The Federal Government will cut the number of its IT Services panels by half, according to an announcement today by Special Minister of State Gary Gray.
The Federal Government is currently operating over 120 panels for IT services for the government's agencies. Now it hopes to move to a maximum of three panels per portfolio. Gray said that the government hopes to cut costs both for itself and for its vendors with the consolidation.
"This policy will reduce the administrative overheads incurred by agencies in establishing their own panels, and also for the IT industry in tendering for inclusion in the current large number of panels," he said in a statement.
The government had released a discussion paper at the end of last year looking into the number of ICT services panels and how they might be cut, although the discussion paper stated that the Federal Government could get by with just one panel.
An agency will normally use its portfolio's panels to procure its IT Services; however, from now on, all panels will have to include a mandatory multi-agency or "piggy-back" clause, which allows other agencies than the one that created the panel to use it for their procurement. The hope is that in time, vendors will only have to tender one panel to reach the whole government with a service. Existing panels will continue until they expire.
Before starting a new tender process, agencies will now first look at their own panels and those available with piggy-back clauses. Finance will develop a matrix of IT services panels to help agencies to locate the right panel. According to the discussion paper, much of the consolidation would involve bringing together panels operated by the largest three portfolios in government. The agency did not name the portfolios, but the largest agencies are the Departments of Defence and Human Services (now including Centrelink), as well as the Australian Taxation Office (ATO). According to the Australian Government Information Management Office AGIMO, the largest portfolios reflect more than 60 per cent of ICT services expenditure across the Federal Government.
One potentially controversial aspect that the discussion paper raised was that AGIMO is proposing to finance its administration by charging fees for both agencies and suppliers to use it. Suppliers would pay "perhaps around $2000" to be on the panel, which AGIMO said would ensure that "only serious suppliers" join the panel. Agencies would pay a fee each time they procure a service from the panel. AGIMO said that since it was no longer the intention to fund a central, single panel, a fee would now not be required.
Feedback to the discussion paper was not only included in the decision to consolidate, but also in the development of a new ICT Multi-Use List (list of pre-qualified potential suppliers that have satisfied conditions), designed around a mandatory head agreement, to go live next year.
AGIMO has already been spearheading the consolidation of agency panels with the creation of whole-of-government panels in the aim to achieve value for money. A recommendation in the Gershon Review on IT, released in 2008, said that government should use its buying power to negotiate better deals.