Commonwealth procurement rises to $60 billion a year

By Harley Dennett

December 14, 2015

The federal government saved $462 million from public service job cuts, then spent an extra $10 billion on new outsourced services.

The already impressive size of the Commonwealth procurement spend has risen another $10 billion in just a year to $59.4 billion, according the latest AusTender figures released by the Department of Finance.

Former prime minister Tony Abbott’s cabinet may have squeezed as much as possible from the public service workforce in its two years in government, but its procurement spending leaped ahead of the Julia Gillard years and all her predecessors too.

The erstwhile Defence Materiel Organisation (now Capability Acquisition and Sustainment Group — pronounced CAZ-Gee) continued to be the top spender with invoices for new fighter jets and maintenance of existing equipment totalling $17 billion, followed by Department of Defence on $13 billion for services like base-building and maintenance.

The departments of Employment, Social Services and Immigration and Border Protection round out the top five. Employment’s high ranking is due to its network of providers (now jobactive), seen by some as a leading success story of market stewardship in the federal government.

While the total procurement spend is on the up and up, its not only the domain for the big players. Small businesses won tenders worth $5.8 billion and medium enterprises won tenders worth $10.9 billion.

The $10 billion increase on 2013-14 came almost entirely from new services procurement (eg, outsourced public services), rather than goods and equipment. The savings from the APS job cuts and recruitment freeze was only $462.2 million over the same period, according to Australian Bureau of Statistics figures.

Sharp rises in the value of services tenders rather than goods. Source: Department of Finance.
Sharp rises in the value of services tenders rather than goods. Source: Department of Finance.
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