How the Australian government is revamping IT procurement

New policy seeks flexibility for innovative proof-of-concepts, end to ‘set and forget’ contract extensions

Australian Parliament House, Capital Hill, Canberra, Australia
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A change to a Australian government ICT procurement policy will allow contract extensions to exceed the length of an initial deal, but also make sure there’s no default “set and forget” approach by departments and agencies.

The Digital Transformation Agency (DTA) has unveiled details of its new Digital Sourcing Contract Limits and Reviews Policy, which replaces the ICT Contract Capped Term and Value Policy.

The updated policy takes effect on 1 February and sits under the broader Digital Sourcing Framework; the policies contained in the framework are mandatory for most Commonwealth entities.

A blog entry published on the DTA site said that under the new policy, contract extensions can be up to three years. Previously, extensions could not exceed the length of the original contract.

“We heard the previous policy could stifle innovation by not allowing trials and proofs-of-concepts,” the DTA explained.

A new requirement is that an extension is only allowed after a contractor’s performance and deliverables are reviewed.

“It is clearer that buyers need to review the performance and deliverables of a contract prior to extending it,” explained the blog entry. “We are making sure there is no default ‘set and forget’ in our digital sourcing contracts so we aren’t left with old technology or solutions that aren’t working.”

As was the case under the previous policy, a contract must not exceed $100 million over the course of its life, including all extensions, and the initial length of the contract cannot exceed three years.

There are a range of exemptions possible, however. One is a joint exemption granted by the relevant minister as well as the minister for government services. That requires an entity demonstrates “a special need for an alternative arrangement and their exemption request must be premised on a genuine intent to meet the policy requirements,” states the policy.

An exemption is also possible under section 2.6 of the Commonwealth Procurement Rules (CPRs): “These CPRs do not apply to the extent that an official applies measures determined by their Accountable Authority to be necessary for the maintenance or restoration of international peace and security, to protect human health, for the protection of essential security interests, or to protect national treasures of artistic, historic or archaeological value.”

The other category of exemption is for purchases made from the mandatory categories of the digital whole-of-government panels (which include data centre space and services, the hardware marketplace, the telco services panel, and the mobile panel).

The federal government in 2017 said that it would revamp ICT procurement, including by capping contracts to $100 million and three years.

As part of the establishment of Services Australia as a successor to the Department of Human Services, the DTA was moved to the new department. New administrative arrangements announced in May 2019 formally gave Services Australia responsibility for whole-of-government IT.

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