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Learnings Australia can take from other jurisdictions

Importance of central coordination

4.29 It is beneficial to have a central authority, such as the DTA, stewarding and fostering effective relationships with the major technology sellers – supported by a clear mandate, legislative frameworks and financial control. 

4.30 Shared Services Canada (SSC) and New Zealand’s Government Chief Digital Officer (GCDO) demonstrate that centralised leadership ensures the coordination and governance required to streamline procurement and enhance service delivery. Such structures empower agencies to implement cohesive and standardised approaches across technology initiatives.

4.31 Central control maximises negotiating power, enabling governments to secure more favourable terms. By consolidating purchasing power, central authorities can leverage scale to secure improved pricing and deliver value-for-money outcomes for agencies, an approach that particularly benefits those with smaller resource profiles.

4.32 Further, the New Zealand GCDO is considering the implementation of a budget prioritisation mechanism for digital investments, similar to the model the DTA has with the Investment Oversight Framework and the Digital Investment Plans.

4.33 The SSC’s Centre of Expertise in Agile and Innovative Procurement was also established in 2019. It focuses on supporting government procurement teams and removing barriers to entry for smaller business with respect to complex government tender processes. 

4.34 At approximately the same time, in Australia in March 2019, Finance established the Commonwealth’s Centre of Procurement Excellence  (CoPE). CoPE provides advice, training and support the broad procurement capability uplift across the Commonwealth, however, it does not specialise in technology. It is important to note there are substantial complexities in the procurement of technology platforms, with specialist knowledge of the technological solutions often required to support procurement activities. Further, through engagement activities, this review is aware of several specialist technology procurement functions which exist in pockets throughout the Commonwealth (e.g. PM&C, DEWR, Defence), and that could be complemented by a model similar to that of Canada. In other words, Australia could benefit from having a DTA-led technology procurement specialist capability.

4.35 Further to the above, when comparing to arrangements the SSA sellers have with other government agencies globally, the value of central coordination by the DTA was also echoed by several of the SSA sellers. 

Enable tailoring and flexibility

4.36 Other nations and Australian States and Territories interviewed all shared similar views about the importance of ensuring whole of government arrangements remain fit-for-purpose by tailoring and driving flexibility to address diverse agency needs and risk profiles, and adapt to technological changes over time. 

4.37 Canada’s experience in respect of managing the diverse risks and priorities which differ significantly between agencies highlights the importance of enabling flexibility and tailoring. Shared Services Canada needs to accommodate variations across 213 agencies, from Mountain Rangers in remote regions to administrative specialists in urban locations, to ensure the effectiveness of their centralised agreements. This diverseness can be likened to Australia’s, with technology needing to be able to cater for Australians and the Australian Government across an equally diverse range.

4.38 Flexibility within centralised arrangements also ensures that whole of government arrangements can adapt to changing operational demands and technological advancements. By integrating mechanisms that reflect the unique challenges and objectives of individual agencies, governments can foster resilience and alignment ensuring continued relevance and efficiency in service delivery.

Consolidated reporting means better decision-making

4.39 Accurate and centralised data collection is fundamental to making informed decisions about technology contracts and investments. Improved transparency through robust reporting processes helps governments identify trends, optimise investments and strengthen negotiations. 

4.40 One of the challenges facing the USA is the absence of meaningful aggregated data on technology spending. Current reporting mechanisms rely on self-reported information from personnel who may lack the requisite expertise, limiting the reliability and comprehensiveness of the data collected. To address this, in January 2024 the US Government Accountability Office called for a series of improvements in technology reporting, releasing a report with two primary recommendations across major US agencies, including:

• Track software licenses that are currently in use for its widely used licenses.
• Compare the inventories of software licenses that are currently in use with information on purchased licenses to identify opportunities to reduce costs and better inform investment decision-making for its widely used licenses on a regular basis.

4.41 Action on these recommendations was subsequently implemented.

4.42 Whilst progress on reporting transparency in the USA has been limited, nations like Canada and New Zealand demonstrate the benefits of improved data collection and transparency in enabling informed decision-making and strategic planning across government ICT portfolios. Canada, for example, has achieved notable cost visibility through detailed comparative analyses, metrics and explicit unit cost reductions for services such as connectivity. Challenges were noted by New Zealand in respect of opaque investment visibility, which is partly underpinned by insufficient or inconsistent reporting mechanisms, hampering decision-making around technology investment.

4.43 Whilst there is an administrative overhead introduced through any new reporting requirement, the lesson Australia can draw from other nations is the significant value that can be achieved from better informed decision-making as related to ICT investment and buy. 

Balancing dependency and stability with competition and monopoly risks

4.44 There is an ongoing tension between:

• Driving consistency and stability.
• Making technology choices which create dependencies.
• Preserving competitive procurement processes to drive value for money.

