire purchaser for 2011-12, with $124.6 million in total value of Labour Hire contracts commencing in the period. This result is down $11.5 million from 2010-11’s value of $136.2 million, or a fall of 8.5%.
The 2011-12 Budget provided a major funding allocation for the DHS, with the agency set to receive over $500 million for the period 2011-12 to 2014-15 for infrastructure consolidation to rationalise the ICT functions of the previously independent Centrelink, Medicare and Child Support Agency and for the development of enhanced online service delivery capability.
Third ranked ATO had a total contract value of $57 million in ICT Labour Hire contracts in 2011-12 up 39.9% from the previous year. The ATO also received funding from the 2011-12 Budget with $15 million of funding for business case and the initial capital outlay for the SuperStream reforms.
The ATO received another $447.9 million for the SuperStream reforms in the 2012-13 Budget which may create more Labour Hire contracting opportunities with the agency in 2012-13.
At $48.7 million Defence experienced the most dramatic decline, falling by almost half from its 2010-11 value of $89.3 million, possibly due to the implementation of the Applications Managed Services Partnership Arrangement (AMSPA) for significant elements of its IT Services requirements.
DEEWR rounded out the top five with $42.5 million in Labour Hire contracts in 2011-12, down 22.7% from $55 million in 2010-11.
Intermedium’s ICT Labour Hire Report provides a more comprehensive view of the market including contracting activity by the top 20 suppliers and purchasing agencies.