Secondary benefits

3.22 The review identified a range of other benefits of the single seller arrangements (SSAs) as secondary benefits. While these benefits are more difficult to quantify, they are important when assessing the overall value and relevance of the SSA model.

Enhancing growth of the Australian technology sector 

3.23 The review acknowledges the substantial contribution the SSA sellers make to Australia by employing a local workforce, establishing partnering arrangements with Australian companies and sponsoring a range of initiatives to foster innovation. 

3.24 Further, the review obtained a range of examples outlining the economic contributions the SSA sellers have made to Australia, including:

“In Australia, we have over 9,000 partners. Seventy per cent of those are Australian small and medium-sized businesses” 

Microsoft submission, page 5 Economic Reference Committee – Influence of international digital platforms
  • Fostering technical capability, such as Microsoft extending its skills program to 300,000 Australians and investment in TAFE NSW Datacentre Academy and Innovation Hub in Sydney, and IBM’s Australia Development Lab with branches across Sydney, Canberra, Brisbane and Perth and a Security Lab in Bundall, Queensland.
  • Investing in Australia’s digital skill development, such as IBM’s partnership with Soldier On and Specialisterne, which has enabled over 1,200 current and former Australian Defence Force personnel and those with neurodivergence to develop digital skills in cyber, AI and leadership through SkillsBuild.
  • Enabling critical infrastructure, such as the AWS Top Secret cloud enhancing Australia’s defence and intelligence capabilities.
  • Provision of training and education discounts, credits or initiatives under the SSAs, available to agencies utilising the agreements.

3.25 Collectively, these initiatives create a broad multiplier affect across the Australian economy. 

3.26 Nonetheless, the review consistently heard from both SSA sellers and buyers that there is scope to use the SSAs to improve fostering local industry participation. While CAIP and Skills Guarantee Plans are not a mandatory requirement, their absence represents a significant missed opportunity to harness substantial economic benefits within Australia. Stakeholders see an opportunity to:

  • More clearly shape CAIP and skilling expectations of SSA sellers, such as by requiring seller reinvestment initiatives and/or training and upskilling as a key criteria for SSA eligibility.
  • Improve the time allocation and of SSA review/design to ensure adequate time is allocated to strategic co-planning of such opportunities.
  • Define meaningful targets for Australian industry participation within the SSA – for example a define percentage (e.g. 10% to 20%) of the contract value – and requiring periodic reporting (e.g. quarterly) against these targets to support active management by the Australian Government.

3.27 Implementing a CAIP Plan (which can cover the Skill Guarantee components) by the SSA sellers will demonstrate a commitment to supporting local industries and ensuring the benefits of these agreements flow back into the Australian economy. Sellers who proactively implement such plans signal their alignment with national objectives and their dedication to maximising the broader economic impacts of their engagements – this, in turn, can be regarded as a key success factor to a strategic partnership with the Australian Government. Whilst not exhaustive, the strategies for inclusion in these plans was discussed in the Procurement and contracts section of this report.

3.28 Of course, any additional effort to create a more balanced approach needs to be considered against unintended consequences of new requirements, policy or legislation to ensure these do not bring added complexity or overheads to sellers.

3.29 An example of the demonstrated effectiveness of similar arrangements can be found in the Department of Defence’s Joint Strike Fighter (JSF) Program, which successfully established Australian companies in the global supply chain. The collaboration of the Australian companies with the international commercial leads, Lockheed Martin and Pratt & Whitney, resulted in over AU$5 billion in advanced manufacturing contracts. This in turn helped de-risk the sustainment of these jet fighters. 

Case Study: Driving Australian industry growth through the Joint Strike Fighter (JSF) Program

The Joint Strike Fighter (JSF) Program has demonstrated the profound economic impact that major government contracts can have on national industries. By leveraging key strategies, such as Australian Industry Participation Plans and targeted grant initiatives, the Australian Department of Defence has facilitated significant benefits for the local economy. This success offers valuable lessons for other initiatives, such as the potential of SSAs, to similarly bolster Australian industry.

Since its inception in 2002, the JSF Program has included Australian Industry Participation Plans with Lockheed Martin and Pratt & Whitney. These arrangements have ensured that Australian businesses play a crucial role in delivering components, sustainment services, and spare parts for the F-35 Lightning II. To date, over 75 Australian companies have benefited, securing contracts worth more than AUD $5 billion. 

This multi-generational initiative, projected to span 94 years, underscores the critical importance of long-term planning and strategic partnerships. Australia's involvement has been central to this global endeavour, and the benefits to Australian industry are undeniable.

A critical component of this strategy has been the New Air Combat Capability - Industry Support Program, established in 2010. Designed to support Australian companies and research organisations in developing new or improved capabilities, the grant program has enabled local firms to win production and sustainment work. These ongoing grants have helped businesses enhance their capacity to participate in the program's later phases, including sustainment and follow-on development.

However, the grant program alone would not have been sufficient to drive the observed growth. The combination of targeted grants and industry participation requirements ensured Australian businesses could compete on the global stage. This dual approach offers a potential blueprint for future initiatives, such as the SSAs, which could similarly unlock opportunities for Australian businesses and catalyse industry growth.

Of course, not all SSA sellers are manufacturing entities. Nonetheless, several SSAs expressed interest in exploring Australian industry participation in a manner consistent with the technology industry.

The success of the JSF Program highlights the power of major government contracts, coupled with a multi-pronged strategy to foster economic development. By enabling Australian businesses to participate in global supply chains, Australia has demonstrated the potential to cultivate a sustainable and competitive industrial base. The lessons learned from the JSF Program's economic impact can serve as inspiration for other government-driven efforts to support and develop Australian industry.

