Exclusive: How the Feds lawfully gut SME opportunities

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Exclusive: How the Feds lawfully gut SME opportunities
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Parliamentary workflow solutions has proven a killing ground for SME suppliers to government for some time.

A similar fate befell the Westbourne Group's Slipstream product around the turn of the century.

In 1999, the group's former director Rick Bushell and his colleagues performed software development for Defence and the Department of Foreign Affairs and Trade.

The company won a $1 million tender issued by the then Department of Industry, Tourism and Resources (DITR) to develop a ministerial workflow solution over a two-year period.

However, Bushell alleges a contractual dispute with the DITR stifled the project and its broader applicability.

“We were young guys as a group and we probably did not set the contracts to protect ourselves,” Bushell said.

“The Government kept the intellectual property (IP). That was the attitude of the Government at the time where any investment in software, they would try to recoup the investment in terms of IP.”

Bushell recalled the department offered to return the IP in exchange for $1.5 million.

“The attitude of the department was that we were sitting on a gold mine," Bushell alleged.

Bushell said Westbourne had no hint that DITR was going to be aggressive in any shape or form until a divisional head, whom he declined to name, saw it as a project to demonstrate that the Government could get the solution at zero cost.

Though Bushell said Westbourne was "happy to provide massive discounts to government agencies across the board because it was in our interest to have a larger footprint", he alleged DITR would "not even allow us to take that first step, which was to give [the system] to another department, before we settled the IP issue".

“We were gutted at the time,” Bushell said. “We [became] disenfranchised and we stepped away from it.”

After Westbourne stepped back, the DITR white-labelled the system and made the associated IP freely available to other federal agencies.

Several departments picked the system up, and Westbourne staff provided some support to these agencies. Other companies such as Dialog began to do business reworking and redeveloping the code.

SlipStream eventually “forked” because there was no one to centrally control it.

“DITR were sticklers for getting money back for the IP," Bushell alleged.

"They never got a cent and they ended up with a system they’d invested in but then went in several directions.

"SlipStream customers got little or no support, could not customise their systems cost-effectively.

"We told the Government that would happen if they did not let us commercialise it properly."

AusTender records show that $1.86 million was spent by various agencies supporting SlipStream from mid 2007 to February 2013.

Bushell argues that Westbourne could have achieved what AGIMO are now trying to do for a quarter of the currently quoted cost.

Bay Technologies' Pickering said the SlipStream experience underlines his concern that government should not be in the business of building and supporting software solutions.

Lid on costs

Despite assurances to the contrary, third party suppliers believe the Government may have under-estimated both the complexity and scope of the task ahead.

“It costs a lot to process ministerial correspondence,” Pickering said, outlining a range of between $800 and $2500 per document, depending on the handling complexity.

Of the 41 agencies in line to receive the whole-of-government system, Random Computing Services' Johnson estimates the 20 largest agencies spend $1 million annually processing ministerial correspondence.

The remaining 21 agencies are so small they account for the size and cost of one large department, he said.

Pickering believed that variation between agency requirements for processing ministerial correspondence would add to the project's costs.

"Departments do have different requirements. They fundamentally process different data, so it’s a bigger internal spend than you might first think," Pickering said.

The argument being run by the incumbent suppliers is that a whole-of-government solution for ministerial correspondence is the last thing an agency is prepared for.

One former Ministerial staffer, that declined to be named, said that the rise of multiple ministers for each portfolio meant the rules for style, content and procedure change whenever a minister may be overseas or take leave.

Only an agency-focused innovative SME supplier would be capable of moving quickly enough to institute workable solutions that fitted agency cultures and requirements, the incumbent suppliers argued.

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