The federal government’s Digital Marketplace spent more than $3 billion on IT in nine months last year as government agencies increasingly turn to the shopping channel to source digital products and services.
At the end of December 2021, total contracts through the market stood at just under $6.8 billion, nearly double the reported figure of $ 3.4 billion in March 2021.
Contracts worth around $2.9 billion appear to have emerged in six months, a figure that has only slightly increased after $6.3 million was recorded in October 2021.
By comparison, the marketplace – which was created in August 2016 to help small and medium-sized enterprises obtain government jobs – took over three years to hit $1 billion in contracts, and reached $2 billion six months later, in July 2020. .
A spokesperson for the Digital Transformation Agency played down the upturn, saying the uptick was due to an “overall increase in requests for quotes and contracts signed,” without giving further details.
According to the latest DTA Annual Report, 2020-21 saw “a significant increase in overall use” and “more agencies are turning to the market as their preferred sourcing method.”
The number of briefs published on the market seems to confirm this; agencies posted 9,660 market opportunities by October 2021, up from 6,000 in March 2021.
However, with the explosion in the number of consultants and contractors in government in recent years, it is unclear whether this increase is solely due to agencies that use the market more.
As of 22 March 2021, the DTA reported over $3.4 billion in Digital Marketplace contracts to AusTender, with over $2 billion awarded to SMEs. There are over 2,000 sellers registered to transact through the Digital Marketplace—90% of which are Small-to-Medium Enterprises—and 2,600 buyers from all government jurisdictions.
According to the latest Digital Marketplace report, 72% of all agency briefs are aimed at acquiring digital professionals, which explains why the top ten “sellers” are all recruiting and consulting firms
Hays tops the list, with 154 contracts this financial year, followed by Modis (96 contracts), Compass (91 contracts), Recruitment Hive (89 contracts), HiTech Group (88 contracts) and Aurec Group (80 contracts).
Software engineering and development, and agile delivery and governance are the two largest work categories, accounting for 4086 contracts since the marketplace’s inception in 2016.
The increase in market spending is significant given that overall federal government IT spending was last estimated at $9 billion to $10 billion per year in 2017.
While this has likely increased since then, particularly with the need to hire talent as workloads have increased in the wake of the pandemic, the DTA has not released an updated estimate in recent years.
Since the last concrete estimate, the considerably smaller NSW government has seen its IT spending increase by at least 25%, from $3.08 billion in the 2017-18 financial year to $3.99 billion in 2020-21.
Analyst firm Gartner forecasts an 8.8% increase in total Australian government IT spending in 2022.
About the digital marketplace
Established in 2016, the digital marketplace is an important initiative as part of the wider DTA digital sourcing transformation program. It demonstrates how innovative, user-centred design can support and simplify public procurement
Managed by the Commonwealth’s Digital Transformation Agency, the Digital Marketplace has made it easier for buyers and sellers to come together to find innovative services – helping support government deliver for Australians.