By Anne Widjaja
The NSW Commission of Audit’s Final Report: Government Expenditure has described the current government’s ICT procurement approach as “very dated” and “not efficient with the changes in technology and service availability that has occurred”.
According to the report, the NSW Government could be saving over $100 million a year in ICT procurement costs.
The report identified a number of leaking costs in the Government’s approach to ICT procurement, including potential savings of around $96 to $196 million in desktop procurement costs. The Commission said in some instances, the purchase of desktops had a cost difference of more than 30 per cent for the same desktop.
The report recommended the procurement model should therefore “shift to a managed service provider panel, and away from the buy/own model to a lease, pay-as-you-go model”, to avoid these discrepancies.
The Commission also recommended cutting down the number of hardware vendors sourcing products, and that the Government should purchase software as part of a managed service bundle, rather than as separate products.
A gap between front line delivery service areas and IT providers was also found to be “evident in the low ratio of spend on front line service delivery compared to back office functions”.
The report noted that IT projects being undertaken were not being aggregated where possible, and therefore “the knowledge of a particular vendor is not reused to get gains across agencies”.
There was also a tendency for IT projects to be drawn up in fixed price contracts, even during early stages of design. The Commission recommended that no budget for IT projects be set until a “a first costing can be made after the design phase”.
The report finally concluded that ICT services could further reduce costs by moving to commercial procurement over the next three years.
In its response to the Commission’s final report, the NSW Government said it had “already begun significant reform to government procurement” and “is committed to saving $1.015 billion over four years through procurement reform”.
In this response, the Government said it has already achieved $72 million in savings during 2011-12 and agencies are on track to save $199 million in 2012-13, through initiatives such as implementing a new procurement framework for transferring sourcing of goods and services to specialised agencies, and expanding the role of the ICT Board to gain a whole-of-government view of ICT investment.
The NSW Government indicated that it would ensure planned reforms would be consistent with recommendations by the Commission, and it will further revise its approach to ICT procurement by ensuring the reduction of administrative costs and the duplication of procurement functions across government.
The Government also plans to attempt to reduce “red tape” and improve competition amongst vendors, by “simplifying access to Government business for the supply community, especially small and medium enterprises and regional businesses”.
Read the full NSW Commission of Audit Final Report and the NSW Government Response here: http://www.nsw.gov.au/news/nsw-commission-audit-final-report
