Procurement, and selected public sector ICT initiatives

Budget Review 2022–23 Index

Philip Hamilton

Small and medium-sized enterprises (SMEs)

The Budget papers foreshadow changes to the Commonwealth Procurement Rules by 1 July 2022 to ‘give SMEs a fairer opportunity to win Government contracts’. The Department of Finance has reported that ‘in 2020–21 there were 84,054 contracts published on AusTender with a combined value of $69.8 billion’.

The new rules will require officials to consider disaggregating larger projects into smaller work packages to encourage greater participation by more businesses, regardless of their size. We will also require that agencies limit the extent of pre-contract insurance and liability requirements, to reflect sufficient risk sharing while not imposing unreasonable or disproportionate risk transfer that unduly restricts the number of suppliers who can bid. Our pay on-time commitment will be extended to all suppliers, regardless of contract value.

Reflecting some of the unique issues involved with national security, and consistent with Australia’s international undertakings, we have also authorised the Department of Defence to undertake limited tenders with SMEs for procurements up to $500,000 from 1 July 2022. (BP4, pp. 21–22)


In February 2022 it was reported that ‘a new whole of government agreement for management advisory services to government has been established to replace all panels related to financial, corporate and commercial consultant work’. In the Budget papers the Government highlighted this previously announced procurement initiative:

Just as we have required Commonwealth agencies to become more efficient over time, the Government is driving better value out of the consultancy sector. We are consolidating 20 previous panel arrangements into a single arrangement that has lowered rates of fees by 22 per cent when compared to rates on similar panels and improved the conditions and performance management standards for consultancies. (BP4, p. 21)

Typically, remuneration is based on milestones and project completion for consultancy contracts, and time worked and hourly rates for non-consultancy contracts (such as labour-hire). Media reporting and a Senate committee have highlighted concerns about the transparency of contractual arrangements with consultants, the quality of consultants’ advice and, more generally, the potential for erosion of the APS’ strategic policy capacity due to a perceived over-reliance on policy advice from consultants.

Selected public sector ICT initiatives

An ICT-trade website has summarised public sector ICT initiatives in the Budget. The following Budget measures relate to cyber security and the proposed Digital Identity system.

Cyber security

The Australian Signals Directorate (ASD) is allocated $9.9 billion over 10 years to 2030–31 to deliver a Resilience, Effects, Defence, Space, Intelligence, Cyber and Enablers (REDSPICE) package. The cost will be partially offset from the Defence Integrated Investment Program (BP2, p. 72). REDPSICE is discussed in more detail in the ‘Cybersecurity package’ article in this Budget Review.

The Cyber Hubs Pilot was funded in the 2021–22 Budget to establish ‘centres of expertise to respond to rapidly increasing and persistent cyber security threats’. The Digital Transformation Agency (DTA) coordinates the program in partnership with hosting agencies, supported by technical advice from the Australian Cyber Security Centre (BP4, p. 15). Current hubs are hosted by the Department of Defence, the Department of Home Affairs, and Services Australia. In this Budget, $30.2 million is provided to extend the Pilot, with the Australian Taxation Office to host a fourth hub (BP2, p. 157).

Digital Identity system

The Government has been developing a Digital Identity system (the System) since 2015. As explained by the DTA:

A secure Digital Identity replaces the need for multiple logins to access different services and makes getting things done with government faster and easier. The system will expand over time to include more government agencies as well as private sector organisations.

Taking into account commitments up to and including the MYEFO in December 2021, it is estimated that more than $600 million will have been spent on the System by the end of the 2024–25 financial year.

The System currently has functionality available for citizens to access a range of Australian Government services. However, Your guide to the Digital Identity legislation, an explanatory publication circulated by the DTA in a consultation process in October 2021, notes that legislation is necessary to expand the System. This legislation would enable state, territory and private sector entities to, for example, ‘participate in the System as an accredited onboarded participant (provides identity services) or a relying party (services that require their customer to verify their identity online)’. The DTA guide also notes that ‘Australians will not need to pay to use the System … The charging framework will only apply to businesses and governments who will participate in the System’. The charging framework is being developed.

As part of the consultation, the DTA also circulated an exposure draft of a Trusted Digital Identity Bill 2021, but the Bill  is yet to be introduced.

The Budget allocates $1.8 million in 2022–23 to the DTA to ‘further support the development of the Digital Identity system, including the governance, regulatory frameworks and funding arrangements associated with the Digital Identity legislation’ (BP2, p. 158).


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