UPDATE: The Australian Federal Government has just awarded nearly $200 million in contracts to a single supplier under the newly established Digital Marketplace Panel 2. This urgent development raises questions about procurement practices, as over 15 percent of contracts were granted through single supplier invitations, despite the panel’s goal of fostering a more competitive and cost-effective procurement process.
According to an analysis by the Canberra Times, the Department of Health, Disability and Ageing emerged as the largest user of single supplier invitations, accounting for approximately 18 percent of these contracts. This trend is concerning for taxpayers as it appears to contradict the panel’s aim of promoting competition. The Department of Employment and Workplace Relations and the Bureau of Meteorology also ranked high in single supplier usage, collectively worth over $100 million.
In a statement, Michelle Tuck, the agency’s branch manager for digital sourcing, defended the panel’s competitive nature, citing procurement rules that allow exceptions for specific scenarios such as scale, risk, and urgent needs. “While agencies are responsible for their own procurement decisions,” Tuck stated, “the DTA encourages buyers to select multiple sellers, as well as engage with small and medium-sized enterprises (SMEs) and Indigenous businesses where possible.”
Despite these recommendations, the reality reveals a stark preference for single supplier contracts. Nearly 75 percent of these contracts were awarded for temporary personnel services, primarily for labour hire. Notably, recruitment giant Hays secured the highest volume with 20 contracts, closely followed by Hudson Global Resources with 19 contracts. Meanwhile, Amazon Web Services won the largest individual contract, initially valued at $22 million, but later corrected to over $25 million.
The situation raises substantial concerns as the Australian National Audit Office scrutinized the DTA’s processes in 2022, finding them error-prone and lacking value for money even after implementing most recommended changes. The agency has since communicated efforts for increased transparency regarding costs and contract amendments.
In the upcoming financial years of 2024-25 and 2025-26, a staggering 362 amendments were reported on DMP2 contracts, adding approximately $101 million to the total contract value. For context, all federal government single supplier contracts have now exceeded $33 billion.
Tuck emphasized the panel’s design to reduce red tape, aiming to simplify processes for agencies. “Agencies and sellers have provided positive feedback on the introduction of the seller invitation request feature and how it improves engagement, particularly with new sellers,” she noted.
As concerns grow over procurement transparency, the DTA is exploring further enhancements to improve communication around rate information and the balance between labour hire and professional consulting services.
This developing story highlights the urgent need for accountability and scrutiny in public spending. As the contracts take effect, the ramifications for taxpayers and small businesses are yet to be fully understood. Stay tuned for more updates on this critical issue affecting government procurement practices.
