Guidance | digital.gov.au

Digital Seller Underperformance Policy: Guidance

About the DSUP

The Commonwealth Procurement Rules explicitly include a Seller’s performance history as a relevant factor when assessing value for money. Before the DSUP was implemented, there was no systematic way to capture and share information about serious underperformance by digital Sellers across the Australian Government. As a result, a Seller could perform poorly on a digital contract without other Buyers being aware of the Seller’s underperformance, potentially leading to persistent issues across multiple government contracts.

The DSUP was implemented to fill this gap by:

establishing a consistent process for reporting Serious Underperformance and capturing Confirmed Serious Underperformance information
enabling the DTA to share Confirmed Serious Underperformance information with Buyers on a need-to-know basis
driving better-informed procurement decisions and improved contract performance
creating reputational incentives for Sellers to deliver successfully
supporting improved delivery of digital projects across government by learning from past issues.

Purpose of the DSUP

The DSUP enables:

Buyers to report to the DTA alleged Serious Underperformance by Sellers performing under Strategic Digital Contracts. This is done through a structured process using standardised Forms and criteria to ensure that reports are consistent and substantiated. Refer to the Self-Assessment Tool (DSUP001) and Serious Underperformance Report (DSUP002) Forms and the ‘Reporting Serious Underperformance’ section of this Guidance
the DTA to share information about confirmed instances of Serious Underperformance with other Buyers, but only on a strict need-to-know basis. When procuring digital products and services under an applicable contract, Buyers are required to consult the DTA’s Confirmed Serious Underperformance Register (CSU Register) to check if a prospective Seller has a history of Confirmed Serious Underperformance. The DTA will disclose limited details via Email to inform the Buyer’s evaluation. See the ‘Buyer obligations regarding the CSU Register’ section of the DSUP Standard.

The CSU Register is internal to the Australian Government and information collected through the DSUP process is not made public by the DTA. Subject to disclosure obligations under law, it is recorded, stored and shared strictly on a needs-to-know basis internally within the Australian Government and disclosure to Buyers is subject to relevant Commonwealth laws and policies. Refer to the DSUP Standard for additional information on this point.

The DSUP is not:

a ban, ‘blacklist’ or debarment tool. Buyers are not prohibited from engaging a Seller – even if the Seller is listed on the CSU Register. Procurement decisions will still consider all relevant factors on a case-by-case basis, including the nature of the underperformance and any remediation
a contract negotiation lever or bargaining tool. For example, it cannot be used as leverage during contract award negotiations or to threaten a Seller during a live contract dispute. Buyers and Sellers remain responsible for managing contract performance issues through normal contractual mechanisms. The DSUP is about sharing past performance information, not about giving Buyers additional powers within an ongoing contract or negotiation
guidance on general contract management. Buyers should continue to follow existing contract terms, and contract management policies and frameworks for day-to-day performance monitoring and issue resolution. The DSUP is a specific overlay for Serious Underperformance as defined in the DSUP, not an overarching contract management system. This DSUP Guidance does not provide general best practice advice and guidance for general contract management or procurement beyond the Serious Underperformance reporting mechanism.

Applicable contracts

The DSUP only applies to Strategic Digital Contracts as defined in Appendix A: Glossary of the DSUP. These are typically larger Australian Government contracts for digital products and services, generally above AUD $4 million GST exclusive in value.

Any contract meeting the Strategic Digital Contract criteria as defined in Appendix A: Glossary of the DSUP is in scope of the policy.

Strategically Significant contracts

Under the DSUP, the DTA has discretion to declare a contract to be a Strategic Digital Contract if it deems the contract Strategically Significant.

Examples of Strategically Significant contracts may include a:

lower value contract that is essential to implementing a high-profile Australian Government policy or legislative requirement – for example, a key component of a nationwide digital identity system
contract supporting systems classified as critical infrastructure even if the contract itself is not high value, the impact of failure is high
pilot or emerging technology project – such as an artificial intelligence initiative – that is central to the Australian Government’s innovation strategy.

If you are a Buyer that is unsure whether a contract falls under the DSUP, you can use the Self-Assessment Tool (DSUP001) Forms available on Reporting Serious Underperformance. By answering the checklist questions in the relevant Self-Assessment Tool (DSUP001) Form, you can assess whether your contract might be a Strategic Digital Contract and if an issue you are dealing with might be reportable as Serious Underperformance under the DSUP.

