Digital Seller Underperformance Policy
Consultation took place between November 2025 and February 2026. The DTA received 19 written submissions online and held several roundtable discussions with industry representatives.
Consultation summary
We consulted industry stakeholders to help make the DSUP fair, clear, transparent and fit for purpose.
Stakeholders raised the following key themes for the DTA's consideration:
- Purpose of the DSUP
- Clarification of key terms and their thresholds
- Interaction between the DSUP and existing contract management and dispute resolution mechanisms
- Procedural fairness
- Confidentiality of information generated under the DSUP
- Retention periods and remediation
- Shared accountability
- The DTA as a Buyer
- Subcontractors and third parties
- Clarification on operational processes enabling policy implementation
The following sections provide further information on these key themes and set out the DTA’s response to the feedback received.
1. Purpose of the DSUP
Stakeholder feedback
Stakeholders suggested strengthening the DSUP’s stated intent and purpose, to clarify the problem the policy is intended to address.
Our response
The DSUP documents will be updated to more clearly state the DSUP’s intent, purpose and scope.
The Commonwealth Procurement Rules allow Buyers to consider past performance at the tender evaluation stage. However, there is currently no formal whole-of-government mechanism to share information about past underperformance when approaching the market. The DSUP is intended to address this gap enabling forward-looking information-sharing across government. The DSUP is not a ban or exclusion mechanism. It is also not a contract management or dispute resolution tool.
2. Clarification of key terms and their thresholds
Stakeholder feedback
Stakeholders questioned whether the AUD $4 million GST exclusive threshold for applicable contracts should be lowered and sought clearer definitions of the following terms:
- Strategic Digital Contract
- Strategically Significant
- Serious Underperformance.
Our response
Contract value threshold
The DTA considers the AUD $4 million GST exclusive threshold to be an appropriate materiality point. It will not be lowered or automatically indexed. However, it may be reviewed in future updates to the DSUP.
Discretion to include contracts below the threshold will be used to address those contracts that may be of lower value but strategically significant. The DTA may also decide to apply the DSUP to multiple contracts from the same seller, each below the AUD $4 million threshold, that grouped together meet the threshold – see the updated definition of ‘Strategic Digital Contract’ below. For example, where the Buyer issues separate work packages or contracts for different stages of the design, build and implementation of a digital solution.
Clearer definition of 'Strategic Digital Contract'
The definition of a Strategic Digital Contract will be defined in a new Glossary section of the DSUP to cover all the following:
- Contracts with a total estimated whole-of-life contract value of at least AUD $4 million GST exclusive, including any extension options. Contracts that are varied or extended beyond their initial term are considered Strategic Digital Contracts if the cumulative value exceeds AUD $4 million GST exclusive.
- Multiple related contracts, each below AUD $4 million GST exclusive, that in aggregate meet or exceed AUD $4 million GST exclusive. In such cases, each contract in the group is deemed a separate Strategic Digital Contract.
- Any other contract, regardless of value, that the DTA, in its sole discretion, determines to be Strategically Significant in the delivery of digital products and services to or on behalf of the Australian Government. Examples include contracts supporting complex digital transformation projects, enabling major government policy or legislative initiatives, or involving systems of national importance.
Clearer definition of 'Strategically Significant'
The term 'strategically significant' will be defined in a new glossary section where it will be defined as any of the following:
- a contract for digital products and services that supports the delivery of:
- complex digital transformation projects led by the Australian Government
- an Australian Government policy or legal initiative – for example, to enable an Australian Government agency to perform its functions under legislation.
- a contract that delivers and/or supports any Australian Government systems of national significance – for example, the contract is low value but requires the Seller to store and manage critical and/or sensitive information of Australians, such as health information
- a contract that includes the provision or support of a ‘critical infrastructure asset’ as defined in the Security of Critical Infrastructure Act 2018 (Cth).
Clearer definition of 'Serious Underperformance'
The DSUP definition of Serious Underperformance is derived from the requirements in Commonwealth Procurement Rules 4.5c and 10.17.
- The definition of Serious Underperformance in the new Glossary section of the DSUP will be updated to include Seller underperformance meeting any of the following criteria:
- Significant Deficiencies in Performance. Instances of significant deficiencies in performance of any substantive requirement or obligation under a Strategic Digital Contract
- Significant Financial Events. Sellers that are subject to bankruptcy or insolvency
- False Declarations. The Seller is found to have made false declarations in connection with a Strategic Digital Contract or related procurement. For example, false statutory declarations or misleading statements.
The DSUP Guidance will provide examples of what may or may not constitute Serious Underperformance under the DSUP.
3. Interaction between the DSUP and existing contract management and dispute resolution mechanisms
Stakeholder feedback
Stakeholders noted that the DSUP should provide more guidance about when Buyers should report Serious Underperformance, and expressed concerns that the DSUP could overlap with existing contract management processes or be used as leverage in contract negotiations or disputes.
Our response
The DTA will update the DSUP documents to clarify that the DSUP does not replace contract management processes and is not intended to resolve live contractual disputes. Buyers remain responsible for managing contracts, including addressing underperformance.
The DSUP documents will also be updated to:
- clarify that the DSUP cannot be used as an enforcement, negotiation or leveraging tool
- introduce a Self-Assessment Tool and Serious Underperformance Report forms to support consistent assessment and reporting by Buyers
- provide examples to guide Buyers.