4.45 There is no one permanent solution, and all jurisdictions reported needing to constantly consider this balance.

4.46 Maintaining competitive tension wherever practicable is essential to managing the risks of monopolistic supplier arrangements. This is a principle enshrined within the CPRs and is observed throughout procurement activities within the Australian Government. 

4.47 Canada and New Zealand’s efforts to avoid over-reliance on single sellers demonstrates the importance of preserving bargaining power and fostering value-for-money outcomes. An example comes from the Enterprise Resource Planning (ERP) capability where both nations have sought to engage a diverse range of ERP providers, for example SAP, Workday and TechnologyOne.

4.48 Where other nations find themselves in a position of dependency or with high switching costs, contracts can be moved to negotiating a rolling contractual window basis (e.g. 5 years), negotiating one out-year at a time. Although 5 years is not a significant window to replace entrenched, critical technology, this allows a sufficient approach for the nation to plan and execute a transition from existing technology, if required. 

Large technology sellers benefit from fragmentation

4.49 Other nations noted anecdotally that large technology sellers frequently exploit fragmented procurement landscapes, leveraging the lack of transparency and unified agreements to maintain advantageous commercial positions. As such, fragmented procurement and contracting can increase monopolistic risk. 

4.50 Further, other nations noted that the large technology sellers often show little interest in promoting change or enhancing transparency, as the status quo enables them to maximise their influence and profitability.

4.51 To counteract this dynamic, governments must coordinate efforts to negotiate more equitable arrangements. Establishing unified contracts and increasing transparency diminishes fragmentation while fostering a more competitive and fair procurement environment that benefits all stakeholders.

Access to information is critical

4.52 Whole of government arrangements were commonly cited by other nations as large and complex. As a consequence, it is difficult for the users of these arrangements to stay informed, and to know how to extract full value. This was echoed by the State and Territory users of the SSAs.

4.53 A key mechanism utilised by Canada was the establishment of an online IT Service Catalogue for government agencies to obtain information about, and to order, enterprise services (e.g. email, mobile technology, workplace technology devices). The introduction of this catalogue supported Canadian agencies to better deliver programs and services by making the information about the arrangements more readily available.

4.54 While the Australian Government already has in place BuyICT, the value of this as a mechanism to enable ease of information access was echoed by New Zealand. What is evident in comparing digital.govt.nz and BuyICT.gov.au, the information commonly included is:

• Arrangements need to be listed on the public access site, including how to access this and validity periods. This information is available on BuyICT.
• Specific information on the products and services available under each arrangement is included for ease of reference. More specificity could be included on BuyICT in this regard to enable potential buyers to understand more about what the SSAs cover.
• The extent to which agreements can be customised or be flexible is summarised at a high level. This information is not available on BuyICT.

4.55 Further, to the extent possible, the preference is for information to not be protected behind a credential wall (i.e. requiring a log in) to make access as simple as possible. A key exception to this is any commercial in-confidence materials (e.g. discount pricing offered by a seller).

Chapter 5: Optimising the single seller arrangements SSAs for the future

Chapter overview

While the review considers SSAs remain fit-for-purpose for supporting the Australian Government’s digital transformation agenda, the review identified numerous ways to extract further value by strengthening their design, management and impact. 

In terms of engaging with the market, there is opportunity to:

• Better leverage existing whole of Australian Government planning processes, such as the Australian Government digital investment planning process, to inform emerging large-scale technology and sourcing requirements.
• Publish a framework articulating the SSA model, its life cycle and expectations, to drive transparency of who the Australian Government want SSAs with. 

In terms of maximising negotiation outcomes:

• Simplify head agreements, to be achieved in part by consistently adopting the Australian Government's terms and conditions as the basis for negotiation, rather than as is currently the case, sometimes adopting the seller’s terms as that basis. This in turn, makes it easier for both the buyers and sellers, as contracts are entered with many agencies across the Australian Government.
• In order to deliver the value that buyers want, ensure SSAs continue to deliver great discounts, terms and conditions that align to policy, and meet the buyers' requirements. Failure to do so will undermine the usage of the SSAs.
• To optimise outcomes for the Australian Government, prioritise flexibility across products and services, keeping the arrangements simple and agreeing an exit plan to enable buyers' freedom of technology choice into the future.
• Further strengthen the DTA’s centralised negotiation capability by incorporating the well-established technology procurement capability of the biggest buying agencies; this is also seen an opportunity to further help align deals with needs. 

Other observations include the need to: set clearer expectations for what constitutes a strategic partnership with the Australian Government to further enhance the national digital agenda; uplift information, education and reporting; and review existing SSAs to ensure they remain fit-for-purpose and strategically aligned.