DTA warns against permanent bans of IT services firms

The Digital Transformation Agency has warned against “permanent” bans of IT suppliers and services firms for “unethical conduct”, in part because it could block departments from accessing emerging technology or critical skills down the track.

The digital policy overseer told a senate inquiry [pdf] that “outright bans on suppliers can introduce significant operational risks and unintended consequences for the Australian government.”

The comments came as the parliament considers a “federal debarment or exclusion regime” [pdf] that would stop suppliers that engage in “unethical conduct” from bidding for government work.

The federal context for a permanent ban regime is the PwC scandal, which saw the consultancy excluded from government work for misusing confidential Treasury information.

But the DTA argues that responses to “unethical conduct”, at least by technology suppliers, need to be “proportionate” and “evidence-based”, and that blanket bans could block access to technology advances or skilled resources.

“In the digital market, where unique or highly specialised services are often supplied by a limited number of providers, a permanent exclusion of a supplier may jeopardise continuity of essential services and escalate costs and risks,” the DTA wrote.

“Furthermore, the dynamic nature of the technology sector - with frequent mergers, acquisitions and changes in subsidiary and reseller relationships - means that a blanket ban may inadvertently restrict access to critical or innovative capabilities that subsequently become available through previously debarred organisations.”

The DTA said any debarment regime needed to be “underpinned by clear terms, robust controls, and defined conditions for supplier return.”

“Permanent or indefinite bans without periodic review can limit the government’s access to emerging solutions, especially in fast-evolving technology markets,” it said.

“Transparent criteria for the duration of debarment, the scope of restrictions, and regular reassessment of supplier eligibility are essential to safeguard both integrity and market diversity.”

The DTA cited the recently overturned 12-year ban on IBM by the Queensland government as an example of a one-off debarment that caused problems for departments and agencies.

“IBM was excluded from new government contracts for several years,” the DTA wrote.

“While this action addressed immediate concerns about accountability, it also reduced competition in the market for large-scale IT services and contributed to a contraction of the local workforce. 

“Even after the issues were resolved and the ban was eventually lifted, the effects on competition and capability persisted, highlighting the enduring impact of such measures on government procurement and the broader technology sector.”

The DTA said it had its own mechanisms to ensure accountability of technology suppliers that bid for government work.