Published on the 12/12/2017 | Written by Jonathan Cotton
The National Audit Office’s (ANAO) report on government procurement shows that big price tags don’t necessarily equal big results…
The report, called the Australian Government Procurement Contract Report, is “not an audit nor an assurance review” and draws no conclusions from the data presented, but offers a useful insight into the nature and scope of government procurement.
To be sure there are some eye watering numbers in the report. Over 2016-2017, the government spent roughly AU$5.7 billion on services within the IT and technology services category (out of a total $29.5 billion on technology contracts over the entire 2012-2017 period). For context, total procurement spend across all categories in 2016-17 (a total of 64,092 separate contracts) was $47.4 billion.
That tech spend, by category, breaks down as roughly $3 billion spent on software; $3.5 billion on IT, broadcasting and telecommunications, with software maintenance and support cost coming in at just under $3 billion.
Predictably, the lion’s share of procurement spend went to a select few. Taxpayers forked out a total of around $5 billion to IBM, Boeing, Lockheed Martin collectively.
IBM is clearly the biggest winner: Over the five year period surveyed, the tech giant won 692 government contracts to a total value of $2.33 billion. Boeing won 165 contracts (worth $1.6 billion) over the same period, and Lockheed Martin won 260 contracts (to a total of $1.46 billion).
‘Smaller’ suppliers include Oracle ($532 million for 674 contracts), Fujitsu (1,092 contracts worth $961 million), Abacus Innovations (133 IT contracts worth AU$894 million), Data#3 (1,689 contracts worth $883 million), Telstra (with 1,091 total contracts, IT accounting for $660 million) and Hewlett Packard (1,517 contracts totalling $597 million).
Consultants are making hay while the sun shines – spending on consultants grew from just over $200 million in 2012-13 to more than $500 million for the last financial year. Overall, Accenture made a total of $1.19 billion for its supplier contracts, Microsoft took $245 million and PWC walked away with $174 million.
By department, the biggest consumer is, by a wide margin, the Department of Defence, spending $15 billion on IT-related services.
One thing’s apparent from the report: Big spending does not guarantee big results. Case in point, the Department of Human Services (DHS), which spent $3.2 billion over the 2016-2017 and still found itself embroiled in this year’s Robo-debt debacle. Similarly, as noted above, IBM has walked away with over $2.3 billion, despite the poor performance of the 2016 Census project.
While the report offers no commentary on the ROI of the government procurement projects, the ANAO has been highly critical of the way some projects are handled. A 2011 report by the Victorian Ombudsman offered damning criticism of the way high-profile IT project failures were handled.
The consensus then was that “projects are often poorly managed and failures are common.”
“[I]n our respective roles as Auditor-General and Ombudsman, we have tabled in Parliament a number of reports relating to ICT-enabled projects. These reports have identified significant shortcomings in the public sector’s management of such projects and have included numerous recommendations about how such management can be improved.”
“Despite these reports, we see little sign of lessons learnt in the public sector. The evidence to date is that the public sector is not managing ICT-enabled projects effectively, as demonstrated by the current difficulties that Victoria is facing in this area and the increasingly adverse public comment about major ICT-enabled projects.”
For those interested in pouring over dense and highly unreadable charts read the full ANAO report here.