Types of Underperformance captured by the DSUP

The DSUP is intended to capture only Serious Underperformance by a Seller on a Strategic Digital Contract. Serious Underperformance is defined in Appendix A: Glossary of the DSUP and derives from the concept in Commonwealth Procurement Rule 4.5(c) and 10.17 about past supplier performance.

Serious Underperformance involves instances of significant deficiencies in performance of any substantive requirement or obligation of a Seller (including failure by a Seller to abide by substantive requirements such as confidentiality provisions in a Strategic Digital Contract), or other serious issues like Seller bankruptcy or insolvency or if the Seller is found to have made false declarations. Minor issues, isolated incidents, or matters outside the Seller’s control are not Serious Underperformance, unless multiple smaller issues that the Seller is responsible for under the Strategic Digital Contract(s) combine into a broader failure.

Serious Underperformance

When assessing Serious Underperformance reports, the DTA will seek factual evidence of a major failure, such as:

failure to meet Seller contractual obligations and requirements in the Strategic Digital Contract, such as failure:
- to meet contracted schedules and timeframes
- to deliver the products and services within the contracted budget
- to meet performance standards such Service Levels
- to invoice correctly – for example, in accordance with agreed pricing or billing incorrect number of hours
- to provide properly qualified and experienced personnel or the required number of personnel
- to meet confidentiality and security requirements and obligations
- to comply with the Commonwealth Supplier Code of Conduct
- to comply with a Procurement Connected Policy included in the Strategic Digital Contract
- to satisfactorily resolve contract performance issues
- of any third parties such as subcontractors performing services, where the Seller is responsible for that third party under the Strategic Digital Contract.
aggregated failures under more than one Strategic Digital Contract. For example, instances of reported Serious Underperformance across several Strategic Digital Contracts may be reported by Buyers
aggregated incidents of minor underperformance by the same Seller across multiple Buyers as reported to the DTA
where a matter affecting a Seller is a Significant Event as defined in Appendix A: Glossary of the DSUP, noting the guidance below to not report to the DTA while other formal processes are underway until those formal processes are concluded, which includes a Significant Event.

Scenarios that may meet the threshold

The Strategic Digital Contract had to be terminated or substantially reduced in scope due to the Seller’s failure to meet key contractual obligations – for example, failure by the Seller to abide by substantive requirements such as confidentiality provisions.
The Buyer incurred significant monetary loss or damages or had to invoke significant contractual remedies – for example, a large claim or significant service credits – due to the Seller’s underperformance.
The Seller did not meet critical milestones or deliverables included in the Strategic Digital Contract despite multiple opportunities to remedy, indicating an inability to meet core contractual requirements.
The delivered solution was so non-compliant with the contractual requirements or poor in quality as required under the Strategic Digital Contract that it was unusable for its intended purpose, and the issues could not be remedied within contract tolerances.
The Seller’s underperformance was persistent and widespread across the Strategic Digital Contract, causing major delays, cost overruns, security incidents, or system outages that severely impacted the project’s success.
The Seller was insolvent or in administration during the term of the Strategic Digital Contract.
The Seller was found to have provided false information – for example, about its compliance or performance – relevant to the Strategic Digital Contract.

Scenario 1: Severe performance failure
The Buyer awarded a $10 million contract to Seller A to build a critical government system. Seller A repeatedly failed to deliver acceptable designs and code, missing key milestones. Even after numerous extensions and opportunities to fix defects, the system never met the core requirements – it had major security flaws and functionality gaps. After a year of delays and rework, the Buyer terminated the contract for breach. It also had to hire Seller B to redo the project, incurring additional costs. This would likely constitute Serious Underperformance under the DSUP, as Seller A failed to meet substantive contractual obligations, leading to termination and monetary loss.
Situations not considered Serious Underperformance under the DSUP
- Third-party failures where the problem was caused by another supplier or a product outside the Seller’s contract responsibility and if the Strategic Digital Contract did not make the Seller accountable for those third-party elements.
- Where the Seller’s lapse did not deprive the Buyer of a significant part of the Strategic Digital Contract’s benefit. For example, a minor delay or a one-time quality issue that was fixed and did not impact outcomes.
- A one-off breach that the Seller promptly and effectively rectified, and where the remedy was quick and caused little or no lasting harm.
- Where the Seller breached a non-essential term of the Strategic Digital Contract, or performance was slightly below an indicator, but the overall service was delivered. For example, 99% uptime vs 99.95% for one month.
- Where the Seller’s delay or failure was largely because of something the Buyer was meant to fulfil. For example, where a Buyer failed to provide timely approvals which caused delays. A Buyer’s contractual responsibilities cannot be attributed to the Seller.
The DTA acknowledges that complex projects often involve shared challenges. When assessing reports of Serious Underperformance under the DSUP, the DTA will focus on the Seller’s performance against the relevant obligations and requirements included in the Strategic Digital Contract. For example, if requirements changed or the Buyer did not deliver prerequisites, those factors are considered by the DTA when assessing Serious Underperformance reports.

