Govt caps IT contracts to give SMEs a bigger bite

The federal government has announced plans to cap government IT contracts at a maximum value of $100 million in an attempt to allow SMEs to bid for more government contracts.

Contracts will also be capped at three years’ duration. Larger projects will need to be split into multiple components to give SMEs the opportunities to secure portions of the work.

With the changes the government aims to increase the portion of its $6.5 billion annual IT spend awarded to smaller Australian tech companies to 10%.

The reform was one of the 10 recommendations of the recent ICT Procurement Taskforce report, which found that a culture of risk aversion in procurement has undermined the government’s ability to innovate and experiment.

Other recommendations include developing ICT-specific procurement principles, building strategic partnerships, transitioning to data-driven reporting, enhancing the public sector’s procurement skills and introducing new procurement methods.

“These are exciting changes that will throw open the door for SMEs and allow government agencies to bring in new and innovative services,” Assistant Minister for Cities and Digital Transformation Angus Taylor said.

“A cap is now in place to limit the term and value of government IT contracts. We are reducing the number of IT panels to make it easier for small players to supply services. We are actively encouraging small innovators to sell us their ideas.”

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