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Final Report of the ICT SME Joint Industry Government Working Party - A
Attachment A
Simplified ICT procurement arrangements to assist SMEs
Simplification of the industry development arrangements for Federal Government procurement of information and communications technology (ICT) and a facilitation package for small-to-medium sized ICT enterprises (SMEs), were today announced by the Minister for Communications, Information Technology and the Arts, Senator Richard Alston. This announcement fulfils the Coalition Government’s election commitment to progress the industry development arrangements for ICT procurement in consultation with the sector.
The new arrangements eliminate the onerous ‘red-tape’ reporting and compliance obligations of the previous regime- meeting the Government’s objective of creating an Australian business environment that is attractive and uncomplicated for multinationals and also maximises the opportunities for SMEs.
However, the Government also considers that multinational corporations have a very important role in fostering innovation in the Australian ICT sector. The ICT Framework for the Future process has already identified the importance to innovation of building strong links between the ICT industry and research and education sectors. Whilst recognising that investment decisions by ICT multinationals are driven by commercial imperatives, the Government will greatly welcome and acknowledge companies that support innovation in the Australian ICT sector with initiatives such as sponsored professorships and fellowships at key research and education institutions.
The new arrangements maintain a central focus on the Government’s priority of developing ICT SMEs by facilitating their overall access to the government ICT procurement market and specifying minimum SME participation in large ICT contracts. The regime will generate commercially sustainable industry development outcomes while reducing the barriers to entry through high contracting costs—particularly for SMEs - and maximising alliances between SMEs and multinationals.
The arrangements involve three key elements:
- Replacement of the Strategic Partnership Industry Development Agreements program by voluntary guidelines (see attached outline) that set out the Government’s expectations for strategic industry development activities by its ICT suppliers. The guidelines reflect the Government’s desire to move away from obligation-based company specific outcomes to a self-regulatory approach based on sustainable investment as the preferred approach to achieving industry development objectives. Companies that have already fully or largely met their requirements under the Partnerships for Development program will be formally recognised.
- Simplified industry development requirements for ICT contracts, thereby reducing the compliance burdens on bidders. For a contract less than $20 million, the only requirement for contractors and sub-contractors will be endorsement under the Endorsed Supplier Arrangement. For contracts above $20 million, the Government will specify minimum SME participation rates determined by the nature of the contract (see attached industry development requirements).
- A pro-active ICT SME Facilitation Package to enhance the ability of SMEs to lead and participate in government ICT contracts. This will include improving the flow of information to and from SMEs about the government ICT marketplace (see the attached outline of the SME Facilitation Package) and facilitating stronger alliances between SMEs and multinationals. The Coalition places a high priority on developing ICT SMEs and, in addition to the ICT SME Facilitation Package announced today, the Government will explore with the sector further avenues to maximise the opportunities for ICT SMEs to participate in the government procurement market. The joint government/industry working group, which has been established to remove SME inhibitors and to work on ways of further enhancing SME participation in the government ICT procurement market, is holding its first meeting today at the AIIA.
These arrangements will lead to more cost-effective and market-driven ICT industry development outcomes from government procurement, and build stronger alliances between multinationals and Australian SMEs. The Coalition acknowledges the assistance of the ICT sector in the development of this new regime.
Media contact: Minister’s Office, Sasha Grebe, 02 6277 7480 or 0409 445 246
Website: www.richardalston.dcita.gov.au
134/02
21 June 2002
Commonwealth Government ICT Procurement and Strategic Industry Development—New Guidelines for Suppliers
The Federal Government encourages mutually beneficial partnerships with its major ICT suppliers to continue the development of the Australian ICT industry. It is important to actively engage major ICT companies in Australia to support the growth and development of Australian ICT SMEs.
The Guidelines set out the principles for such partnerships and provide guidance for companies on the Government’s strategic industry development priorities associated with its ICT procurement.
OBJECTIVE
The Commonwealth’s objective for the ICT sector is to have a vibrant, globally competitive and internationally recognised ICT industry that can take advantage of international opportunities and contribute to economic growth in Australia. This includes:
- global scale Australian ICT companies, supported by a thriving base of ICT SMEs, which capture a significant proportion of the global ICT market; and
- transnational ICT companies which see Australia as a first tier choice for the location of global scale ICT operations which make use of Australia’s competitive strengths to address global markets.
This objective is being supported by a range of major initiatives such as the ICT Centre of Excellence. In addition, the Government is developing long-term shared strategies for the sector through its ICT Framework for the Future.
