PREFACE
The committee's inquiry into IT outsourcing[1]
by the Commonwealth was added as paragraph (g) to the committee's general
inquiry into contracting out on 27 May 1997 with a requirement to report
by 22 September 1997. The full terms of reference for the inquiry are
at Appendix A of this report The committee was given extensions
of time to report on this part of its reference until 10 October 1997.
It is the committee's intention to report on the remaining part of its
reference by the end of the current session of Parliament.
The committee has sought to avoid duplicating consideration of issues
between the two reports thus matters not specific to information technology
will, as far as is practicable, be dealt with in the second report.
The committee conducted two days of hearings specifically on IT outsourcing
on 4 July 1997 and 5 September 1997 in Canberra. In addition, at the previous
five days of hearings on the general terms of reference, many of the issues
with regard to IT outsourcing were also canvassed. The Finance and Public
Administration Legislation Committee has also considered IT outsourcing
quite extensively during its examination of the estimates of the Office
of Government Information Technology (OGIT) and the former Departments
of Finance and Administrative Services. This committee has drawn on that
evidence in preparing this report.
In addition to the evidence received by the committees and published
reports and papers, this report also draws on the Cabinet submission on
IT outsourcing considered by government earlier this year. There are arguments
for and against using this document. Its release was clearly unauthorised
and the committee does not support the leaking of confidential documents.
However the document has been in the public domain for some time now.
It has been widely circulated and has been extensively quoted in the Parliament
and in the media.
The committee recognises that confidentiality encourages frank coordination
comments on proposals before Cabinet and that a fully transparent process
might lead to more sanitised responses. However it is regrettable that
the debate on an important issue such as this cannot, officially, have
access to the full range of expert views from within the public sector.
The coordination comments in the cabinet submission by Commonwealth agencies
on the IT outsourcing proposal are absolutely central to this committee's
inquiry. They provide a much more useful and, given the source, thoughtful
appreciation of controversial aspects of the proposal than this committee
could obtain through a public hearing with many of the same agencies.
To ignore the comments would be to deprive the committee and the public
of a valuable source of information on the subject. There appears to be
nothing in the coordination comments that needs to be kept out of the
public domain for security or genuine commercial-in-confidence reasons.
Given the importance of the outsourcing proposal it is in the public interest
that the views of the agencies most directly involved be considered by
the committee.
In presenting this report the committee is sensitive to the comment by
a writer on computer matters in the Australian newspaper that the
one area of IT in which Australia leads the world is the preparation of
reports.[2] The committee has sought
to avoid reproducing at length the work of others. The work of the Industry
Commission on competitive tendering and contracting canvasses the general
issues relating to public sector outsourcing while the Information Technology
Review Group's Clients First report has examined the Commonwealth's
use of IT and the future directions in which it could go. There is a vast
and ever-expanding body of academic literature on the subject which analyses
the success or otherwise of outsourcing as a management technique and
seeks to identify all the factors to which managers considering outsourcing
should have regard. Industry development options have recently been examined
in the Mortimer and, more specifically, Goldsworthy reports. This report
is focussed narrowly on the current outsourcing of government information
technology by the Commonwealth. It does not purport to provide a blueprint
for 're-engineering the delivery of government services' or to equip this
country to participate in the 'global information economy'.
Footnotes:
[1] The committee has used the
term outsourcing throughout this report as a shorthand for the process
of market testing, competitive tendering and contracting.
[2] Stewart Fist, 'Flabby
IT reports go flip-flop' , The Australian, 2 September 1997, p.
50.
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