​Commonwealth to rid provider panels to make room for startups

In order for the “big bureaucratic beast” known as the Australian government to make good on its promise to undergo a digital transformation, it needs to change the way it procures products and services, and according to Assistant Minister for Digital Transformation Angus Taylor, one of the key places to start is ridding its innovation-stifling service provider panels.

Speaking with journalists on Sunday, Taylor criticized the procurement method currently in place for lower cost government projects, highlighting that the panel process has been a big barrier to smaller, innovative companies getting access to government opportunities.

“Panels are a really good example of well intentioned policy leading to less than ideal outcomes,” he said.

The assistant minister explained that often panels are being used by government for projects that lie within the AU$80,000 to AU$5 million bracket, as they have previously not been large enough to require a customised solution, or large enough that provider selection warrants intervention from government.

Taylor explained this spend bracket is also the sweet spot for small-to-medium enterprises (SMEs), as generally the projects can be turned around quickly, and allow for a single technology solution to a problem that is reasonably digestible.

“We know that by increasing our spend on SMEs we can create a whole industry in this country. An allocation of 10 percentage points more of our IT spend — of AU$9 billion — to SMEs will be one of the biggest investments in innovation in this country’s history,” Taylor said.

“In money terms, it will be double the size of the first round of the National Innovation and Science Agenda.

“If we want to transform the digital government sector in Australia, the most important thing we can do is be a better customer.”

The government’s Digital Marketplace, launched days shy of 12 months ago, is an initiative aimed at getting SMEs involved in the government’s IT spend. It’s touted by the government as an ecosystem where government buyers and sellers can “connect” with smaller suppliers.

“Since the Digital Marketplace’s launch … we’ve had over 250 sellers come on, with many millions of dollars of opportunities on the platform. 93 percent has gone to small-to-medium enterprises,” Taylor explained.

“I love this project because it demonstrates how with technology you can level the playing field and the government can stimulate innovative companies without resorting to hand outs.”

To Taylor, success in getting smaller Australian tech players involved will require the government putting words into action.

“We’ve got to get our act together. We’ve got to create smaller, more modular projects, and we’ve got to reduce the barriers to entry through the current panel process,” he said.

“We’ve got to have a procurement process that allows for innovation, just doesn’t define the spec in gory detail without allowing the innovators to come to us and say: ‘Look, this is what is possible, you haven’t thought about it hard enough’.

“All of that needs to happen.”

However, the startups and entrepreneurs need to want to play, as well.

“Digital government has to be a focus for the entrepreneurial tech sector in Australia and that’s something I want to make happen as fast as we possibly can,” he said, adding he wants to see 10 percentage points — in IT spend — given to SMEs as soon as is reasonably achievable.

In order to usher in the new wave of tech procurement, Taylor said the government needs to kick off change in other places.

This will require government to break up contracts and projects into smaller pieces, with Taylor saying that tenders tend to be indigestible for Australia’s SMEs, and that the government also needs to build internal projects with the ability to integrate them with projects within other departments and agencies.

Taylor also said there is a need to drive the uptake of the cloud.

“These things have been identified time and time again to break down the tendency to make safe choices and those so-called safe choices prohibit innovation,” he said.

Currently, 0.5 percent — the equivalent of AU$60 million — of the federal government’s IT spend goes to the cloud, a figure Taylor said is “simply not enough”, considering about AU$700 million is pumped into the purchase of hardware.

Pointing to the protected-level approval given by the Australian Signals Directorate to two Australian cloud providers last week, Taylor said innovation is breaking through to the “hard parts” of government.

“This is an illustration of what we can do with the government’s IT spend if we get our act together,” he said.

“Which is why having two local protected cloud providers now … is such a breakthrough because we now — we’ve broken into if you like the hard parts of government where protection of data is absolutely central.”

Disclosure: Asha McLean attended Tech Leaders as a guest of MediaConnect.