3.30 Further to these examples, a range of stakeholders engaged by the review indicated a willingness to engage in the identification and development of Australian industry-born ideas and products. Building on the CAIP Plans, and recognising the SSA sellers as leaders in the global technology marketplace, the Digital Transformation Agency (DTA) could co-design and establish a Technology Collaboration Centre (similar to Microsoft's recently established Innovation Hub in Sydney, which could complement this initiative) with the SSA sellers. This centre will enable the SSA sellers to come together and collaborate with Australian industry, in the interest of the Commonwealth, to support:

  • Identifying and further developing emerging technologies, including proofs of concept and prototypes.
  • Integrating and ensuring interoperability with the SSA seller’s product suite.
  • Developing sovereign data and digital capabilities.
  • Engaging of Australian industry in SSA seller global supply chains, and associated opportunities.
  • Creating engagement opportunities for Australian industry to connect with Australian Government buyers.

3.31 The DTA should enable broader outcomes for Australian industry by:

  • Working with DISR and buyers to implement CAIP Plans and Skills Guarantee targets with SSA sellers.
  • Working with the SSA sellers to implement a Technology Collaboration Centre, bringing SSA sellers, buyers and Australian industry together to identify and progress opportunities domestically and within global supply chains.

Improved ability to maintain critical technology

3.32 The SSAs make it easier for buyers to secure and maintain critical technologies essential to delivering government services to Australians by providing an established contractual means which can be leveraged by buyers to engage with the major technology sellers. In this way, the SSAs play an important role in ensuring continuity and resilience in government service delivery to the standards set by the Australian Government. 

3.33 Examples of these critical technologies the review heard are: 

  • Day-to-day operations of the Australian Government underpinned by Microsoft (M365 E5 suite), including Word, Excel, PowerPoint, Outlook, EntraID, etc.
  • Whole of Australian Government payment utility provided through a combination of SAP (S/4 HANA) and IBM’s Power10 Platform, which distributes the majority of Centrelink based payments, including Families, Parenting, and Pensions.
  • The Australian Taxation Office's (ATOs) Standard Business Reporting as the Business-to-Government (B2G) reporting gateway where employers submit accounting records.
  • Defence payroll for service personnel.
  • The Australian-based Top Secret Cloud, which AWS is developing for the Australian Government.

3.34 The SSAs help provide stability of the core technologies underpinning government service delivery in a rapidly evolving technological landscape, reducing the risks associated with service disruptions, cyber threats, or system failures. By securing reliable access to these critical technologies on behalf of all agencies, the Australian Government can uphold national security, safeguard sensitive data and maintain seamless interactions between buyers, sellers and Australians.

3.35 Several of the SSAs also include training for APS staff in these technologies. This supports the Australian Government in upskilling its staff, reducing reliance on external contractor support and enhancing staff mobility across the Commonwealth, as these skills are transferrable from place to place given the commonality of the technology.

3.36 Further, the SSA sellers collectively invest a substantial amount globally in research and development, and emerging technologies, independent of the SSAs. The Australian Government can indirectly leverage this global investment in innovation by the SSA sellers, helping to keep pace with changes in the global technology sector.

Leveraging centralised digital procurement expertise and support services

3.37 Government agencies can leverage centralised digital procurement expertise within the DTA and access a range of support services as part of the centralised SSA model. It is important, however, this does not replace the capability and responsibility for ongoing contract and delivery management by the buyer. In addition, the DTA is not funded to provide bespoke advisory support.

3.38 As the Alignment to policy, strategies and legislation section of this report shows, the digital procurement environment is complex and includes a substantial number of legislative, policy and technology considerations. Although some of the largest buyers (e.g. ATO, Defence) have in-house technology procurement teams, this expertise is not commonplace in smaller buyers. The DTA's centralised expertise and support helps buyers to understand their obligations, the way in which the larger technology vendors engage with the Australian Government commercially and the solutions which might best suit their requirements. This contributes to achieving the optimum value for money outcomes for the Australian Government.

3.39 Buyers also receive assistance in contract negotiations under the head agreement. This helps ensure buyers, particularly those with limited experience in complex negotiations, have access to expertise and reduce the likelihood of unfavourable terms. The DTA facilitates the use of the SSAs, manages overall compliance where there is a whole of Australian Government requirement and manages a limited number of central contracts under the SSAs, which are:

  • DTA's contract under the AWS SSA.
  • Central enrolments under the Microsoft SSA.
  • The DTA enterprise licensing agreement under the IBM SSA.
  • The Initial Software Contract under the SAP SSA.
  • The Oracle Java contract.

3.40 Centralised ongoing management of the head agreements strengthens the process by ensuring consistent monitoring of compliance, performance and pricing through centralised account management. This offers buyers a dedicated point of contact for resolving issues, providing updates, and maintaining oversight, which is especially valuable to the buyer in managing the contracts under the SSAs. Further, the centralised approach to data collection and reporting, supports adhering to policy obligations, maintaining accountability for contractual obligations on both sides and enables informed decision-making across the lifecycle of the SSAs.

3.41 Disputes are common in any complex contractual arrangement. While the DTA understandably does not provide legal advice to buyers regarding the SSAs, the SSA model offers a centralised point of contact for practical support with dispute resolution if required, and monitor seller performance, helping to:

  • Ensure potential conflicts are managed effectively and professionally.
  • Foster continuity of knowledge and a stable and constructive environment for all parties involved.
  • Address issues promptly, reducing the likelihood of prolonged conflicts that could delay project timelines or escalate costs.
  • Achieve consistency and transparency across the Australian Government. 

3.42 The presence of such support builds trust and confidence among stakeholders, enhancing the overall effectiveness of the SSAs. 

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Chapter 3: Costs

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