Funding model complexity
6.17 The funding model in place in respect of the SSAs is complex, made up of:
- Departmental funding: provided annually to the DTA as part of the Commonwealth budget process.
- CAF: the fee set by the DTA to recover the costs of administering the SSAs.
- CRF savings fee: the fee collected and returned to the Consolidated Revenue Fund; this does not contribute to the administration of the SSAs.
6.18 The table below outlines the applicability of these fundings sources to the respective SSAs.
Funding source | Use | Microsoft | AWS | Rimini Street | IBM | Oracle | SAP |
|---|---|---|---|---|---|---|---|
Departmental budget | Funds administration of the SSAs | Nil | X | X | X | X | X |
CAF | Funds administration of the SSAs | X | X | X | Nil | Nil | Nil |
CRF savings fee | Returned to CRF | Nil | X | X | X | X | X |
6.19 To further complicate this, the charging scales across the SSAs are dependent on the specific agreement type with a particular SSA, as depicted in the table below:
6.20 These inconsistencies within this funding model introduces:
- Administrative inefficiency for the DTA in having to manage various differing arrangements, making processes unnecessarily complex.
- Complexity for buyers, as the arrangements are not consistent, meaning agencies have to understand a different financial model for each arrangement.
- Potential competitive inconsistencies, whereby SSAs are competing with each other, but are subject to differing fees and impacts on the total cost of ownership for the buyer.
6.21 Survey respondents identified the need for further clarity of the fees and recovery charges, supporting the challenges identified above.
6.22 The DTA is responsible for the ICT Coordinated Procurement Special Account, which was established by a Determination (PGPA Act Determination (Establishment of ICT Coordinated Procurement Special Account 2017)) that enables expenditure on the administration of the SSAs, including:
- Planning and conducting SSA tenders.
- Managing the SSAs.
- Providing assistance to Commonwealth entities.
- Monitoring and reviewing the SSAs.
6.23 DTA also noted the Determination will sunset 1 October 2027. Ahead of this, agreeing a clear pathway forward with Finance will enable the implementation of a suitable funding and fees model, which reflects the common financial management better practices implemented by Finance and other agencies in respect of cost recovery. Implementation of an updated funding model could occur progressively as the SSAs are renewed or closed, or additional SSAs are established. It should be noted that Finance have indicated any changes to the Special Account will require agreement from the Finance Minister (issued pursuant to sections 78 to 80 of the PGPA Act).
6.24 The DTA should, when the SSA funding model is up for renewal, simplify the funding and fees model and make it more consistent.
Use of seller marketplaces
6.25 There are two marketplaces which have been established by the SSA sellers: Microsoft’s Azure Marketplace and the AWS Marketplace. The establishment of these marketplaces represents a potential opportunity to enhance how government procures digital products and services.
6.26 Under these marketplaces, sellers can self-list, agree to specified terms and leverage pre-existing arrangements. A key advantage of the marketplace model is that providers can come and go dynamically, enabling the marketplace to quickly and easily keep pace with the changing technology environment.
6.27 Although these marketplaces offer value in market scanning to understand potential solutions, and are being used by buyers within the Commonwealth, their use to procure or transact in alignment with procurement policy requires consideration.
6.28 Factors of relevance to these marketplaces noted by the review were:
- To utilise the seller marketplaces, buyers must approach the market in accordance with the CPRs, which require either Open Market approaches using AusTender, use of a suitable Limited Tender provision or use of an established panel.
- Where changes are required to a contract under the seller’s marketplace, these changes will have to be negotiated by the buyer on a case-by-case basis. Panels (e.g. DMP2) are established with standard contractual terms and conditions to make this more efficient for the buyer.
- Any contracts implemented using the seller contract templates offered on the sellers' marketplace may not be fit-for-purpose or reflect the model contract clauses (for example, per Resource Management Guide 420 Mandatory use of the Commonwealth Contracting Suite for procurement under $200,000, subject to the relevant exemptions within this guide), resulting in gaps or vulnerabilities. These gaps or vulnerabilities must be assessed by buyers prior to entering the contract.
6.29 Insights from engagement with stakeholders indicated buyers are unaware of, or at times confused about, the appropriate means of using these seller marketplaces. This is further complicated by the existence of the DTA's marketplaces.
6.30 The DTA should engage with Finance to review the ongoing appropriateness of the use of seller marketplaces (i.e. Azure Marketplace and AWS Marketplace).