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Government introduces reforms to open up IT procurement to startups

The Federal Government has announced the introduction of reforms to cap the amount for which big businesses can sell their IT services to the government on contracts, opening up opportunities for startups to take a stake in large-scale government projects.

Under the reforms, which come into effect today, government ICT contracts will be capped at a maximum value of $100 million, or three years duration on a single project.

With these limitations, the floor is now open for smaller to medium sized IT businesses (SMBs) to bid on sections of large projects, opening up opportunities for them to grow.

Announcing the reforms, Assistant Minister for Digital Transformation, Angus Taylor, said the government aims to pump an extra $650 million annually into Australian startups.

“Government is targeting an increase of 10 percent of its annual $6.5 billion IT spent to smaller operators. We are reducing the number of IT panels to make it easier for small players to supply services. We are actively encouraging small innovators to sell us their ideas,” he said.

“These are exciting changes that will throw open the door for SMEs and allow government agencies to bring in new and innovative services.”

Taylor added that the reforms were sourced from recommendations set out by the ICT Procurement Taskforce report, which was released today.

Looking to gather feedback from startups and SMBs about how the government could make their ICT contracts more accessible to smaller innovators, the ICT Procurement Taskforce was called together late last year. 

The Taskforce set out to investigate the experiences of smaller IT businesses during the procurement process, with a consultation paper on the issue released by the body acknowledging that collaboration between government and industry to develop ICT solutions was limited.

“To capitalise on digital solutions in the private sector, we need to remove barriers for startups and SMEs who want to pitch their ideas and win Government ICT work. Procurement is the main gateway for the digital technology sector to provide solutions to government. This gateway needs to be open and streamlined so that new technologies can be deployed quickly to improve public services,” Taylor said at the time.

Also outlined by the Taskforce’s report were nine other recommendations, including the development of a “coordination process” to mandate significant ICT procurements and vendor relationships, as well as the establishment of a public dashboard to display ICT projects and spending to increase the transparency of investment decisions and project outcomes. 

Tyler thanked the startups and SMBs who contributed to the report, saying, “The Taskforce found a culture of risk aversion in government procurement had undermined the freedom to innovate and experiment. If we are to reward the entrepreneurial spirit, a new procurement culture is necessary.”

With the recommendations laid out, the government said it will continue to develop new mechanisms and changes to improve the ICT procurement process.

The news comes less than a week after a Senate inquiry was announced to investigate the Government’s tech spend. Following a push from Labor, the inquiry will look at issues including the strategy for the whole of government digital transformation, and procurement of digital services and equipment.

Image: Angus Taylor. Source: Supplied.

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