Polishing the handcuffs then swallowing the keys

I’ve read a lot of government reports in my time. Most of them are dry, dusty things that serve as excellent door stops or cures for insomnia. But every now and then, you come across one that tries so hard to polish a specific narrative that the cracks in the veneer start to shine brighter than the polish itself.

The "Strategic Review of the Whole of Australian Government Single Seller Arrangements" is one of those documents.

On the surface, it’s a celebration of efficiency. It throws around big numbers like $1.6 billion in discounts and uses all my favourite corporate buzzwords: "strategic partnerships," "value for money," and "enabling digital transformation." It paints a picture of a well-oiled machine where the Digital Transformation Agency (DTA) uses its mighty leverage to wrestle good deals from big tech giants for the good of the nation.

But if you scratch the surface - and you really don’t have to scratch that hard - you find the cracks. There are some genuinely uncomfortable truths buried in here that the DTA, I suspect, would prefer you skimmed over while admiring the glossy charts.

Here are the key insights that the DTA probably doesn't want you to dwell on.

1. The "Black Box" of Spending: They Don't Actually Know What They're Buying

This is the big one. The report leads with a headline figure of $1.6 billion in discounts. Impressive, right? But hold your applause.

Buried deep in the report is a startling admission: the government doesn't actually know how much it's spending. The report explicitly states that "values published on AusTender do not align to the actual spend under the SSAs".

Why? Because reporting is a mess.

• AusTender reports "potential maximum value," not actual cash out the door.
• It doesn't include state and territory spending.
• Reporting is "only mandatory for 65% of agencies".
• Some agencies report against the wrong codes, or through resellers, meaning the data is fundamentally broken.

So, we have a "strategic review" of agreements worth billions, but the central agency responsible for them admits they can't give you an accurate acquittal of the actual spend.

They are negotiating these massive deals in a partial information void. As the report gently puts it, there is "poor visibility of whole of Australian Government spends... with no single source of truth".

Now, the report insists that the $1.6 billion savings figure is a "conservative estimate" and that they only counted deals they could verify. I’m willing to believe the arithmetic is solid. But even if the math is right, the economics are flawed.

This is a textbook case of Anchoring Bias. The DTA is celebrating a verified discount off a "Rack Rate" - a fantasy list price that no enterprise actually pays. Measuring savings against a price that doesn't exist in the real world isn't savings; it's the theoretical avoidance of an imaginary cost.

Furthermore, without visibility on total spend, the DTA is fighting with one hand tied behind its back. They might know the unit price they achieved, but without accurate data on consumption volumes across all agencies, they cannot accurately forecast demand or leverage the full weight of the government's purchasing power.

The system is so opaque that there is a market for third parties (like my own platform, AwardedTenders) to simply interpret the limited data that is published. To be fair to the Department of Finance, they are trying their best to drag data quality out of the dark ages. The real failure here belongs to successive Governments that have refused to implement the meaningful, whole-of-government reform required to turn these "black boxes" into transparent ledgers.

2. The "Lock-In" Gaslight

This part made me laugh out loud. One of the biggest risks with massive, long-term contracts with vendors like Microsoft, AWS, or SAP is "vendor lock-in" - the idea that you become so dependent on their tech that you can't leave, and they can charge whatever they want.

The report assesses this risk. And what does it conclude?

"The risk of buyers being locked into sellers as a result of an SSA was assessed to be low."

Why? Because - and I kid you not - the report argues that by the time a vendor is big enough to get an SSA, "technology reliance is likely already present". In other words: We aren't locking you in; you were already handcuffed when you walked in the room. We're just polishing the cuffs.

The DTA defends this logic by arguing that the SSA is merely a "contracting framework," not a "procurement pathway." In their view, the lock-in happens when an agency first chooses the technology, not when the DTA signs the master agreement. They even suggest mitigations like "building in exit plans" and prohibiting egress charges.

But this ignores the economic reality of Path Dependence. While the SSA might not be the original sin, it codifies and deepens the dependency. By smoothing the procurement path for incumbent giants, the DTA lowers the friction of staying locked in, while the Switching Costs of leaving remain astronomically high.

Sure, prohibiting egress fees is a nice gesture, but it’s a band-aid. The real lock-in isn't the exit fee; it's the entrenched technical debt and the sheer administrative ease of buying from the incumbent.

By streamlining access to the monopoly, the DTA is unwittingly suppressing dynamic efficiency.

Agencies lose the incentive to explore innovative alternatives because the "path of least resistance" has been paved with gold.

So, while the report technically claims the SSA doesn't cause lock-in, practically, it calcifies it. The strategy isn't to break the monopoly power; it's to streamline the paperwork for submitting to it.

