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'If you see it on Austender, you're already a week too late'

Sir Richard Branson with Canberra businessman Mick Spencer.

Sir Richard Branson with Canberra businessman Mick Spencer.

The way federal public servants choose the best suppliers to meet billions of dollars worth of contracts is stifling innovation and competitiveness within Australia, the Canberra Business Council says.

It has been backed up by one of the nation’s brightest young entrepreneurs who says, "The industry talk is that if you see it on Austender, you're already a week too late".

The council has called for the bureaucracy to tweak its definition of value for money to make overseas companies partner with Australian entities and for the government to give weight to companies based here because they employ locals and pay taxes - particularly in situations where a local supplier is only slightly more expensive than an overseas competitor. 

Canberra Business Council chairwoman Michelle Melbourne.

Canberra Business Council chairwoman Michelle Melbourne. Photo: Elesa Kurtz

Government procurement has a massive impact on the Canberra economy. A large number of ACT enterprises rely on Commonwealth-generated work.

But Canberra entrepreneur Mick Spencer, who is building a global sportswear business, said his OnTheGo enterprise had had little opportunity to supply the bureaucracy and found it difficult to find out information about upcoming contracts. 

‘‘There can be a fine line between what’s an open tender and what is not,’’ Mr Spencer told Fairfax Media.

"The industry talk is that if you see it on Austender, you're already a week too late".

Mr Spencer said this result was particularly annoying because his company supported multiple local charities and sporting groups, employed numerous Canberrans and paid tax. 

‘‘It makes it harder to get the motivation to grow and it leads to Australia losing businesses to other countries,’’ he said. 

He said the federal government did not appear to be upholding the promise of Small Business Minister Bruce Billson to nurture home-grown enterprises.

The concerns come after another Canberra businessman, Clive Summerfield, said he had been given no opportunity to tender for a job with the Australian Tax Office to supply it with voice identification technology, even though he had just finished another similar project with the New Zealand’s tax department.

Instead, Optus won a large contract a number of years ago - of which the voice technology was only a minuscule part - and gave the work relating to voice technology to a United States company. 

Chair of the Canberra Business Council Michelle Melbourne told the Senate Finance and Public Administration References Committee on Monday that procurement policies favoured large ‘‘blue chip’’ suppliers who were often foreign, at the expense of Australian businesses.  

The organisation cited a lack of transparency in the tender process and said the government should routinely publish price expectations on Austender.

She said the exclusion of small Canberra businesses from Commonwealth tenders was stifling innovation and competitiveness within Australia. 

Ms Melbourne, a director of the IT company Intelledox, which supplies government, said another worrying trend was departments asking for expressions of interest and requests for tenders and quotes that never eventuated in contracts. She described this as ‘‘milking free consulting’’. 

Department of Finance first assistant secretary in technology and procurement John Sheridan told the committee he had not yet seen where the existing procurement framework was failing.

Committee Chair, Senator Kate Lundy, said she would push for a more even playing field.

‘‘This is significant here in Canberra where innovative small businesses make up the vast majority of the private sector,’’ Senator Lundy said. 

‘‘With many of these businesses providing services to the Federal Government – procurement policies have a tangible and meaningful impact on the local economy.’’

11 comments

  • Uuummm where to start? In Clive Summerfield's case I can only agree with him. I know his products and services and his organisation is amongst the best on the planet not just in Aust. However companies like Optus usually have partnering arrangements and preferred supplier within their solutions offering. I feel for Clive and smaller ACT companies like his. They have limited opportunity t get in front of Dept CIO's and Government Tech leaders. If they did the client would be asking for the products and business outcomes that matched in the gov tenders.

    I also believe Dept do themselves no favours with the way they tender. They do NOT engage widely enough with industry and if they do not want to talk to someone they call probity or some such rubbish. For many years i have witnessed Government make stupid costly errors in major IT purchasing.

    Look at the ATO deal. It took years for the successful tenderer to get it anywhere near what they sold the dept. Only cleaning it up when they needed to win a major Defence opportunity.... Cost Tax (and the taxpayer millions)... Just very poor due diligence and complete lack of common sense. Happens ALL the time.

    Commenter
    Hammer
    Location
    Canberra
    Date and time
    April 28, 2014, 6:02PM
    • Bureacrats are amazingly skillful at subverting guidelines, rules and procedures to get the outcome they want. Just look at the joke of a level playing field for public service jobs. An inside job 99 times our of a 100!

      Commenter
      Gavin
      Date and time
      April 28, 2014, 6:32PM
      • It's very hard to find a good solution for this...

