Improving how the government engages its contractor support workforce by focusing on program outcomes will drive better value for taxpayers and enable suppliers to deliver high impact results, people capability and workforce solutions advisory service, Connect3i, says.
Connect3i director, James Hall, says the way the government engages its contractor support can be improved immeasurably and this can drive tangible benefits for both departments and industry.
“All engagements must be better designed to deliver the outcomes government needs in a manner that generates better value for the taxpayer and enables suppliers to deliver high impact and innovative solutions that government desperately needs,’’ Mr Hall says.
Finance Minister Katy Gallagher has acknowledged that the use of external labour in the Australian Public Service is necessary but had declared it must add value rather than be used to simply address workforce shortages caused by previous caps on public service hiring.
“The Albanese Labor government acknowledges that there is a role for external labour in the APS, but, where it is used, it should provide a clear value-add and not simply plug holes created by an ideological obsession to gut the APS,’’ Senator Gallagher said in May.
Mr Hall says this requires a cultural shift from engagements based on a “just buy people mindset’’ centred around time and materials-based contracts, to an outcomes-based delivery approach. This can reduce the perverse outcomes in the labour market that are being generated because of the way contractors are currently procured and utilised.
A clearer articulation of desired contract outcomes and a re-evaluation of the panel system for engaging contractors will also address the systematic APS attraction and retention issue and contribute to the government’s stated objectives of saving more than $3bn in the use of contractors.
Everyone benefits
Mr Hall says Connect3i has real-life experience in helping agencies adopt a different way of optimising the use of contractors and has developed a pathway for change that leverages more effective partnerships.
Once changes have been identified, Connect3i continues to work with officials to support the implementation of the program and embed the governance and assurance to realise the benefits over the short and long term.
A discussion paper prepared by Connect3i reveals the strategic transformation that is needed today, and defines the solution as a key element of a workforce strategy that will rebuild the APS, utilises an external workforce more strategically and create better outcomes for everyone.
This transformative journey is embodied in a comprehensive change management program, well planned, and effectively implemented.
Its purpose is to redirect the agency away from conventional practices of engaging individuals at high day rates. Instead, it fosters a future where contractor panel members are tasked with delivering tangible and measurable outcomes.
Mr Hall says Connect3i’s program centres around education and training to help departmental officials in comprehending the challenges stemming from the prevailing procurement practices, along with the broader ramifications of their decisions on the labour market and the costs of doing business for government and industry.
The Connect3i discussion paper says APS employees become disenfranchised based on large pay inequalities for what they see as the same work. The 2022 job vacancy rate across the public service was 44% with resignations being the reason for almost 80% of separations.
“We focus on planning the work, packaging the work, and delivering the work that government needs using an outcomes mindset,’’ Mr Hall says. “We have the capability to affect the change that is required to ensure everyone benefits.’’
Cultural change to boost commercial acumen
Mr Hall says a fourth overarching element of Connect3i’s program addresses the need for cultural change.
“We have developed a range of products and strategies to foster this cultural shift. Our approach is strongly focused on cultivating commercial acumen and empowering individuals,’’ Mr Hall said.
Mr Hall says collaboration between government and industry and engaging effectively with co-design of the work and sharing risks will dramatically improve results for government.
“The use of true collaborative tools and techniques and the acceptance of co-design as an underpinning foundation is part of the solution toolkit that Connect3i uses,’’ he says.
Helping decision makers and managers learn how to operate in partnership with a long-term strategic outlook is paramount to achieving better value, he says.
Mr Hall says Connect3i has developed education products that help both governments and industry partners to understand the role they play and how they can work collaboratively using outcomes-based contracts.
This has the effect of raising the level of commercial acumen for all parties.
“This is one of the most rewarding parts of the work that we do when you know that you have seen someone have a light bulb moment and that positive changes will follow,’’ Connect3i principal consultant, Deb Hein, says.
Among the innovative solutions deployed by Connect3i to drive positive change has been the development simple tools that can help empower agencies to better define their requirements and engage in outcomes-based contracts.
These tools provide a structured framework to navigate the complexities of contract definition, accounting for the intricacies, risks, and constraints inherent in various projects.
Mr Hall says the impact of this innovation is twofold.
It not only equips officials with the means to delve into contract dynamics more comprehensively, but also sets the stage for a more inclusive and insightful interaction with industry counterparts.
Rather than a one-sided approach, industry suppliers are invited to the table, acknowledging the shared challenges, risks, and constraints. This prompts a collaborative exchange where industry expertise is invited to propose tailored solutions that align with departments’ objectives.
Mr Hall says this has produced a notable shift.
Industry’s responsiveness does not need to be confined to the limitations of a traditional skills matrix with day rates from a government panel.
Instead, industry suppliers are provided the freedom to craft proposals that transcend conventional limitations. This not only paves the way for innovation but also triggers focused, solution-oriented thinking.
“The era where roles were confined to predetermined skill classifications and corresponding day rates gives way to a flexible framework fuelled by innovation and customised solutions, focused on delivering value for money,’’ he says.
The discussion paper argues contractors should only be used in areas that are not considered core business for departments.
“This will then set up or enable government departments to engage industry on an outcomes-based contracting model and pay for results.’’
Changing the way government partners with professional services to achieve outcomes
Beyond the immediate transition, the paper advocates for a holistic re-evaluation of the APS.
This encompasses evaluating salary discrepancies across departments, delving into the alignment of the nature of work with cultural and demographic nuances and considerations of inter-department mobility, professional development, and work flexibility.
In parallel, the establishment of a robust APS-wide strategy to attract and retain talent emerges as a vital complement to the ongoing transformation of contractor engagement practices.
Mr Hall says the transformative shift from time-based compensation to an outcomes-based model carries an enticing prospect: a potential saving to government and a more collaborative engagement with industry.
Connect3i’s experience, through their work with government, has led them to the belief that a “systems of systems’’ approach is necessary to create and embed change around how government engages the professional services industry to tackle the current large workforce shortage, Ms Hein says.
“This shift isn’t just about cost reduction, it’s about driving efficiency, fostering innovation, and ensuring that every investment aligns with tangible results,’’ Ms Hein says.
“What we are doing is more than changing how to contract a different way, we are looking to change the procurement culture around engaging contractors,’’ Ms Hein says.
“We need government officials to think, feel, act and interact differently when considering how they engage contractors,’’ she says.
For more information about how the Government can improve the way they engage its contractor workforce, download Connect3i’s discussion paper. To learn more about how Connect3i can support you, please contact James Hall on 0437 699 623.
