Finance and public service minister Katy Gallagher has moved swiftly to distance her fledgling ministry from the activities of the Digital Transformation Agency, which is the subject of a blistering Australian National Audit Office report.
Gallagher described the damning findings as “very concerning”.
“I take these matters very seriously and will closely monitor the way the DTA addresses these audit recommendations to ensure that the processes and behaviours that have been highlighted in this report are cleaned up and won’t happen again,” Gallagher told The Mandarin.
The ANAO report failed the DTA on all information and communications technology (ICT) service procurements it probed, finding that “the DTA’s procurement of ICT-related services has been ineffective for the nine procurements examined”.
The report did not cover whole-of-government multi-billion mega-contracts but did focus on various rapid go-to-market deals under COVID-19 that proved essentially ineffectual.
“The ANAO has investigated the DTA’s internal procurement processes during the period of the previous government and identified some very concerning issues with process and behaviour,” Gallagher said.
The finance minister’s grim observations on the official audit, which was initiated independently before Labor took power, do not bode well for the future of the boutique agency.
Finance has traditionally used a more centralised rather than free-range approach to procurement, a setting often criticised for entrenching expensive incumbents and excluding innovative challengers.
The Digital Transformation Office, which begat the Digital Transformation Agency, was envisaged as a way of breaking through the morass of federal procurement compliance process that many smaller suppliers complained locked them out of government deals.
The shift into the Finance for the DTA is essentially a re-centralisation of procurement control after a series of events that sought to put government ICT and wider digital strategy into policy agencies.
The creation of the DTA was supposed to break open the highly regimented and restrictive government procurement process blamed for stifling innovation in government and favouring big incumbent suppliers because of the cost of bidding.
The central argument for procurement reform driven by digital transformation is that it allows government access to cheaper, commercial challenger technologies and avoids costly vendor lock-ins where agencies become hostage to big platforms that control modernisation pathways.
Large tech suppliers have increasingly used procurement and governance processes over the past 25 years to defend their turf by investing in risk and compliance solutions that smaller competitors find expensive or onerous to keep up with.
Some states, particularly the New South Wales government, have kicked hard against the imposition of strict procurement mandates, favouring instead the creation of ‘markets’ of accredited suppliers for agencies to pick from rather than going through laborious and expensive tender processes.
The issue reached a peak in NSW when the education minister returned a degree of discretionary spending to school principals for items like coloured paper, pencils and glitter used for classroom projects that were cheaper at Officeworks than from restrictive central procurement catalogues.
However, there has been far less success reforming procurement culture in Canberra, where agencies such as Finance still wield immense power despite not having a seat at the policy table. This situation was exemplified by the infamous Gershon Review of technology, which badly missed key megatrends like cloud computing.
Julian Bajkowski is a senior reporter for The Mandarin, and is based in Sydney
People: Katy Gallagher
Departments: Australian National Audit Office (ANAO) Department of Finance DTA
Tags: AGIMO Chris Fechner conflict of interest corruption DTO Gershon Review gifts ICT Labor managed services probity Procurement public service
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By Julian Bajkowski
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Department of Home Affairs
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Australian Bureau of Statistics
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