by Byron Connolly

ATO to overhaul IT contractors

May 15, 20143 mins
CareersGovernmentIT Leadership

The Australian Taxation Office (ATO) wants to revamp its IT contractor recruitment methods, which it describes as “inefficient, costly and unnecessarily complex”.

In a request for information (RFI) issued Thursday, the ATO invited industry to propose models to improve the procurement, engagement and management of IT contractors.

The ATO typically employs between 180 and 260 IT contractors with an annual spend of between $35 million and $45 million.

The agency’s IT contractor procurement model was developed when the US Free Trade Agreement was introduced in 2005, and involves establishing a large panel of service providers through a competitive tender process.

The ATO implemented an IT Contractor Procurement Panel in July 2011 and has regularly reviewed the performance of the panel.

A recent review – which included feedback from industry – found that the model was costly and complex. Poor industry engagement, lack of transparency on fees and value for money, and unnecessary delays in the recruitment and selection process were also concerns.

The ATO said the target benefits of any proposed model would be greater efficiency in identifying and hiring contractors; enhanced contractor management, retention and performance; and improved industry engagement.

A new procurement model would also provide more accountability and transparency through the procurement process, and provide sustained cost reductions.

It would provide “access to appropriately skilled experienced IT contractors to fulfill short and medium term [up to 36 months] capability gaps in the ATO’s IT programs”.

“The ATO is seeking to establish benchmarks and service level arrangements in regard to the time taken between releasing a resource requirement to market and the contractor start date,” the tender document said.

The agency also wants to reduce the rate of hiring errors (people without the right skills or those who terminate their contracts early), and minimise the time it takes to hire contractors.

Currently, the ATO pays an hourly price to service providers for contractors with limited visibility of the components making up the total fee, with the exception of GST, the ATO said.

“Respondents are asked to provide examples of pricing models that improve transparency and allow for the identification and separation of each individual component making up the total fee,” the RFI said.

The RFI closes on June 13. The ATO said it may issue a request for tender for a new IT contractor panel to be implemented in early 2015.

The ATO is expected to be hit hardest by the public sector staff cuts announced in the federal budget. It is expected to remove around 2300 full time jobs in 2014-15.