Feds test procurement plans

The federal government is market testing its procurement framework including IT outsourcing as part of a review to be handed to Cabinet in the next few months.

Speaking at the Canberra Business Council's fifth outsourcing roundtable, the parliamentary secretary to the Minister for Finance and Administration Peter Slipper, said the government is assessing the progress of the Finance Management and Accountability Act 1997 (FMA).

He said the finance department will consult with commonwealth agencies in coming months and review procurement practices for the $28 billion the federal government spends annually on purchasing.

In reference to the government's IT outsourcing debacle, Slipper said an important lesson learnt is that "skilled contract managers are an essential ingredient to a successful outcome for both the agency and the company providing the service."

"To reap the benefits of outsourcing agencies must put in place mechanisms to manage the arrangement," he said.

In developing strategic relationships Slipper said there is a huge onus on agencies to develop a good contract management scheme with service levels clearly defined with mechanisms in place to measure performance including feedback from clients.

He said responsibility for the implementation of IT outsourcing policy should rest with agency chief executives.

More recently about 40 per cent of agencies have outsourced their payroll function following a strategy to improve efficiency in consultation with PricewaterhouseCoopers.

Slipper said the procurement framework theme is "Value for Money" and sourcing contracts to Australian industry particularly small to medium enterprises. He said about 27 per cent of Commonwealth contracts went to SMEs in 1999/2000.

But opposition IT spokesperson Senator Kate Lundy said the government has abandoned plans to develop a framework specifically for SME's to get involved in IT outsourcing contracts.

"Last year the government announced plans to investigate this matter but this has not happened," Lundy said.

"It has been dumped in favour of dealing with broader industry development issues. This means that the big end of town have won a huge victory. There will now be even less opportunity to test industry development commitments and outcomes as each contract will now have its own provisions under the new framework."

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