3. The "Strategic Partnership" Myth

The report loves the phrase "strategic partnership." Usually, this is vapid, feel-good language used to mask a lack of leverage. But to give credit where it’s due, the DTA is surprisingly transparent about how hollow this phrase currently is.

They admit upfront - in the Executive Summary, no less - that "a genuine strategic partnership does not yet exist across all of the SSA sellers." They candidly acknowledge that convincing these multinational behemoths to change their global terms is "challenging, if not near impossible."

This honesty reveals the brutal economic dynamic at play. The DTA is attempting to exercise Monopsony Power (the power of a single buyer) against a global Monopoly. But leverage in negotiation requires a credible threat to walk away - a BATNA (Best Alternative to a Negotiated Agreement).

The report explicitly notes that sellers are "well experienced in negotiating with buyers globally" and that negotiations are "hard fought." But you cannot effectively negotiate with a monopoly when you have admitted you have nowhere else to go. Without a credible BATNA, the government isn't a "partner"; it's a captive customer. The vendors get guaranteed revenue and market dominance; the government gets a discount and the illusion of control.

4. The "Efficiency" Trap (or, The Bureaucracy of Saving Money)

The primary selling point of SSAs is efficiency. "Simplified / streamlined procurement" was cited by 80% of surveyed buyers as a benefit.

But is it actually efficient? Or have we just moved the bureaucracy around?

The funding model is a "complex" mess of administration fees (CAF) and savings fees (CRF) that differ by vendor.

• The CAF (Administration Fee): Agencies are charged to cover the DTA’s operating costs.
• The CRF (Savings Fee): Agencies are charged a fee that represents the "savings" achieved, which is then stripped from them and returned to the central Treasury.

This structure creates a bizarre economic reality:

1. High Transaction Costs: We have created a system where we spend $1.6 million to establish an agreement and $1 million annually to manage it. Agencies must navigate complex fee structures and reconcile discrepancies in terms. This is classic Deadweight Loss - resources spent on administration that produce no actual product or service.
2. The "Tax" on Technology: The "Savings Fee" (CRF) reveals the true game. The DTA negotiates a discount, but the agencies don't get to keep it - the Treasury does. Effectively, the government is taxing its own agencies for using these contracts.
   • The DTA gets the political win (the headline "saving").
   • The Treasury gets the cash (the CRF).
   • The Agency gets the bill (the price + the fees) and the administrative headache.
3. Misaligned Incentives: Because the savings are centralized to Treasury rather than retained by the agencies, the agencies have little financial incentive to play ball. They bear the implementation costs and the administrative burden, while the "savings" vanish into the Consolidated Revenue Fund. It is a system designed to look efficient at the top while creating friction at the bottom.

5. The "Consultation" Charade

Finally, the report hints at the classic tension between the centre (DTA) and the periphery (agencies). Agencies consistently reported that they have "limited ability to influence and contribute to SSA negotiations". They feel excluded.

The DTA negotiates the deal, but the agencies have to live with it. The report notes that "contractual commitments made by the DTA did not reflect respective buyers strategic technology or business intent". In plain English: The DTA bought stuff the agencies didn't want or couldn't use.

This is a textbook Principal-Agent Problem. The DTA (the Agent) negotiates deals to maximize its own metrics (headline discounts), while the Agencies (the Principals) bear the cost of implementation and poor fit. This leads to Allocative Inefficiency: we are buying software based on deal structure, rather than what actually solves problems on the ground.

The report suggests a solution: "trial the inclusion of a select group of buyers... at the negotiating table." What’s revealing is that the report admits major buyers (like Defence and ATO) used to be involved, but were "replaced by an SES Sponsoring Group."

So, they had the right people in the room, kicked them out in favor of a bureaucratic steering committee, realized that broke the feedback loop, and are now recommending we go back to where we started. It’s a perfect microcosm of top-down managerialism: breaking a working system just to centralize control, only to discover that the people doing the work actually needed to be consulted all along.

Conclusion

The DTA wants us to see a story of "significant value" and "digital transformation".

What I see is a system struggling to manage the unmanageable. It’s a story of a government locked into dependencies it can't break, spending money it can't accurately track, calling vendors "partners" because it can't afford to call them "boss," and celebrating "efficiency" while drowning in its own administrative complexity.

It's not that the SSAs are useless - $1.6 billion in discounts is nothing to sneeze at (if it's real). But let's not pretend this is strategic mastery. It's damage control on a massive scale.

They've built a very expensive, very shiny fence around a herd of cats. And now they're writing a report to tell us how well-organised the cats are.