Govt considers ICT services panel cuts

Federal Government ICT services panels could be cut back from 87 to "about four", according to a discussion paper issued by the Australian Government Information Management Office (AGIMO) last week.

Entitled Proposed Whole of Government ICT Services Panel, the paper responded to a Gershon recommendation that the Government "optimise" the number of ICT panel arrangements.

As well as cutting the number of panels, the paper also proposed greater use of online tools such as reverse auctions and "eNegotiation" to improve competition and benefits to all participants, particularly small and medium enterprises (SMEs).

That proposal appeared to be modelled on the Victorian Government's eServices Panel, although it excluded labour hire.

ICT services accounted for about half of all Federal Government ICT contracts. AGIMO observed that 72 percent of all such contracts were worth less than the $80,000, which was under the threshold required for an open tender process.

The work was "likely" to go to known suppliers rather than new entrants, AGIMO said.

Annual fees proposal

AGIMO proposed initially to consolidate the panels run by three large portfolios - which accounted for into single panels in each portfolio.

All other portfolios would be required to either use one of these larger portfolio panels or to join the new Whole-of-Government ICT Services panel (WISP) once existing panel arrangements expired.

To ensure "only serious suppliers joined the panel", qualified vendors on one of these four panels would be expected to deposit an annual fee of $2,000.

Likewise agencies using the panel would be charged a fee for each time they used the panel. No indication was given of the likely fee agencies would be charged.

Winners and losers

While the whole-of-government panel would promote a more open bidding process by service vendors, some analysts believed there would be losers in the market.

"One of the big advantages of the existing panels is that once you are on a panel, it is an incentive to knock on the doors of agencies to talk to them about their requirements and what's in the pipeline," Ovum public sector research director Kevin Noonan said .

"But being on one of four massive panels does not say anything about you."

Noonan questioned whether the centralisation of ICT services in government was unbalanced.

Another analyst, who declined to be named, said it was sensible for government to rationalise and centralise but warned that agency IT procurement staff may have to "watch their backs".

He estimated up to 1,000 staff could be affected.

An AIIA representative welcomed the discussion paper. A spokesman said it offered a provocative and innovative set of options on which the AIIA would respond in detail by 17 December.

"Initiatives to introduce efficiencies into panels are positive overall and should benefit smaller agencies," the AIIA spokesman said, noting however that the proposed fee of $2,000 would be "a strong disincentive to SMEs".

The AIIA also wondered why labour supply companies were excluded, and said the paper left uncertain whether Defence will participate and how state and territory governments can potentially engage with these panels.