Entry No.10i

IT Writers Awards

THE body overseeing the $5billion handover to private industry of the federal Government's computer business is to be stripped of its powers after a scathing independent review of the policy championed by Finance Minister John Fahey.

Before the week is out the Government will be advised by Australian Stock Exchange managing director Richard Humphry that all departments should regain responsibility for their own technology outsourcing plans and that the central controller should be eliminated.

The advice from Mr Humphry overturns a three-year Coalition policy championed by Mr Fahey and is a victory for departmental heads and agencies that have campaigned against the concept of one size fits all in public sector outsourcing.

The decision is a big defeat for Mr Fahey, who pushed for the mandatory program in 1996 despite strong protests from most government department secretaries. The Office of Asset Sales and IT Outsourcing has been criticised for its heavy-handed approach to the outsource-at-any-cost policy and is expected to be stripped of its control of computer outsourcing.

The office will continue to manage commonwealth asset sales, but its function as central manager of outsourcing will finish, government sources confirmed yesterday. Under the new system department and agency heads will decide when and what computer equipment will be contracted out to the private sector.

It is understood the Government now believes agencies should regain control of information technology, especially the CSIRO, the Bureau of Meteorology and Centrelink. Under the much-maligned outsourcing scheme all government information technology infrastructure was to be outsourced to private contractors, mainly multinational companies, in large chunks of work.

Five-year contracts covering 23 commonwealth agencies have been awarded at a total value of about $1.2billion. Agencies who have already had their technology needs outsourced include the Tax Office, Immigration and the Australian Electoral Commission. Another two in the marketplace were put on hold when the Humphry review was called. One of these was Centrelink. Many agencies have already had their budgets cut in anticipation of savings, but Auditor-General Pat Barrett reported in September that the savings had been overestimated. Mr Barrett also reported that the Office of Asset Sales was well over budget on the initiative, paying at least $17million to one US consulting firm.

Many public servants believe the whole government outsourcing scheme has created waste and inefficiencies and promoted privacy and security concerns.
Local businesses also believe they have lost work to multinational companies, forcing some to leave the industry.

Even those bidding for the $100million government contracts have signalled they are not happy with the present outsourcing scheme. Vendors have kept fairly quiet about their concerns, fearing they may lose future contracts if they complained, but in its submission to the Humphry review the Australian Information Industry Association said the process was flawed.

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