This presentation was given in Darwin to the Industry to Government Conference on 27 August 2015. It is a general discussion on federal government ICT procurement issues.

This is the scope of the presentation and a picture of a radioteleSCOPE at Tidbinbilla Tracking Station near Canberra.

Coordinated procurement had its genesis in a decision by the Rudd government in 2008. It was reinforced as an important policy and effectiveness tool by the 2008 Gershon review of Australian Government ICT usage.

Coordinated procurement includes both ICT and non-ICT categories. The non-ICT categories include airline travel, accommodation, hire cars, credit cards, stationery and office supplies, advertising, the Commonwealth fleet, and travel management.

Coordinated procurement aggregates government demand and uses it to leverage better prices and conditions. The total of savings and cost avoidance due to coordinated procurement activities now exceeds $1 billion.

ICT coordinated procurement includes the range of categories shown on this slide.

The first such procurement was the Microsoft volume sourcing agreement. We are now beginning negotiations for its third iteration. The first saved $105m over the Government 'D' price, previously the benchmark for large agencies, over four years. The second, which expires in June 2016, further reduced the price by an additional $105m over three years.

When we began, there were 42 contracts covering 41 agencies. One contract now covers over 120entities. The relationship has also been used to negotiate significant savings from Microsoft extended support for products at the end of their normal support period.

One of the best tests of the utility of this arrangement is the significant number of entities which have joined it, despite it not being mandatory for them to do so.

Similar savings have been experienced in internet based network connections. In this area, government had previously not been benefitting from the falling cost of the Internet. Following the introduction of centralised quoting, price reductions in the order of 50-75% have not been unusual. Aimed at returning $55m to the budget over five years, the program has so far saved more than $90m.

Desktop hardware procurement saw prices for standard desktop PCs fall from 55% above the Australian average to 60% below it I. Less than two years. This program has saved almost $30m since it began.

The 2010-2025 Data Centre Strategy sought to avoid $1 billion in costs over 15 years. So far we are on track, having avoided $74m against a target of $73m in the first four and a bit years.

The mobile phone panel, now in its second iteration has also been successful. Over its first iteration, we had to concentrate on carriage rather than devices as agency behaviour (quite reasonably) was not consistent with the benefits a centralised approach could provide. We were able to adjust the panel to take this into account and then improve the situation in the current second iteration.

While not managed under the ICT banner, due to the manner in which printing supplies were
procured, major office machines has also been interesting to manage. We have seen agencies economise by extending the life of their printing fleets and a somewhat surprising lack of perceived value in managed print services.

This financial year, following a successful new policy proposal in the 2015/16 budget, we are expanding ICT coordinated procurement to explore initially similar VSA arrangements with other major software vendors.

Successful coordinated procurement requires more than just aggregated demand. This slide shows some of the mechanisms we have employed to gain and maintain a competitive environment.

Having a single head agreement and not negotiating individual vendor differences has accelerated the procurement process and helped to ensure a level playing field.

Conducting a series of regular best and final offer rounds not only maintains competition but also speeds up tender evaluation by allowing detailed price negotiation to occur when a purchase is on the table rather than at the outset of panel establishment.

Regular benchmarking is also essential to ensure prices do not creep up, reducing value for money.

Centralising the conduct of RFQs also maintains price discipline and increases competition, avoiding the situation in which agencies that only conduct major procurements occasionally are not aware of the full range of market place offerings.

Commonwealth procurement requires a regime of continuous improvement in order to ensure the rules, guidelines, processes and procedures remain current and effective.

Procurement also attracts considerable media attention with the media always keen to report on perceived inefficiencies or errors. Other stakeholders also have their own axes to grind.

This isn't surprising given the volume and value of government expenditure on procurement. In 2014/15, some $59 billion was expended over about 60,000 contracts. While SMEs are well represented, about 35% by value and 60% by volume historically, the government remains keen to promote small businesses. These took 11% by value and 30% by volume in 2013/14.

This FY, we will increase our focus on small business by introducing targeted guidance and deploying a small business app to assist with AusTender access.

We have been aggressively using social media to assist in our work with ICT and procurement. using the hashtags #AusGovIT and #AusGovBuy on Twitter and the AGICT and procurement coordinator's blogs, we have been able to increase engagement and consultation with our stakeholders.

As an example, the current myth busters series is proving useful in correcting misperceptions about government procurement.

The new Commonwealth Contracting Suite is reducing the time and cost of approaching the market and setting up contracts for procurements between $80,000 and $200,000. It is soon to be broadened to permit its use for panel offerings.

It's often said that if the first a supplier sees of a sales opportunity is the published RFT, then that supplier won't get the job. While a bit harsh, this folklore has an element of truth. Vendors need to do a lot more than sit back and wait for opportunity to knock.

AusTender can help with this. Now being trialled in the cloud, analysis of the data it holds, or the machine readable version in data.gov.au, can provide lots of useful intelligence on trends, dates, and plans.

Operational since February 2015, the CSP now has 114 vendors offering a range of services in IaaS, PaaS, SaaS, and specialist cloud consulting and similar services.

It demonstrated the advantages of social media consultation and incorporates a refreshable panel concept.

Cloud computing expenditure is growing across government, broadly consistent with industry in Australia. $25m in 14/15, after $7m in 13/14, and $6m in the previous five years.

Cloud offers significant benefits to the intelligent buyer as our AusTender experience is showing.

Our new govCMS offering grew out of the remodelled australia.gov.au, post the movement of the MyAccount function to become MyGov.

Free of the need to maintain an expensive proprietary solution in protected hosting, we were able to utilise open source software and public cloud hosting to get an improved solution which has subsequently been made available to agencies at all three levels of government.

This slide shows the characteristics offered by govCMS. It features prominently in the improved digital service delivery future being pursued by the recently established Digital Transformation Office.

Questions from the audience