DTO's digital marketplace: tech today, all procurement tomorrow?

The federal government’s new digital marketplace could eventually become the standard for all kinds of procurement, but that’s a still a fair way off, according to Digital Transformation Minister Angus Taylor.

The Digital Transformation Office fired up the new Commonwealth IT procurement system beta yesterday with over 220 information technology vendors on board and held a small demonstration event at its Canberra headquarters.

“I would love to see these principles applied more broadly, because they’re good principles,” said the minister. “Procurement should be a marketplace, and that’s effectively what we’re doing here; we’re turning procurement into a marketplace.”

The government presently has no plans to transform all of procurement in the same way. Taylor can see potential, but the new platform still needs to prove its worth. “I think if we can get it to work in digital, there’s no reason why we shouldn’t be trying to get it to work elsewhere, but let’s start at the beginning and we’ll see where we can take it,” he said.

As the project team works to rapidly adjust, improve and enhance the beta site over coming months based on user feedback, it will also be trying to encourage agencies to start using it.

“This is where we get to start conversations with real users, both buyers and sellers, through their interactions with the marketplace and their interactions with us,” said service design leader Catherine Thompson (pictured top), who described the concept as a “curated ecosystem” that would be actively managed and moderated.

“The principle of continuous development means that as soon as we see something [to fix or improve], or someone asks us or provides feedback, we are able to test it and bring it up within a day or so.”

The digital marketplace aims to make it simpler for government buyers and for IT companies, particularly small-to-medium enterprises, to do business. The idea is to have easily accessible information about what the market can provide published openly, alongside public sector IT requirements and what agencies are willing to pay for them.

Procurement officers can log in to post requirements for individual digital specialists — locations, timelines, pay rates — or for outcomes they want to achieve.

Thompson said this information would later be displayed on dashboards and the site would grow into “a data-driven ecosystem [where] buyers and sellers will be able to find price and other points that will help them to fine-tune their offerings, and their responses”.

“The buyer’s dashboard will show what work they have underway. A short series of guided steps will allow buyers to put together briefs logically and easily,” she explained.

The system supports buyers approaching the whole market, a single supplier or a shortlist, which the system can also suggest. Another proposed feature is to have the marketplace throw up “wildcard” suggestions too.

After evaluating the initial applications, agencies will be able to quiz suppliers in more detail about their credentials and start deeper discussions about more complex or specialised outcomes that might require more contractual rigour.

“Sellers will also see how buyers are planning to evaluate them and what the essential skills are,” said Thompson. “And they’ll be able to ask questions before they submit their responses. It’s simple for them to then start an application.”

The marketplace experience currently ends after the initial evaluations, but her vision is to make it digital from end to end.

A marketplace of ideas

The platform is designed to make it simpler for agencies to buy simple things, while still enabling more serious and in-depth discussions as necessary. It also aims to stimulate the flow of new ideas between the private sector and the federal government.

One new function to be trialled during the beta testing period is an “ideation platform” that the DTO team is working on with staff from the Department of Human Services. They will try out a few different models to see which is most popular with agencies and tech vendors.

“The ideation platform will allow for sellers with good ideas to post that good idea for the marketplace and have it showcased,” said Thompson. “And because the DTO is a digital agency that also exists in the real world, that will be combined with the ability of sellers to do pitch days. For buyers, it will mean the ability to post your challenge out to the marketplace.”

Agencies won’t have to be specific about an outcome they need to achieve or even the exact kind of individual specialists they want to employ, she said.

“The ideation platform will support more unstructured discussions, and then a metrics platform will show us how well we’re doing in all the other quadrants, supported by regulatory frameworks that allow us to have these interactions in a way that’s rigorous but not prescriptive, and a controlled environment that allows these conversations to happen in a way that’s safe for all parties,” Thompson explained.

She said the ideas feature could also help bring small tech companies with unique service offerings to the attention of public service procurement officers, responding to a question from one of the select few guests at the launch, Startup Muster founder Monica Wulff.

“I think it’s important for the marketplace to be a curated ecosystem,” said Thompson, who apparently promised her previous employer, a small virtual reality start-up, that she would make things easier for companies like them.

“So it’s not going to be a set and forget, we’ll have people out there, talking to start-ups, talking to buyers and making those creative collaborations between the two, because without that active management it will simply be a job board, and we don’t want it to be that. So you’ll see a lot of activity from us in the coming months.”

The first crop of nearly 230 suppliers of tech goods and services were brought on through the same kind of tender process as a typical supplier panel and offer 14 capabilities between them. The majority have done business with government before — that’s how they came across the AusTender entry — but the plan is to make it easier for other small players to crack the government market.

To get more on board, the DTO will run “a series of showcases, conversations and road shows” to various start-up incubators, peak bodies and other organisations in the world of IT sector SMEs, Thompson said.

About 70% of the suppliers that responded to a DTO survey planned to expand their digital capabilities in the next year, in many of the same areas that are currently in short supply both on the digital marketplace and in the local market in general, like agile coaching, service design and ethical hacking.

“We’re hoping that by publishing information about upcoming requirements, as well as briefs that enliven the marketplace, we’ll be able to encourage suppliers to grow in an area that best responds to our government needs,” said Thompson.

At the same time, the project team will be contacting departments to ask them to prepare briefs that help businesses understand their broader digital transformation plans.

Quick-smart

The digital marketplace came online several months quicker than expected, which is “wonderful” for the minister. DTO chief executive Paul Shetler said it was “an excellent example of how government can work to deliver a real product used by real people very, very quickly” when it worked in a “lean and agile” way.

Thompson said the project had been accelerated by borrowing code from the United Kingdom’s existing digital marketplace, which was built by the DTO’s British equivalent, Government Digital Services.

“They provided the base code on which we’ve iterated and they also came over to spend some time with us,” she explained. “And the principle is that whenever we develop something they don’t have, we chuck it back over the fence at them and they can then use it themselves.”

In the same way, others including state and territory governments or other agencies could build on the DTO’s open-source work to make their own digital marketplaces without having to reinvent the wheel.

Taylor placed the project into the agency’s wider role of shaking up the Australian Public Service, and said it was “even more important” to encourage innovation in government than in the wide economy.

“It is important that the DTO be a disruptor, but it’s also important that it be a change manager,” the minister said.

One thing that must change, according to Taylor, is the way the APS thinks about procurement. He said that from talking to businesses and his own experience before entering politics, there is “enormous frustration involved in bad procurement processes” on both sides of the equation.

There are four flaws in procurement processes, in Taylor’s view, which the marketplace addresses. He believes they don’t encourage public servants to “constantly look at new and clever ways of doing things” that are being done in the private sector, and therefore stifle innovation.

Secondly, he says they are not “interactive” enough: “We need procurement processes … where the buyers and sellers can talk, because that’s what we do in the real world. And yet our systems and our processes don’t reflect that reality that we all know is incredibly important to getting good outcomes in our procurement.”

The minister also foreshadowed benefits from a system of accountability that applies to agencies as buyers as well as to suppliers, sort of like an online auction site. He suggests the adage that “you’re only as good as your last project” might be outdated.

“Because the truth is your reputation should be built on a whole range of projects, and a whole range of experiences people have had with you, and what we really want is that accountability for someone’s effectiveness as a supplier, and as a buyer, to be built into our technology.”

Finally, Taylor claimed the digital marketplace would boost a form of transparency “as to what we buy, as to what the seller can offer and how we interact”.

“I’m sure we can improve,” Taylor said. “That is exactly the philosophy we have with everything we do. We get started, we beat the blank page and then we continually work from there, which is why, of course, it’s a beta.”