New procurement mandates for govt agencies to give small firms better chance

The changes come after the Albanese government ditched the whole-of-government GovERP contract last year. Enterprise resource planning, or ERP, systems are the software used to manage main business processes.

Departments and agencies have been encouraged to go to market independently for digital payroll, human resources and finance solutions that fit their needs, with an eye to sourcing products from smaller businesses.

Many of the systems currently in use by departments are reaching the end of their lifetime. For example, the Department of Infrastructure recently tested the market for a replacement for its two-decade-old system, which will no longer be supported in just over two years.

In place of the GovERP project, which was with German software giant SAP and over budget and delayed, the government has launched a new category in the Digital Transformation Agency's Software Marketplace for these critical systems.

"We want to encourage innovation and give small businesses the chance to grow," Minister for Finance Katy Gallagher said.

"The establishment of this marketplace category means that government is again open for business."

The marketplace is expected to launch in mid July and non-corporate Commonwealth agencies must use the platform to select an ERP system that matches their requirements.

Corporate Commonwealth entities, as well as state and territory governments can also access the marketplace.

The Department of Finance and the Digital Transformation Agency will provide support to software vendors and developers, including small and medium businesses, to enable their products to be listed on the marketplace.

Agencies' procurement of the software platforms will also be bound by new Commonwealth Procurement Rules that came into force from July 1. These rules include a higher target for purchasing products and services from small businesses. Departments must source 25 per cent of procurements under $1 billion from small and medium businesses, and 40 per cent of contracts worth less than $20 million.

The changes are hoped to counter a perception among local IT businesses that the government is not yet delivering on it promise to shift public sector procurement away from large multinationals to smaller, Australian businesses.

The marketplace is accessible through the government's BuyICT portal.

At an industry conference held in Canberra on Wednesday, July 24, officials from the DTA foreshadowed that there would be further changes to the online marketplace.

DTA branch manager for digital sourcing Anthony Conway said the agency was looking to streamline the panel system, for both government buyers and private sellers.

"We need to focus on lowering barriers to entry," he said at the Tech in Gov conference.

Mr Conway said this would include reducing the number of marketplaces and panels, while opening applications to these forums more frequently.

"I can imagine from an industry point of view, it would be incredibly frustrating if you've found out that all the panels in town are effectively a closed shop for the next couple of years."

There are more than 4000 registered suppliers on marketplaces managed by the DTA, with 3200 of those classified as SMEs.

Other changes floated could be removing the need for sellers to have insurance before a tender is won.

"You'll see some big changes over the next six months," Mr Conway said.