Gershon: Contractor cull hits DFAT, Defence

Gershon: Contractor cull hits DFAT, Defence

Summary: The Departments of Defence, Foreign Affairs and Trade, and others this week revealed they had made early moves to reduce their dependence on ICT contractors in line with the Gershon Review.


The Departments of Defence, Foreign Affairs and Trade, and others this week revealed they had made early moves to reduce their dependence on ICT contractors in line with the Gershon Review.

Razor: Gershon and Tanner

Sir Peter Gershon and Lindsay Tanner (Credit: Brian Hartigan)

The news from several large agencies comes days after last week revealed most large federal government agencies had no plans to follow the Department of Immigration and Citizenship's early lead in hiring a swathe of new permanent IT staff to replace contractors to meet Sir Peter Gershon's recommendations.

A spokesperson for Foreign Affairs told that the department had commenced reducing IT contractor levels before the release of Gershon's review last October.

"Even before the Review was completed, the department had commenced the process of increasing the number of APS ICT staff and reducing its dependence on ICT contractors," they told

Gershon's arguments to cut contractor levels centred on the retention of IT skills within the public sector, security clearances, and the higher cost of contractors compared to public servants.

He recommended agencies with contractor levels higher than 23 per cent halve those levels over the next two years, which he estimated would result in savings of $100 million.

The DFAT spokesperson said the department would continue to recruit permanent IT staff over the course of 2009 "in line with the contractor reduction targets recommended in the Gershon Review".

Defence has also admitted it would trim its IT contractor workforce as part of the Gershon Review; although, exact numbers are not yet clear.

The department had in December last year commenced a "Bulk ICT recruitment" drive for permanent staff for a range of positions — however, this was in support of Defence's ICT reform agenda, which chief information officer Greg Farr said was expected to kick off in 2009.

The roles Defence is still hoping to fill range from APS-level application developers, project managers and enterprise architects to executive level support professionals, with salary offers of no more than $90,000 per annum — less than half what Gershon estimated the annual cost of an IT contractor to be.

Defence has posted 54 full-time ICT-related vacancies in the past two weeks, according to the government's recruitment website, almost matching the 60 full-time IT staff the Department of Immigration and Citizenships announced it was on the hunt for last week to "rebalance its workforce with a greater proportion of staff" said DIAC's CIO Bob Correll.

Also cutting contractor levels will be Australia's peak innovation body, the Department of Innovation, Industry, Science and Research.

"The Department of Innovation, Industry, Science and Research will reduce the number of ICT contractors by a small number in 2009, replacing some with permanent staff, in order to meet the government's requirements following the Gershon Review," a spokesperson told

Topics: Government AU, Emerging Tech, Government

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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  • Stupid.

    So they put on a bunch of full time clowns and look what will happen.

    In a year they'll be screaming about how all the projects are failing.

    Wake up and smell the coffee, you bring in contractors when your perms are useless and incapable of delivering.

    This will all end in tears...
  • so what is a contractor?

    The bulk of contractors work for the outsourced service providers either as subcontractors or staff. The outsourcers are locked in with long term contracts of at least 5 years. Key projects are contracted to companies such as IBM/EDS/Acenture. There are a small number of independents and small company contractors who wil be dumped as is usual when ever departments what to comply with policy. These small businesses will be hurt and their work transfered to IBM.EDS/Accenture who will charge twice as much to do the same job. Its pretty muddle headed thinking. So the small guys will become permanents, at half the pay and no chance for a pay rise due to the 15% + 3% productivty cut backs. Its not a good prospect, especially for young people looking at the market.
  • joke

    And they wonder why nobody wants to do IT courses at UNI!
  • Sack the rowers...coxwains multiply!

    Senior management is the issue, not the contractors.
    First sack all senior management who cannot do the job of their charges, or at least understand the job. If management cannot lead, then they are not much use to a professional developer/DBA/Analyst, etc.
    If they cannot manage contractors then they have no hope with permanents. This is assuming output is desirable of course. If they want a Telstra / Sensis deal (Arthur Anderson's never ending billing system!) then mismanagers and permanents works well!
  • Gershin who?

    This is not about logic or rational review but some alterior motive that those in govt ie Lindsay Tanner have. They are hiding behind this 'foreign contractors' review to justify what they seek to do.
    My best advice is let them do it and get a job in some other IT related field or maybe hospitality, like I intend to do.
    The pay and effort have never been worth it in IT anyway.
  • Not as stupid as you think...

    I've been permanent and a contractor. I've seen people on both sides incapable of delivering. You bring in contractors to provide flexible resources to help you deliver an objective AND so you can get rid of them when the work ends or economics mean you think you have to.
  • Rebel Today, Put the Heat on Your Managers

    It is quite a shame the government has taken such a narrow slash and burn view to its approach to contractors and have fallen for the delusion that it will save money. We all know it is accounting hocus pocus.

    We never seem to hear things like how $100,000 was spent on a contractor which created a system and a Capital Asset of 20 function points worth $10,000 each which runs for 10 years saving $50,000 in admin per year. Talk about a great investment! But no, there seems to be no focus on the value which talented and highly trained people bring the Australian workplace and the fact that these people are adding to the national wealth through their creativity.

    IT and all creative endeavours need to be viewed as investments in national wealth building because they create assets. Just because it is a decision to cut a project which therefore moves the asset from the balance sheet to operations, it is not a loss as accountants would have us believe. No money has gone out the door and the asset which has been created does not disappear. But messages then fly around about how we are operating departments at huge losses of millions of dollars. It is a complete lie.

