Chapter 12: Outsourced services
Outsourcing refers to an arrangement whereby an APS agency has a function or service which was previously undertaken in-house performed by a private sector provider. Outsourcing usually involves market testing through a competitive tendering and contracting process. Under these outsourced arrangements the APS agency retains overall responsibility and accountability for the function or service.
In its 2001 response to the Review of the Whole of Government Information Technology Outsourcing Initiative, conducted by Richard Humphry AO, the Government decided that progress with the implementation of ICT outsourcing would be monitored and reported on annually by the Commissioner in the State of the Service report. In accordance with the Government’s decision, the Commission continues to ask questions of agencies about the implementation of ICT outsourcing and to report on the results. The 2005 agency survey also included questions on the outsourcing of HR services and on agencies’ experiences of insourcing1 of ICT and HR services.
Agencies are asked only to report on outsourced contracts that are worth more than $100,000 (departmental funds) or $5 million (administered funds) over the life of the contract.
This year’s agency survey did not ask questions about contract duration and value due to the discrepancies uncovered during the drafting of last year’s report. Last year an examination of some agencies’ responses to the Senate Order on departmental and agency contracts2 showed significant differences between the data supplied on outsourced contract duration and value in response to the agency survey and data on outsourced contracts reported in agencies’ Senate Order lists for 2003–04.3
1 ‘Insourcing’ occurs when an agency brings a function or service that was previously contracted out back into the agency.
2 The Senate Order requires that Financial Management and Accountability Act 1997 agencies provide on their Internet home page a list of all contracts to the value of $100,000 or more which have not been fully performed or which have been entered into during the previous 12 months. The Order was passed by the Senate on 20 June 2001, with subsequent amendments passed on 27 September 2001 and 26 June 2003.
3 Australian Public Service Commission, State of the Service Report 2003–04, 2004, <http://www.apsc.gov.au>