Treatment of repeated minor issues under the DSUP
While a single minor incident will not meet the Serious Underperformance threshold, repeated or aggregated minor breaches can amount to Serious Underperformance if they significantly impact outcomes over time. The DTA will look at the cumulative effect of the minor breaches.
Scenario 2: Accumulation of minor issues
The Buyer has a large enterprise software implementation with Seller A. No single incident has had a high impact by itself, but over 18 months:
- the Seller was late on multiple deliverables, adding up to 8 weeks’ delay
- there were cost overruns due to poor change control
- a minor security flaw slipped through untested
- the system has had sporadic outages post-launch affecting payroll runs.
The Buyer starts to see a pattern of unreliability. Eventually, these compounded issues force significant remedial work and disruption for the Buyer’s operations, even though the project was not terminated. This cluster of issues could be considered Serious Underperformance when reported, because taken together they amount to significant deficiencies in performance of substantive requirements and obligations that have jointly caused major delays, cost increases, and trust-impacting failures in a critical system.
Under the DSUP, one minor mistake is not Serious Underperformance, but persistent underperformance can be. Buyers should document such patterns and can report Serious Underperformance to the DTA when a threshold is reached where, in aggregate, the Seller’s performance is materially below standard.
Multiple parties involved in underperformance
In complex digital projects, performance issues can involve not just the prime Seller but also subcontractors, software vendors, or the Buyer’s own actions or deficiencies.
In such situations, the DSUP focuses on the prime Seller’s contractual obligations. The DTA will assess if the Seller met the duties for which it was contractually responsible. If a subcontractor failed but the prime Seller was contractually accountable for that subcontractor’s performance, this could constitute Serious Underperformance by the prime Seller under the DSUP. Conversely, if the prime Seller was not contractually accountable, this would likely not constitute Serious Underperformance under the DSUP.
- If the Strategic Digital Contract explicitly makes the Seller responsible for managing subcontractors or third-party products, then failures in those areas will reflect on the Seller under the DSUP. For example, if the Seller must deliver an integrated solution including configuring a Commercial Off-The-Shelf product, and they fail to do so, this could constitute Serious Underperformance even if the Commercial Off-The-Shelf product was made by someone else – because integration was the Seller’s job.
- If the Strategic Digital Contract separates responsibilities – for example, the Buyer retains certain responsibilities like data quality or providing infrastructure – and the issue arose from those areas, the DSUP would not consider the Seller contractually responsible for Serious Underperformance in this area.
The DSUP does not assess Buyer underperformance. It only considers whether the Seller failed to meet its contractual responsibilities, and whether that failure meets the definition of Serious Underperformance.
Scenario 3: Prime contractor vs. software vendor
The Buyer hires the Seller for a critical system build under a Strategic Digital Contract. The Seller’s job is to configure and implement a product from vendor “TechRus.” Major interoperability issues emerge, as the Seller cannot make the TechRus software work as required, causing serious delays. After exhausting contract remedies, the Buyer terminates the Strategic Digital Contract with the Seller for breach. In this case, the Seller could be reported for Serious Underperformance – even though a third-party product was involved – because the Seller was contracted to deliver a working solution (including resolving any product issues) and failed to do so. The fault is attributed to the Seller’s inability to meet critical Strategic Digital Contract requirements, not to TechRus.
Scenario 4: Managed service vs. product fault
The Buyer contracts the Seller to support a messaging software (TechRus Chatbox) under a Strategic Digital Contract. The Chatbox product itself, provided under a separate contract directly between the Buyer and TechRus, suffers daily outages exceeding Service Level Agreements. The Seller’s role per its obligations under its Strategic Digital Contract is to consult with TechRus and assist in resolving issues, which the Seller does diligently in accordance with its obligations under the Strategic Digital Contract. Here, even though there’s serious service underperformance (the system is down daily), the Seller is not failing its obligations – the product is at fault and the Seller is doing what it is required to do under the Strategic Digital Contact. The Buyer should not report the Seller under the DSUP, because the underperformance is not due to the Seller breaching its contractual obligations.
In summary, the DSUP will consider the context and contractual obligations. It targets Seller failures, not systemic issues outside of the Seller’s contractual requirements and obligations.