    Unfortunately the message out there is that cutting [perceived] costs is good. That is so bad.

    It takes human time and effort to create systems / anything and that's what the cost is for - to pay for human time and energy. The link from Cost to Return on Investment however is sorely missed which is a complete tragedy because this sort of thinking bankrupts nations. It certainly bankrupts companies when you deplete all your assets through cost cutting and employing an accountancy mentality as opposed to an entrepreneurial more visionary mentality. The government however can not really shut if it's 'bankrupt'.

    Right now this economy needs leadership that springs from vision, creativity and abundance and not what we are seeing currently - which is short-term, narrow-minded, scarcity, fearful and disrespectful to Australian workers who deserve to have more faith placed in them and the respect that they are creating worth in the community -- not messages that they are costing us, or are a drain on society or the public purse. I am sure there are ignorant people out there (thanks to the govt/media) now saying 'Oh those highly-paid IT workers, they cost so much, thank goodness we are getting rid of them and saving all this money. We will surely be better off now'.

    I think the Gershon report has tapped into a highly damaging mentality and has opened the floodgates to a path of destruction and shrinkage to the Australian economy, the social and economic damage of which we will have to deal with for many years to come.

    Let's hope enough brave people continue to challenge the current status quo and push themselves into creative and entrepreneurial endeavours which add value to the country in any and every sense possible before we are stripped bare, and all our creative talent leaves our shores for more a more respectful work environments elsewhere. We do not have to buy into America's financial mess and 'shrinkage mentality', nor the current party line. Aren't Australians free-thinkers? We all have choice in the direction we are heading as individuals, families, companies and communities and we CAN reject the pea-brained mentality of some senior management who would seek to diminish workers for their own political gain or ego.
  • Not Stupid at all

    Many contractors who have milked the Public Sector for years then leave after they have been trained at the public expense, developed their skills while plagerising incumbents and then pretending the gains from replacing old hardware with new is due to their excellence.

    Grow up, I worked for a Contractor Placement firm from 1983 to 86 and have dealt with contractors since. Little has changed.

    It is pathetic how many are incompetent and get their skills at the public expense then move on to more lucrative positions leaving their long term failures for the permanents to deal with.

    Their delustion is flamed by their agencies who milk a percentage from them regardless of their quality. The greater their delustion the more they perpetuate the myth and make percentages for the agencies.

    Well done Gershon.
    Why has it taken government so long to see and more importantly ACT on this!
    Action is needed.
  • Political hocus pocus

    I have been a contractor for aver 15 years and I have seen this games played out many times. I am currently contracting to Defence and the amount of pay I get does not amount to much more $100K. The section I am working in has many vacancies and cannot attract any APS people of any caliber ( no I am not involved in the recruitment) and has hired a number of unskilled people who frankly cant do the job. One has just resigned to go work in the private sector after getting skilled up by Defence.
    If the APS offered skilled people market rates or at least equivalent of market rates then they would have no problem keeping the skills. The problem is not that the skills are not being retained because contractors are doing the work. The problem is that the skills are not being retained because the pay does not match up to market rates. The contractors are being hired because this is the only way to get the skills.
  • haaha...sour grapes huh?

    So you wanted to leave your APS job and contract but no-one would touch you ?

    Looks like you're one of the useless ones.

    There there, just day a flex day on monday, put your feet up and have a rest, ok ?

    Trust me, no-one will miss you.
  • LIkewise I too am a contractor...

    Worked on a MAJOR ICT project for a large department. Permies worse than useless, totally incapable of taking any action as they're all afraid of making any noise and getting their promotion chances harmed. In come the contractors and start getting the job done. Four contractors made more REAL progress in 6 months than the army or perms did in the past 2 years.
    Suddenly the perms are noew being shown up, so bam... contractors out the door. That was a year ago..and guess how much progress has been made to date with the perms back running the show, go on...guess...

    Yeah..exactly..nothing at all..they're actually going backwards!

    I swear, you could fire half the permanent APS IT staff and you wouldn't even know they'd gone.
  • Fed Govt stomach the fight ?

    a lot of contractors comments...where are the APS comments ? contractors have been creaming (or scamming a better word) it for years and the result is a system that cant work because no-one in Fed Govt has had the guts to say ENOUGH. 2 things need to happen. 1. if the Fed Govt has the stomach to clear the decks of APS non-achievers and 2. provide full-time positions for the current contracting staff (where warranted) and cancel contracts for the rest of the scammers, they will find a solution to that is in the best interests of the tax-payer...question is do they have the stomach for the fight on both sides of the fence ?
  • Where are the APS staff?

    I have held positions within the military, private sector and public sector - both in IT and non related fields. I am currently in my second non-ongoing APS term in an IT field. While my position, along with many others, was re-advertised as permanent, it looks like senior management have changed their minds and decided not to make anyone permanent. Worried about more funding cuts.

    I have seen good and bad contractors and APS staff. The form your payment takes - more money, or "job security" and less money has more to do with your personal situation than how good you are at your job.

    So where are the APS staff? Probably left for the private sector, where it takes only a few weeks for someone to make a decision as to whether or not an applicant is suitable for the job.
  • I have been both a Contractor and a permanent APS employee. Frankly, the problem is that due to a huge demand for contractors fed by Govt. policies that reflexively assume 'private good, public bad" - anyone who can acquire some skills through APS training policies, can immediately market themselves as an expert contractor at a ridiculous salary. A lot of the contractors I have worked with have been the incompetent clowns. This set of policies have drained the APS of the top performers.