Queensland's ICT industry is up in arms about a state government proposal to handle the recruitment of all IT contractors through one master vendor to drive down contracting costs.
I really think there'll be some blood on the walls on this one.
The details on the proposal currently being put to industry have not yet been made completely clear, but the government has aired the idea in a presentation this week that current supplier panel arrangements be replaced by a master vendor that would draw on a database of contractors.
According to the government's presentation, the panels currently draw from the same pool of candidates and result in higher costs for suppliers, which is an increase in costs and an inconsistent experience when dealing with the government. The government pointed to figures that put upper-range wages for IT contractors at $338,430, a tick more than the Prime Minister at $330,000.
Despite those figures, the plan has the industry up in arms, especially as it flies in the face of the consultation the government has done in the market on the issue. The presentation saw some unhappy faces. "Both sides wouldn't look at each other. It was getting pretty vehement," one source said. "I really think there'll be some blood on the walls on this one."
Some think the proposal will reduce the quality of contractors brought in, others believe it will mean a migration of skilled workers out of the state. Many are waiting until the government clarifies issues before they speak for or against the proposal.
A report that the industry lobbying group, the IT Working Group, and the Queensland Government Procurement Office commissioned from Queensland-based analyst firm Longhaus to look into the government's engagement with the IT contracting industry did not recommend the model being proposed.
That type of model could be positive as it would form an industry standard, according to Longhaus' report, which has entered the public domain, yet the database could end up being just another place for contractors to list their services with specialist panels springing up as soon as skills couldn't be found in the database.
Longhaus found the rates charged by many companies were necessary to cover costs. "Industry perceptions surrounding excessive margin costs charged to government (as a percentage of daily rate charges), as a potential source of savings is unfounded. Contrarily, the 20 to 40 per cent charged by labour-hire or recruitment management companies, and the 50 to 100 per cent for consulting companies would appear to represent reasonable business practice and be commensurate with the cost of operation, value and risk mitigation provided by both sub-sectors within the ICT labour industry servicing the Queensland Government," the report said.
The problem, according to Longhaus, lay in the way the Queensland Government was engaging with the industry. Often the government would bring in a worker to do a job, who would then bring in more contractors in a snowballing effect that ends in the government bearing higher costs than it had planned.
Instead of the government bearing the risk for such projects, Longhaus believed it should forge deals with firms for a specific job, so that if the requirements for that job expand, it is the industry that bears the risk if more manpower was required than expected.
The government could also automate the renewal of the tenures for long-term contractors who are treated like public servants and employed by the government for years, but are contractors and are paid as such. Another recommendation was to have a standard engagement model instead of a variety of sanctioned panels, non-standard contracts and direct agency acquisition.