Role of ICT Suppliers in Industry Development
The Federal Government anticipates that its ICT suppliers will be actively engaged in the Australian industry and, where appropriate and commercially beneficial, will make use of the skills and capabilities of Australian SMEs in the research, development and delivery of ICT products and services. In addition, companies will assist Australian ICT SMEs to access international markets through their global networks.
Companies are encouraged to develop the role that their Australian operations play in achieving the company’s global development and to undertake strategic activities in Australia of a scale that takes advantage of commercial opportunities and Australia’s competitive strengths to address global and regional market needs.
To support these objectives, the guidelines will encourage Commonwealth Government ICT suppliers to undertake the following types of strategic activities in Australia:
- Research and Development;
- Exports;
- Strategic Investments;
- Venture Capital Investments;
- SME Alliances;
- Technology transfer; and
- Skills Development
The Government will also ensure that the efforts of companies that have fully or largely met their Partnerships for Development requirements are formally recognised.
Industry Development Requirements for Major Commonwealth ICT Contracts
Commonwealth agencies will be required to ensure that tenderers for contracts with a value of $20 million or more meet minimum SME participation levels set for broad categories of ICT products/services. Tenderers, and their subcontractors, will also continue to be required to meet the conditions of the Endorsed Supplier Arrangement (ESA).
The new industry development arrangements for ICT contracts involve the following:
- All ICT suppliers of ICT products/services to Commonwealth agencies must be endorsed under the ESA;
- There are no specific industry development requirements, other than under ESA, for contracts with a total value below $20 million;
- For contracts valued at $20 million or more, Commonwealth agencies are required to ensure that tenders meet the following minimum SME participation levels:
- 10 per cent of the contract value of hardware purchases, e.g. PCs, network equipment, mainframes, printers, etc.; and
- 20 per cent of the contract value of services purchases, e.g. systems integration, software development/support, service provision, and consultancies.
- For the purposes of these requirements, an SME is defined as a body corporate incorporated in Australia or New Zealand which, together with its Related Bodies Corporate and Parent Entities, has an average aggregate annual revenue over the last four financial years of less than $A500 million.
These requirements will be administered flexibly to ensure that tenderers and agencies are not unjustifiably disadvantaged. Exemptions or adjusted levels may be required where significant commercial impediments to achieving the specified SME level exist or the nature of the contract could substantially preclude SME participation, e.g. telecommunications services.
ICT SME Facilitation Package
This Federal Government’s ICT SME Facilitation Package is aimed at helping small-to-medium sized enterprises (SMEs):
- access a greater share of the Commonwealth information and communications technology (ICT) market;
- establish alliances with key players in the industry; and
- locate the Government information they require.
Joint Industry/Government Working Party - The key driver of the Package will be a Joint Industry/Government Working Party. The Working Party will act as the central “clearing house” for SME facilitation activities. It will meet for the first time in June 2002.
ICT SME Information Unit - DCITA will open a new ICT SME Information Unit to provide SMEs with a central point from which to locate information on Government programs and other useful resources. There will also be an ICT SME information resource on the DCITA website.
Commonwealth Tender Notification System - DCITA will seek to establish a tender notification facility as part of the Commonwealth Electronic Tender System (CETS) – the system that the National Office for the Information Economy is currently developing as the central Commonwealth business opportunities web site. This will provide a company registration and notification facility to alert any SMEs that pre-register to the posting of tenders in nominated areas of interest.
The Government will also be implementing several measures in collaboration with industry, with the assistance of the Australian Information Industry Association (AIIA). These are:
SME Briefing on Selling to Government - a series of briefing sessions for SMEs on selling to Government. These will be held during the period July to September 2002.
- Briefing on the Forward Plans of Government ICT Buyers - a series of briefing sessions on the forward ICT purchasing plans of Commonwealth Government Departments and Agencies. These will be of particular interest to SMEs and will be held during the period October to December 2002.
- Assisting Agencies to get a better understanding of SMEs - initiatives to help provide agencies with information about SME capabilities and performance. This will assist in raising the profile of individual SME capability and the benefits to agencies of seeking an SME solution that may be more closely tailored to their particular needs.
- SME Alliances - initiatives to facilitate SME partnerships with key stakeholders including other SMEs, MNCs and research and development organisations. These will enhance SME capability to produce and deliver globally competitive products and services, to facilitate growth, and where appropriate, to assist with export readiness and the development of channels to export markets.