Government liability capping argument rages on

The ICT Council for South Australia on Wednesday called for an end to uncapped liability in government contracts to help smaller local firms, but the state government claims it is a non-issue."Uncapped liability is a barrier for local companies and favours multinationals whose solutions may be inferior," said David Raffen, chair of the ICT Council for SA, in a statement.

The ICT Council for South Australia on Wednesday called for an end to uncapped liability in government contracts to help smaller local firms, but the state government claims it is a non-issue.

"Uncapped liability is a barrier for local companies and favours multinationals whose solutions may be inferior," said David Raffen, chair of the ICT Council for SA, in a statement. "Clearly if a niche software specialist can deliver massive savings on, say, government networks, but employs 20 or so staff, then the company's size is a handicap. The government in turn misses out on an opportunity to gain productivity."

However, an SA government source that requested anonymity, told ZDNet Australia that uncapped liability is not a set policy and caps can be negotiated -- depending on the risks involved.

"The SA government has a policy that is followed in all ICT procurements. It is not a totally uncapped policy, which people seem to keep quoting.

"We have to go to the market requesting uncapped but as part of the negotiation process we can cap within guidelines depending on the risks of the business... We assess risks in each contract individually and whether we will cap or not," the source said.

But the ICT Council, which represents 1,200 companies employing around 20,000 people, claims that recent contracts awarded to multinationals indicate that the current system is unfair to local firms.

"When our companies venture into US or European markets, many are asked who else uses their software or services? It is a huge drawback when they admit that their own government is not one of their customers," said Raffen.

Raffen added that by reforming the procurement system, government agencies will have better access to technologies that are commonly deployed in by private sector firms: "Supporting local companies is not only the quickest way to begin to address Australia's AU$19 billion annual ICT trade deficit, it also affords government access to highly innovative and productive software that in many cases has been deployed for many years in the private sector".

It seems unlikely that there will be any changes to the procurement process in the foreseeable future, according to the government source.

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