Anger at $1.2bn Govt spending tender

By ADAM GIFFORD

Electronic procurement software vendors are spitting tacks over the Government's decision to short-list only two vendors to provide the Government's e-procurement system.

The vendors short-listed, an EDS-SolNet consortium and Oracle with Cap Gemini Ernst & Young, were the same teams which did a pilot this year for the Department of Work and Income (DWI).

The bidders are vying for the contract to build a system consolidating Government buying of up to $1.2 billion of non-specialised goods and services on the internet.

When the tender was announced, project manager Greg Nicholls, of the State Services Commission's e-government unit, said it was a clean slate for vendors.

Yesterday, Mr Nicholls refused to comment on the short list, but said: "We are following a very robust process."

Disappointed vendors said they felt their time had been wasted in preparing bids.

"Why bother to do a tender, if all you are going to come up with is the DWI shortlist again? It's a nonsense and it's not responsible from a Government perspective," said one, who did not wish to be named.

Another said the Government was costing the information technology industry a lot of money with badly directed buying activity, in which tenders were abandoned or projects were vetoed by the commission.

Carl Mitchell-Turner, of SupplyNet, which went into the bid with KPMG, Microsoft, Compaq and SAP, said it was a strange decision.

"I imagine there are a number of vendors out there who felt they complied with the tender, and to not even get a chance to do a demonstration is a disappointment.

"Still, it's not make or break for us because I don't believe that even if you get the pilot you will necessarily win the business."

Mr Mitchell-Turner said e-procurement involved a complex mix of processes, not just a front end for departmental buying.

Even one of the successful tenderers, Mark Botherway, of Solnet, was surprised the shortlist came down to the same two the Government had evaluated previously.

"I understand the number of serious bidders was in the teens, so there was opportunity for others to come through."

Mr Botherway said his consortium's offering, the iPlanet Expert Buyer suite developed by the Sun-Netscape alliance, had matured further since it was piloted, and was capable of scaling up to cover multiple departments and agencies.

The DWI pilot, which has since been switched off, required the prospective vendors to host the applications and cover all costs. A limited number of suppliers were put on the system.

After it finished, Solnet said that the exercise had cost it more than $100,000.

The successful tenderer for the whole of the Government system will be given $250,000 to build a pilot involving Inland Revenue, the Ministry of Social Development, the Fire Service, the Treasury and the Ministry of Fisheries,

Industry experts consider that is well short of the amount needed for the final system or even for a proper pilot, and shows that the Government still does not understand the complexity and scale of what it is asking for.

A survey in September last year of 40 Government departments showed the "big five" spent a total of $758 million on goods and services.

This did not include specialised spending specific to a department, such as the $419 million spent on equipment for the military.

The other 36 departments totalled $494 million in non-specialised spending.

Crown entities, including health and education, but not state-owned enterprises, were estimated to spend a further $3.5 billion on goods and services.