IT outsourcing scam goes bottom-up
by Peter Mac Federal Finance Minister John Fahey's latest scheme to let private firms cream off the most profitable parts of the government's multi-billion dollar computer (IT) operations has come to grief — and with it the Minister's own long-term career prospects, it seems. The Government's IT outsourcing program, which has been running for three years, was originally described by Mr Fahey as having the potential to save the nation a billion dollars over five years. The program involved transferring responsibility for the administration of IT work in virtually all government departments and agencies to private firms, thus creating further massive redundancies in the emaciated ranks of government employees. However, implementation of the program was widely criticised from the outset. In 1997, many government departments warned that the scheme would compromise national security, privacy laws and other legal obligations on government, and would not deliver cost savings, a claim which was confirmed last year by a report from the Auditor-General's Department. One of the complaints which has now surfaced is that the scheme, which centralised the IT operations of government agencies into a few enormous operations, effectively excluded local companies from winning contracts and restricted the competition to international IT firms. Not long after implementation of the scheme, the Department of Trade and External Affairs was exempted from compliance with it, presumably after complaints from foreign governments that they were not willing to have confidential information about international relations put at risk, even if the Howard Government was. Last year the CSIRO complained in confidential documents that the scheme posed a considerable risk to its reputation as "an impartial and trustworthy source of scientific information and advice". The scheme would also have put at risk the confidentiality of records held by Centrelink on millions of Australians. The Auditor-General's review concluded that outsourcing in this area had such potentially significant consequences which, "if not adequately managed, especially at transition, (the risks) could lead to a substantial impact on individuals, the community at large and the broader economy." Undaunted, the Minister then ordered a full review of the scheme, only to have the review (the "Humphrey Report") confirm these adverse conclusions, much to his horror. After receiving the report he is said to have claimed that the scheme would have worked fine but for "the reluctance on the part of agencies to accept government policy". Public service unions, however, are pleased with the report, which they see as reflecting their own concerns about the scheme. The National President of the Community and Public Sector Union, Mr Matthew Reynolds, commented: "We were pleasantly surprised at the independence of the review." As a result of the release of the report current tenders for outsourcing work have been frozen. These tenders involve Centrelink, the Department of Family and Community Services, the Department of Education, Training and Youth affairs, the Treasury and the National Library. It is expected that most federal government departments will now be given the formal option to continue their own in-house IT operations. Some or all of the IT contracts which have already been let may be suspended. However, the situation is not all sweetness and light. The Minister has not been sacked, nor is he likely to be, and despite the damage to the Government and the strained relationship between Fahey and the PM the Government remains committed to handing over its IT work to the private sector. It will undoubtedly pressure agency heads to conform to that policy. Once Fahey had recovered himself, after the release of the Humphrey report, he jauntily remarked: "All that's changed is that the policy is not going to be centrally managed." And that spells more bad news for the taxpayer and for government employees.