IT, broadcasting and telecommunications contractors accounted for $3.85 billion worth of public contracts, or 6.8 per cent of Australia’s total government procurement spend, in the financial year ending 2016, according to new figures by the Department of Finance.
The Department’s latest government procurement tally also revealed an increase in small to medium-sized enterprises (SMEs) taking part in government projects, with smaller providers representing 18 per cent of the year’s contract wins in the IT, broadcasting, and telecommunications category.
During the financial year ending June 2016, the Federal Government spent almost $57 billion on just over 70,000 contracts. The previous year, it forked out almost $60 billion on just over 69,000 contracts.
This trend suggests the government engaged in a greater number of smaller contracts in 2016 than it did in the year prior. Yet contracts worth $5 million or more still made up almost 78 per cent of the government’s total contract spend.
Overall, SMEs accounted for 24 per cent of the government’s overall procurement contract value, and claimed 61 per cent of the number of contracts, with 42,737 deals awarded to SMEs over the course of the year.
As usual, the Department of Defence topped the list of big spenders, claiming over half of the total government agency contract procurement value for the year, equating to more than $30.5 billion.
Following Defence on the list of big contract procurement spenders was the National Blood Authority, the Department of Immigration and Border Protection, and the Department of Human Services.
While the Department of Defence spends a lot on IT and other services, the latest findings show that SMEs only claimed about 18 per cent of the agency’s total contract value, while making up 58 per cent of the companies involved in providing services to the Department across the board.
Much of the Department of Defence’s IT procurement contract investment goes to top-tier players that specialise in government and military, such as Lockheed Martin, Thales, Fujitsu and, more recently, Leidos.
Late last year, the Department awarded Thales Australia a $47.4 million, four-year combat systems support contract for the provision of software maintenance and support.
Likewise, the Department recently handed Fujitsu an $18 million deal for computer hardware maintenance and support in relation to its distributed computing central services.
One of the big winners in Defence spending over the past year has been US-based multinational military contractor, Leidos Holdings, which merged with Lockheed Martin’s IT services subsidiary in August, effectively taking over the its Information Systems and Global Solutions (IS&GS) business.
In November, the Department revealed it had signed a $55 million, five-year contract with Leidos subsidiary, Abacus Innovations. The deal, which is worth over $60 million when adjusted for indexation over the course of the contract, includes options to extend for up to an additional five years.
The contract terms see Leidos provide software maintenance and support for an information communications technology-based system that will manage Australian Defence Force (ADF) operations and major Joint and Coalition exercises.
In September, following its acquisition of Lockheed Martin’s IS&GS business, Leidos mopped up the remainder of Lockheed Martin’s $800 million deal with the Department of Defence to supply centralised processing services until 2022.
The company claims that the transferal of orders under the existing contract following the acquisition was worth at least $147.9 million for the company, although tender documents published in September put the figure closer to $550 million.
Also in November, the Department of Defence updated its ongoing IT transformation activities, with the release of its Defence Information and Communications Technology Strategic Direction 2016-2020, which outlined plans to spend $20 billion on IT over a 10-year period.