Seller remediation plan

After a minimum of 2 months having a Confirmed Serious Underperformance status, a Seller may request permission from the DTA via Email to submit a remediation plan for inclusion in the CSU Register. The Seller may Email the remediation plan to the DTA. If approved, the remediation plan will then be recorded on the CSU Register and made available to Buyers when consulting the CSU Register.

A remediation plan may only include:

how the Seller will address the Serious Underperformance in future contracts
how the Seller will prevent recurrence of the Serious Underperformance, such as details of a commitment to improve internal processes and/or training
a description of up to 3 confirmed similar contracts where the Seller has performed well or improved its performance. This must include references to verify the Seller’s past performance in these contracts.

The DSUP and Digital Marketplace Panel 2’s Performance Management Framework

The DTA administers multiple mechanisms to improve procurement outcomes. The Digital Marketplace Panel 2’s Performance Management Framework is another initiative focusing on capturing performance data for panel contracts. However, the DSUP and the Digital Marketplace Panel 2 Performance Management Framework are separate and operate independently.

The Digital Marketplace Panel 2 Performance Management Framework applies only to contracts under the Digital Marketplace Panel 2. It gathers routine performance feedback on panel engagements for consistency and oversight on that panel’s use. It focuses on continuous performance scoring and improvements for panel Sellers.
The DSUP applies to all Strategic Digital Contracts – not limited to one panel – and only considers instances of Serious Underperformance under Strategic Digital Contracts. The main purpose of the DSUP is to share critical risk information for future procurements across Buyers, rather than to manage performance day-to-day.

The DTA will ensure alignment where possible – for example, avoiding contradictory signals if a Seller on Digital Marketplace Panel 2 is also on the CSU Register – but Buyers and Sellers should treat them as distinct tools. If you are using a Digital Marketplace Panel 2 contract and face performance issues, you might end up engaging both processes: the panel Performance Management Framework for regular performance reports, and DSUP if the issue is severe enough to warrant reporting across government.

Reporting Serious Underperformance

This section guides Buyers through identifying Serious Underperformance and the procedure to report it to the DTA under the DSUP.

When to report

You should report once you consider an instance of Serious Underperformance has occurred or will occur and you have exhausted normal contract remedies. For example, terminating a Strategic Digital Contract for cause due to the Seller’s underperformance could be a strong trigger point to Submit a Serious Underperformance Report.
You do not need to wait until a Strategic Digital Contract formally ends if you consider the Serious Underperformance is already evident. For example, you could choose to report mid-contract if a project had to be partially de-scoped to remove underperforming elements, or the Seller’s underperformance is ongoing with significant impact.
Do not report while other formal processes are underway. If the issue is subject to an active internal investigation, external inquiry or court proceedings, wait until those are concluded. For example, if there is a fraud investigation involving the project, or litigation against the Seller, allow that to finish first. The DSUP is not intended to run in parallel with such proceedings, to avoid prejudice or duplication. If an investigation or proceedings eventually provide an adverse finding, a Buyer may then report Serious Underperformance to the DTA under the DSUP, if the Buyer considers it may impact the Seller’s suitability for future work.

In summary, report promptly once you have a clear, substantiated case of Serious Underperformance and have exhausted normal contract remedies – but not before or during other official investigations/legal actions. If in doubt, consult your legal advisers or the DTA via Email.

Before reporting

Before reporting under the DSUP, follow due diligence under your Strategic Digital Contract.

