Government outsourcing under microscope

Amidst the din of the Melbourne Cup and the US Presidential election, the Federal Government announced a "small scale" review into its controversial IT outsourcing policies.

The Government failed however, to stave off Democrat and Labor threats to set the powerful Senate Public Finance and Administration Committee onto the Government's beleaguered IT Outsourcing policies.

Despite repeated Government assurances that the initial review would not delay the tender review timetable, the latest turn of events has placed the future of remaining outsourcing contracts in doubt.

Labor Senator Kate Lundy, a vociferous opponent to the Government's outsourcing policies, believes she has secured cross-bench support for the public inquiry. However, the foreshadowed move has yet to be presented to the Senate.

The Federal Minister for the Department of Finance and Administration (DOFA) John Fahey announced the initial review early last week, describing it as an opportunity to identify and assess the "implementation risks" associated with the transfer of IT services to the private sector.

Although the terms of reference for the more wide-reaching Senate inquiry are yet to be finalised, Senator Lundy is indicating the Finance and Public Administration Reference Committee will focus on some of the financing issues uncovered by the recent Auditor General's report into the Government's outsourcing push.

Given the Senate is not due to meet again for nearly another fortnight, industry pundits are sceptical that the Senate Committee will have a chance to review the Government's policies let alone announce its findings before the new year.

Nick Cuthbertson, managing director of IT outsourcer Protech Australasia, called the initial review a "logical step" in the outsourcing process. However, he was worried about the potential costs of delays to the review of tenders currently taking place.

"If they [DOFA] deliver their report on the 8th of December as they have said they will, hopefully there won't be any significant delays," Cuthbertson said. "The concern is that this will hold up what is already a lengthy and costly process."

Cuthbertson is suspicious that the Federal Government's outsourcing policies are in danger or being hijacked by politically agendas. "I would be concerned if the review was diverted into questioning the logic of outsourcing itself," he said.

However, Peter Kazacos, managing director of ASX-listed outsourcing company KAZ Computer Services, believes certain areas of the Government's IT outsourcing policies should be called into question.

"Our main concern is that a lot of business is going to American-based multinationals when there are Australian companies that provide a viable alternative," he said.

Kazacos believes the Government should pay more attention to the formulation of the contracts, ensuring the skills created and expertise garnered throughout the life of the tender process remain in Australia.

"A multinational can pack its bags and leave overnight, taking their expertise with them."

Kazacos agrees with Cuthbertson, describing the tender process as costly and long winded.

Office of Asset Sales and Information Technology Outsourcing (OASITO) press secretary Paul Edwards said the review would not set the tender process timetable back in any way. Edwards also moved to quell concerns that either the inquiry or the Government-led review would have far-reaching effects on the Govern-ment's IT outsourcing policies.

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