IT projects: what can you do in three years with $100 million?

By Stephen Easton

Wednesday June 13, 2018

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The federal government’s policy of capping all IT procurement contracts at $100 million and three years suggests giant projects like the Welfare Payments Infrastructure Transformation might be a thing of the past, but there are always exceptions.

Both WPIT and the relatively new time and cost limits on IT contracts are now the responsibility of Michael Keenan, as Minister for Human Services and for Digital Transformation in the public service, and both featured in his speech yesterday, in which he boldly claimed Australia would be one of the world’s top three digital governments by 2025.

The Capped Term and Value Policy is a couple of months away from its first anniversary, while the WPIT project is three years into a seven-year overhaul of the core information system used by Human Services, broken up into five stages that are each rather large in their own right.

The policy obviously does not apply to WPIT, which pre-dates it, as the minister pointed out in response to a question following the speech. At the same time, WPIT’s modular structure and regular review system reflects the same intention that eventually led to the policy.

Keenan is pleased with how it’s going and said it made sense that any such “enormous transformation project” should be broken up into smaller chunks and subject to constant review along the way.

“I think we need to be a bit more careful, a bit more measured, and measure ourselves as we go to make sure that the money we’re spending is actually effective and working,” Keenan said.

“And we’ve done that, I think, brilliantly with WPIT. We might have overdone it; it’s the most reviewed program in the Commonwealth’s history, I think. We’ve got an enormous number of people looking at it to make sure that it’s working, but that’s given us pretty good results, I think.”

Exemptions are allowed

Departments can get out of the cap, and its related rules like a ban on contract extensions for IT procurement without first reviewing the supplier’s previous work, with the blessing of both Keenan and their portfolio minister.

Whole-of-government coordinated procurement and measures taken by public service bosses “for the maintenance or restoration of international peace and security, to protect human health, for the protection of essential security interests, or to protect national treasures of artistic, historic or archaeological value” are automatically exempt.

But how forthcoming exemptions will be is another matter. There’s a lot of support across federal parliament and interested sections of the community for tighter control on IT spending. It is likely that even if the ministers agreed to waive the cap for something else on the same scale as WPIT, which is replacing a decades-old legacy payments system, public servants would still have to work harder to justify the costs than they have in the past.

Keenan said he believed there would be less “horror stories of IT projects that have gone off the rails” with larger IT needs being broken up into smaller pieces more like the WPIT approach.

“If we’re doing it in more manageable chunks, then hopefully we can identify where things are going wrong and rectify it before it does go too far down the track of another failed transformation project.”

The minister also fielded a question about the timing of yesterday’s big announcement, the rapid delivery of a new digital government strategy and roadmap, midway through the wider Australian Public Service Review and around the time when a Senate committee is just about to report back from a long and exhaustive inquiry into the same issues.

There’s always lots of things going on, the minister replied, essentially arguing that his new plan is a separate process that does not, in his view, need to wait for anything else to happen.

“Frankly if we keep waiting for something else to report back to us, we’re just not going to get it done in the timeframe that I want to get it done in, which is a very tight timeframe,” Keenan said. “And we deliberately did that… I just don’t think we can afford to waste any more time with this.”

He said the initial plan had been to have the strategy and roadmap completed in 90 days.

“It’s going to be a little bit longer than that, but it won’t be much longer.”

Ministerial memo to APS: look past large firms

Keenan also agreed that public servants are still hesitant to award large IT contracts to mid-sized companies due to “cultural” inclination towards the big players, which was a view put forward by Informed Solutions chief executive Elizabeth Vega.

“We must change the culture with this,” he told Vega, who is also deputy chair of the Australian Information Industry Association, which hosted the speech.

“It’s very easy in government just to have the large firms deliver things and we’re very deliberately looking at ways that we can break that culture down by changing the rules.”

Keenan also reiterated that he hoped to see the Australian Government analyse more of the data in its possession to help inform decision-making, as companies were already doing. “We’ve got more information than anyone, and we’re not using it in the way that we should be,” he said.

For example, he said data analytics had recently shown ministers where industry policy had failed to achieve value in the past.

“Now, we spend tens of millions of dollars on industry policy, and we actually ran some data over that and we looked back and said, you know what? Some of that was just completely wasted money.

“And we’ve now got information that can help us look and say, well, this policy worked and we’ve got evidence to show that it worked, and this policy didn’t, and we’ve got evidence as to what went wrong.”

He believes the public service and Cabinet both have to continue their growing “embrace” of data analytics as a source of new understandings, and this would help the government make better decisions.

“We’ve got a new data policy coming in. We’ve got a new data commissioner coming in. Their job is to drive that culture in the APS, because if it’s going to happen in the Executive, then it’s got to happen in the public service as well.”

Michael Keenan’s full speech has been published online.

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