Gov pressed to end reliance on IT contractors, fill APS "capability gap"

The federal government should end the “technical capability gap” that has emerged in the Australian Public Service as a result of an unhealthy reliance on IT contractors, a senate committee has found.

The finding is contained in the second interim report [pdf] from a Labor-led senate inquiry into insecurity in publicly-funded jobs, which has recommended a broad spectrum of proposed reforms.

The report, released on Tuesday, calls for an end to the “technical capability gap” that has resulted from an “over-reliance” on external contractors.

It called on the government to ensure the APS is resourced to become a digital leader.

“The committee is concerned that there are technical capability gaps in the APS resulting from the over-reliance on contractors,” the committee said.

The recommendation mirrors the conclusion about the state of the APS in the 2017 ICT procurement taskforce report, which resulted in caps of $100 million on most IT contracts.

“Technical ICT capability gaps in the APS have resulted from an over-reliance on ICT contractors – particularly for more complex, high-value ICT work,” the 2017 report said.

At that time, the number of IT personnel across government was estimated to be 14,000, one-third of which were contractors.

But recent figures for the 2019-20 financial year, released by the Digital Transformation Agency in May, show that IT contractors now outnumber APS staff across government.

It is particularly pronounced at three of the four biggest agencies – the Department of Defence, Services Australia and the Department of Home Affairs.

Services Australia, for instance, had 2266 APS staff and 2442 non-APS employees working in its technology services group, though it has since committed to reduce its reliance on contractors.

While the senate committee recognised that not everything could be done internally, it said having the internal capabilities, knowledge and experience to deliver major IT systems is “vital”.

The committee also said it is concerned by evidence that APS staff have “inadequate systems and tools… to perform their jobs” and that agencies aren’t investing in “modern technologies”.

“The committee believes the government must rapidly increase the digital literacy of the APS to ensure that it can become a digital leader,” the report said.

The committee has endorsed a number of reforms put forward by the Community and Public Services Union and urged the government to “immediately implement them”.

The reforms are wide-ranging, from an “ongoing investment in ICT systems” to “build[ing] the expertise and knowledge of the APS to deliver ICT solutions” and “competitive remuneration”.

The committee said that it strongly agrees with the proposals to “reverse the current trend which has made [the government] over-reliant on external vendors”.

The report also asks that the Department of Finance “regularly collect and publish service-wide expenditure data on contractors, consultants, and labour hire workers”.

Other general recommendations include placing an “upper limited on the expenditure on consultants and contracts” and removing the average staffing level (ASL) cap.

The DTA is currently auditing digital capability across the APS after David Thodey’s root-and-branch review found “limited knowledge and understanding about the overall state of ICT”.

The audit, deemed urgent almost two years ago, was still yet to be finalised when an update was provided earlier this month.