        On the one hand, the public sector is responsible for spending taxpayer funds in the best way possible. If a large multimational company can offer a solution that complies with the technical requirements of the work at the cheapest price, then isn't that the best solution for the taxpayer?

        Or are taxpayers happier if higher prices are spent for a local product?

        But then the public service gets criticised for spending too much!!

        Commenter
        AS
        Location
        Geneva
        Date and time
        April 28, 2014, 8:03PM
        • Having worked with federal government in Canberra, as a public servant or for multinationals and even one Australian company in the last 26 years I can say its a joke for John Sheridan to say it's not failing. John was very well aware of the far fairer PE system which created a much leveller and more even playing field.
          Firstly there is no way to identify an Australian Company over a multinational. This was intentional, as over the last 15 or so years lobbyists have weaved the promise of risk mitigation from using "primes". In fact in a lot of instances unless your a "prime" you won't get a look in to tender. So the smaller guys go to the "primes" and they promise the world to win he bid and get the local content, then cut them out.
          The "prime" risk mitigation company did not serve the ATO when they threw Accenture out after failing to deliver on numerous contracts where they "under delivered" and the amount paid outstripped the contract projection. Or Immigration when they employed IBM to deliver the SfP program was intended to deliver 12 program's of work for $427 million but was abandoned when they failed to deliver and the departments coffers had been drained for nearly $2 Billion dollars. How about HR panels which cost us over a billion dollars because departments HR areas can't hire competitively from the same pool of people? John Sheridan I suggest your out of touch with business & you have forgotten that your own department gave a $15M contract to Cisco 3 years ago in the telepresence space without so much as a competitive comparison. It didn't even go to open tender, there was only one bidder.
          Out of touch bureaucracy that is less accountable than ever.

          Commenter
          Mother
          Location
          Australia
          Date and time
          April 28, 2014, 8:42PM
          • How dare public servants do their job in selecting the BEST contractor for a job paid by taxpayers' money ! Haven't they read the memo that contracts are to go to Tony's lobbyists, that the motto of Tony's govt is "Quid Pro Quo".

            Commenter
            D Murphy
            Location
            Nedlands
            Date and time
            April 28, 2014, 9:14PM
            • You mean spend $10 on process and compliance costs to save a $1 difference in purchase price for a commodity?

              There is more to value for money than the lowest bid price, just as private enterprise know that the lowest bid price just gets you in the door so you can start charging for variations and extras.

              It's a game. A very inefficient game.

              Commenter
              dhv
              Location
              The real world
              Date and time
              April 29, 2014, 8:49AM
          • The trouble is, .gov still want to have skin in the game when it comes to solutions, rather than sticking to defining the requirements and then leaving the tech stuff up to the vendors.

            Commenter
            IT Veteran
            Location
            ACT
            Date and time
            April 28, 2014, 10:01PM
            • Responding to "expressions of interest" and "requests for tenders" and "requests for quotes" comes out of a business's "prospects and tending" budget (where that budget is a resource budget, ie. time and money). The canny business person knows which EOIs, RFTs and RFQs to respond to, and in what detail, so as to maximise the return on the P&T expenditure in terms of time and money. Chasing unwinnable business is not good business.

              Commenter
              Lian
              Date and time
              April 28, 2014, 11:48PM
              • Most deals are done thru the "who you know and who you like" system and the "who you like" means the people who make your life easy and allow you to be lazy. For years I got business that should have gone to tender but didn't basically because of lazy incompetent public servants who do not have the skills, interest or ability to haggle for a good deal, or often know a good deal if it hit them in the face. Govt needs to employ Buyers who are good wheelers and dealers & bright enough to learn about who the best deals come from and that is not necessarily the large and/or multinational or overseas companies. Buyers for large departments stores do a better job and mostly because they would be out of a job if they kept buying badly, because private industry doesn't have a taxpayer slush fund they can keep digging into when they stuff up.

                Commenter
                Buyers require better skills
                Date and time
                April 29, 2014, 1:10AM
                • Procurement in the Commonwealth public service is absurd.

                  My company presented information on a highly innovative product to a large government department relating to an upcoming tender. I advised them that this information was confidential and that it was not publicly available.

                  I subsequently was ruled out of the tender process because the information about the product was not available on my website. Apparently scanning websites is the key criteria for evaluating contracts. No wonder the public service is so wasteful

                  As a result, a less effective, and more expensive product won the job. In effect, they ruled out confidential information. The new government needs to clean up procurement.

                  Commenter
                  Dave
                  Location
                  Canberra
                  Date and time
                  April 29, 2014, 8:37AM

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