The Commonwealth Government has announced significant reforms to the way businesses can sell IT services to the government.

Starting immediately, government IT contracts will be capped at a maximum value of $100 million or three years’ duration. This is to allow small- and medium-sized businesses the opportunity to bid for smaller components of larger projects.

Assistant Minister for Digital Transformation Angus Taylor said the Government was aiming to inject an additional $650 million annually into small Australian tech companies.

“Government is targeting an increase of 10% of its annual $6.5 billion IT spending to smaller operators,” Assistant Minister Taylor said.

“A cap is now in place to limit the term and value of government IT contracts. We are reducing the number of IT panels to make it easier for small players to supply services. We are actively encouraging small innovators to sell us their ideas.”

The reforms were recommendations from the ICT Procurement Taskforce report. The taskforce found “a culture of risk-aversion in government procurement had undermined the freedom to innovate and experiment”.

The ten recommendations from the taskforce cover issues such as developing ICT-specific procurement principles, building strategic partnerships, data-driven reporting, enhancing the Australian Public Service’s procurement skills, and new procurement methods.

Work will continue over the next 12 months to deliver more pathways to improve coordination and reduce duplication of ICT procurement across government.

The DTA’s increased oversight of the government’s IT investment portfolio and its work to build digital capability will address the calls for a more strategic IT procurement approach and a stronger technical workforce.

The ICT procurement taskforce was established within the Department of the Prime Minister and Cabinet in October 2016 and became the responsibility of the Digital Transformation Agency in February 2017, the Minister said.

Industry welcomes the move

Rob Fitzpatrick, chief executive officer of the Australian Information Industry Association (AIIA) said the changes were an important step forward to make it easier and less expensive for smaller Australian ICT companies to bid for components of larger projects and have the opportunity to do business with the Government.

“We welcome the government’s commitment to build improved procurement capabilities and introduce new ICT procurement options aimed to streamline and speed up processes for both government and vendors.

“These changes are in line with recommendations made by AIIA to provide a more level playing field.

“We are particularly pleased to hear the Minister’s strong commitment to cloud services across government and to reforming existing panel arrangements.

“To succeed, it will be important to implement the spirit of these changes effectively, and industry looks forward to working with the government to ensure an effective rollout.”