Very possibly a restricted process for up to 12 months on major commodity ICT purchases such as desktop PCs, printers, photocopiers and MFDs as a start!
Since the beginning of the year, there have been a number of broad references to “coordinated procurement contracting” by Finance Minister Tanner in the Gershon Review’s terms of reference and most recently in a Defence RFT for Microsoft Large Account Reseller services. However there's been little explanation as to what this might mean and how it might operate in practice.
Like so many of the new Government’s reviews, all will be revealed in time. However it is evident there may be lean pickings in terms of the sales pipeline for certain commodity ICT items over the next 12 months until arrangements are finalised.
First up (after Microsoft) are major office machines including printers, photocopiers and multi-function devices, as well as desktop computers. Scoping studies will be undertaken to identify coordinated procurement opportunities for these items. In the meantime, Intermedium understands that Finance has instructed agencies to hold back from major procurements (ie any type of contract longer than 12 months) for these items pending completion of the scoping studies.
Intermedium data shows Government agencies typically spend between $50m - $75m annually on these items. Around one-third of this is currently purchased through open tender. Delaying purchases will have an obvious effect on suppliers, especially in tandem with the impact of the additional 2% efficiency dividend which has cut discretionary spending.
While market failure is unlikely, the Government may well face an already rationalised supply base at the end of 12 months.
Intermedium understands the proposed coordinated contracting arrangements would apply to all FMA Act agencies, with CAC Act agencies invited to participate. One approach could be along the lines of the Defence Microsoft LAR RFT where a whole-of-government arrangement is developed around a lead agency. The Victorian Government has adopted this model over recent years.
It has been reported some suppliers have pre-empted the Government’s studies by offering additional discounts. The Government would obviously welcome this as an outcome, as it would clearly support claims that there are additional discounts to be had.
Given the level of conjecture in the market at present, it would be helpful if the Government clarified what it intends, including processes and timelines, as a matter of urgency.