Government ICT procurement policy needs reform: report

New research finds Government ICT procurement policy must be urgently reformed, as Australia has fallen out of step with international practice when it comes to supporting local industry.

According to the report commissioned by TechnologyOne from independent economic analysts Insight Economics, reforms announced by the Albanese government in the past two years — such as supporting local R&D and intellectual property creation, tax payments and skilled job creation — were a step in the right direction. Yet to ensure the Australian community, economy and taxpayers benefit more from the massive public spending on government procurement they cannot be the end of the reform agenda.

The report found that Australia’s major trading partners have been far more aggressive in using procurement to directly support their own technology industries than Australia has been. Nations, including the US, Canada and the UK, recognise their ICT industries as fundamental pillars of national self-reliance and economic growth and use procurement to boost them. This has left Australian high-tech businesses in a loss-loss situation and at serious risk of becoming reliant on overseas supply lines — a situation the COVID-19 pandemic has already exposed as a high risk to the economic and social stability of the community.

The report, which underlines the importance of procurement as a tool for driving economic outcomes, has been welcomed by Australian technology companies, including SaaS ERP provider TechnologyOne; government and critical infrastructure cloud vendor Vault Cloud; cybersecurity, data centre and ICT business Macquarie Technology Group; custom software development firm Agile Digital; counter-drone defence solutions company DroneShield; space technology company Gilmour Space; software and data company Psithur; and the Australian Computer Society, the largest professional body in Australia representing the ICT sector.

In line with the report’s recommendation, the ICT industry is urgently calling for a clear framework for measuring and evaluating procurements based on:

• a weighted scorecard approach, especially for smaller contracts
• a ‘calculator’ to transparently value benefits of medium deals, using standard economic multipliers
• an economic impact assessment for ICT procurement deals over $10 million, making explicit the expected outcomes as is already commonly done in other industries, such as mining and infrastructure.
   

“Australian tech is world-best and has shown it can compete and win in every market in the world, but continually finds itself fighting for recognition and respect with governments at home,” said TechnologyOne CEO Ed Chung. “All we are asking for is that our contribution is properly valued before taxpayers’ money is spent supporting the pension funds of people in other countries.”

Australian Computer Society CEO Josh Griggs agreed, saying: “ICT continues to be the defining enabler of Australia’s economic growth, yet our highly sophisticated and world-class technology sector is not adequately prioritised by government procurement processes. It’s time to give Aussies businesses a fair go so we can all share in the benefits of a truly advanced, high-tech 21st century economy.”

“When we empower Australian sovereign companies, we drive locally led research and development, enabling Australian engineers to lead the forefront of technological advancement,” said DroneShield Chief Technology Officer Angus Bean. “For companies like DroneShield, a world-leading innovator in counter-drone solutions, this support not only strengthens our capabilities but also fosters growth in opportunities for emerging talent from our Australian university pipeline, building a skilled, future-ready workforce — right here in the heart of Sydney.”

Agile Digital Executive Director David Elliott said: “As the cost of living crisis continues, Australians are questioning why so much time and taxpayer money goes into large, often unsuccessful Commonwealth ICT projects. As a country, we need to rethink awarding massive ICT contracts to multinational companies and consider turning to our local industry instead.

“This report from Insight Economics urges policymakers to learn from our trading partners — and to consider the benefits Australia could gain if our government were more strategic, focused and sovereign in its ICT procurements.”

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