Use contract remedies and strictly follow the performance management or breach clauses in your Strategic Digital Contract. For example, if the Strategic Digital Contract requires you to issue a formal notice to the Seller identifying a breach and allowing time to resolve it, you must do that first. The DSUP is not a substitute for enforcing your Strategic Digital Contract, it is an additional layer for sharing information after you have acted.
Maintain clear records of what the Seller did or failed to do, and the impacts. This may include emails, meeting notes and performance reports. Good record-keeping will be needed to support your Serious Underperformance Report.
Obtain legal advice as needed, particularly if considering termination or other major actions.
Communicate with the Seller. The underperformance issues should not be a surprise to the Seller. Before Submitting a Serious Underperformance Report, you should have communicated your concerns and given the Seller opportunities to remediate as required by the Strategic Digital Contract.

How to Submit a Serious Underperformance Report

Reporting Serious Underperformance to the DTA under the DSUP involves completing and Submitting the following two Forms:

Self-Assessment Tool (DSUP001). This Form is a checklist to assess whether your contract is a Strategic Digital Contract. If it is, this Form also helps you assess whether the Seller’s conduct meets one or more of the DSUP’s Serious Underperformance criteria and helps you decide whether to Submit a Serious Underperformance Report using the relevant Serious Underperformance Report (DSUP002) Form.
Serious Underperformance Report (DSUP002). This Form is your official Serious Underperformance Report to the DTA. Clearly and objectively substantiate your report with facts and supporting evidence. Attach supporting documents as needed.

If you choose to Submit a Serious Underperformance Report to the DTA you should either:

use the online digital webform versions of the Forms if you have assigned a Security Classification of up to Official: Sensitive to the information to be included in your Forms
download the Word versions of the Forms if you have assigned a Security Classification of PROTECTED to the information to be included in your Forms. Once you have populated the Forms you will need to Email the Forms together to the DTA at DSUP@dta.gov.au.

Submitting both Forms via one of the appropriate methods outlined above will ensure the DTA has visibility of your self-assessment rationale along with the detailed Serious Underperformance Report.

If you have assigned a Security Classification above PROTECTED, you will need to Email the DTA at DSUP@dta.gov.au to make alternative arrangements for the submission of your Serious Underperformance Report.

After Submitting the Serious Underperformance Report to the DTA, you must inform the Seller in writing that you have Submitted a Serious Underperformance Report to the DTA naming them, unless extraordinary circumstances prevent this, such as legal constraints. This ensures the Seller is aware of the Serious Underperformance Report.

If the situation involves multiple Buyers – for example, two Buyers had similar problems with the same Seller around the same time – the Buyers can Submit a joint Serious Underperformance Report. In this case, coordinate with the other Buyer to compile completed Forms for each Buyer covering both perspectives. This can provide a fuller picture to the DTA if appropriate.

Finally, please note the DTA might update the reporting process as required from time to time – for example, by changing Serious Underperformance Report Submission requirements to an online portal only or amending the Forms. The DTA will notify Buyers of any changes or amendments on Digital Seller Underperformance.

Attachment size limits and alternative submission options

The online Serious Underperformance Report form has a maximum attachment size limit of 20 MB.

If the supporting evidence for your Serious Underperformance Report is likely to exceed this limit, please use the downloadable DSUP001 and DSUP002 forms available on Reporting Serious Underperformance and submit them, together with all supporting evidence via email to DSUP@dta.gov.au.

Any questions, feedback or complaints in relation to the DSUP should be directed to the DTA via Email at DSUP@dta.gov.au.
If submitting a complaint, you should provide details of the basis for your complaint, including:
- a clear statement about the subject of the complaint
- a statement as to what you wish to achieve from the complaint process.
The DTA will attempt to resolve the complaint through timely communication, including via Email, telephone or other means. If the complainant is not satisfied with the DTA’s response, the complainant may seek to have the complaint reviewed by a person in a more senior position at the DTA.

The DTA may use information received from Buyers and Sellers via questions and complaints when periodically reviewing the DSUP.

Digital Seller Underperformance Policy: Guidance

Digital Seller Underperformance Policy: Guidance

On this page

About the DSUP

Purpose of the DSUP

Applicable contracts

Strategically Significant contracts

Types of Underperformance captured by the DSUP

Serious Underperformance

Scenarios that may meet the threshold

Seller remediation plan

The DSUP and Digital Marketplace Panel 2’s Performance Management Framework

Reporting Serious Underperformance

When to report

Before reporting

How to Submit a Serious Underperformance Report

Attachment size limits and alternative submission options

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