Buyers are required to attempt to resolve underperformance issues with Sellers before submitting a Serious Underperformance Report under the DSUP. However, the DSUP will not be updated to:
- specify at what point a Buyer should report Serious Underperformance – this will vary depending on the nature of the alleged Serious Underperformance. For example, it might be appropriate to submit a report when the Strategic Digital Contract is terminated or part way through the term of a Strategic Digital Contract, if the scope of the contract is partially reduced to remove the impacted services
- provide contract management guidance to Buyers as this is already being addressed through other work across the Australian Government, including the Department of Finance’s Commonwealth Procurement and Contract Management Community of Practice.
4. Procedural Fairness
Stakeholder feedback
Stakeholders noted that there was no right to seek review of a decision by the DTA of Confirmed Serious Underperformance. Stakeholders suggested a more formalised process to challenge decisions, including a right to seek review of a DTA decision of Confirmed Serious Underperformance, and longer timeframes for Sellers to respond to a Serious Underperformance Report.
Our response
The DTA will update the DSUP documents to:
- include a more formalised consultation process for Sellers to respond to the initial report of Serious Underperformance
- include a high-level outline of the decision-making steps
- introduce the right to request internal review of a Confirmed Serious Underperformance decision.
5. Confidentiality of information generated under the DSUP
Stakeholder feedback
Stakeholders requested greater clarity on what information will be recorded on the Confirmed Serious Underperformance (CSU) Register and how it will be accessed.
Our response
Information on the CSU Register will be accessible to Buyers on a ‘need-to-know’ basis for the purpose of the DSUP. Buyers are bound by the Australian Public Service Values and the Australian Public Service Code of Conduct, including obligations regarding confidentiality.
Records generated under the DSUP are Commonwealth records and may be subject to disclosure under relevant legislation, including:
- Parliamentary orders for production of documents
- the Freedom of Information Act 1982 (Cth)
- the Archives Act 1983 (Cth).
The DSUP documents will be updated to clarify the above and include a list of the types of information that the DTA will record on the CSU Register and make available to Buyers. The DTA will provide more details about the mechanism and processes surrounding Buyer access to the CSU Register closer to the implementation date of this requirement. As stated in the updated DSUP documents, this requirement does not take effect until at least 6 months after the date from which Buyers are able to submit Serious Underperformance Reports to the DTA (the DSUP commencement date).
6. Retention periods and remediation
Stakeholder feedback
Stakeholders sought clarification of the minimum 12 months Confirmed Serious Underperformance period, the 5-year retention period, and remediation rights.
Our response
The DTA will update the DSUP documents to clarify the process for Sellers to seek a change in their Confirmed Serious Underperformance status. In direct response to industry feedback, the DTA will also reduce the 5-year retention period to 3 years.
Sellers will also be able to submit a remediation plan for the DTA to approve for inclusion in the CSU Register outlining how risks will be addressed in future engagements. Please refer to the updated DSUP documents for further information.
7. Shared accountability
Stakeholder feedback
Stakeholders noted that delivery challenges in complex digital projects may arise from multiple contributing factors, including Buyers’ actions. Concerns were raised regarding agency accountability and how the DTA would assess this where Buyer decisions contributed to delivery issues.
Our response
The DTA acknowledges that delivery challenges often arise from multiple sources. The DTA decision-maker will assess alleged Seller underperformance against specific contractual obligations. Where relevant, factors such as delays outside the Seller’s control will be considered.
However, the DSUP’s purpose is not to manage Buyer underperformance. The DSUP’s scope and purpose focus on Seller Serious Underperformance to inform Buyers’ future procurement decisions. Broader contract management capability uplift across the Australian Government is being addressed separately.
8. The DTA as a Buyer
Stakeholder feedback
Stakeholders sought clarification on whether the DTA could report Serious Underperformance under the DSUP as a Buyer, and if so, how the DTA would ensure fair and ethical assessment and decision-making.
Our response
The DTA will update the DSUP documents to clarify that the DTA may submit a Serious Underperformance Report under the DSUP as a Buyer and note the internal measures being taken to ensure ethical and effective information barriers are in place.
9. Subcontractors and third parties
Stakeholder feedback
Stakeholders expressed concerns around the:
- DSUP not considering complex interactions among Sellers and intermediaries with respect to underperformance, especially for complex digital projects where multiple parties may be involved
- DSUP’s application to software Sellers if implementation is completed by partners or integrators.
Our response
The DTA will update the DSUP documents to seek to address these concerns, in the form of guidance which includes scenarios.
The DTA will only apply the DSUP to subcontractors and other third parties or resellers to the extent the Seller is contractually responsible for third parties per the Strategic Digital Contract. For example, some contracts include clauses that oblige the Seller to be responsible for the performance of the services performed by third parties, including subcontractors and resellers under the contract. In this case, if the subcontractor failed to perform the services in accordance with the contract, then the Seller may be reported under the DSUP because the Seller was responsible for the subcontractor’s performance.
10. Operational processes
Stakeholder feedback
Stakeholders sought greater transparency about how contracts are determined to be in scope of the DSUP. Stakeholders noted that knowing when a contract is subject to the DSUP at its outset and having a centralised system of recorded contracts would assist with this.
Our response
The DSUP will update the DSUP documents to address this feedback and will publish a Self-Assessment Tool to assist Buyers in assessing whether a contract is a Strategic Digital Contract.
The current process involves the DTA making the determination on whether a contract is a Strategic Digital Contract only at the point a Buyer submits a Serious Underperformance Report. The Buyer will also indicate if they consider the contract is in scope of the DSUP per the Buyer Self-Assessment Tool that will be published.