Assistant minister for digital transformation Angus Taylor said he is starting to make good on his plan to radically alter the public service's approach to IT, worth more than $9 billion, including Defence tech spending, each year.

Mr Taylor argues that a greater involvement of small local players will dramatically lessen the risks of more public sector tech wrecks like the infamous Census fail, the recent Tax Office meltdown, the Child Support payment debacle and others.

The minister has nominated a spending target of $900 million each year on entrepreneurial tech suppliers, to move away from traditionally dominant providers like IBM, Accenture, SAP, CapGemini, Hewlett Packard and others.

The target is part of a broader plan that will also see a bigger role for the Digital Transformation Agency and reviews of about 100 IT projects worth $10 million or more in the coming months.

Mr Taylor says the involvement of small firms, who have traditionally found it tough to get a foothold in the Commonwealth marketplace, is key to his ambitions.

"The government can support innovative companies without resorting to handouts," the minister said.

"If we want to transform the entrepreneurial or digital government sector in Australia, the most important thing we can do is be a better customer."

Mr Taylor said spending $900 million through small tech firms and start-ups could amount could be "probably the biggest investment in innovation in this country's history".

But the key to the change was reform to the public service's "panel" procurement system, much hated by smaller and emerging players, that gives a huge advantage to the well-resourced multi-nationals in becoming "preferred suppliers".

The new system, dubbed the "digital marketplace", was already helping new firms break into the lucrative Commonwealth market.

"Let's face it; the panel process, which the digital marketplace is seeking to break down, are a big barrier to smaller, innovative companies getting access to government contracts," Mr Taylor said

But it was also vital to change the bureaucratic mindset that was drawn to huge projects that took many years to complete, cost hundreds of millions of dollars and so often ran into trouble.

"A necessary condition for getting SMEs involved is doing smaller projects," he said.

"We want to do smaller projects, because the risk is lower, they're easier to manage, and if they get into trouble they're easier to deal with."

Mr Taylor's reforms also include an upskilling of the public service to reduce the over-reliance on private contractors who often reap massive windfall profits from taxpayer-funded projects that go long over schedule and over-budget, sometimes by hundreds of millions of dollars.

The Canberra bureaucracy will also be moving toward a UK-style system where a central office of IT specialists, the Government Digital Service, must sign-off on big-spending IT projects proposed by Britain's Civil Service.