What's Happening?
The U.S. Department of Defense has disclosed its spending on IT and digital contractors, amounting to $410 million for the fiscal year 2023-24. This figure was revealed as part of a Finance-run audit, which also showed that the total government spending on external
labor for IT and digital services was just under $1.8 billion, a decrease from $1.92 billion in 2021-22. The audit highlights a government policy shift towards rebuilding internal capabilities and reducing reliance on external contractors. Other significant spenders include Health and Aged Care, Treasury, Employment and Workplace Relations, and Social Services.
Why It's Important?
The disclosure of the Defense Department's spending on IT and digital contractors underscores the government's ongoing efforts to manage and reduce external labor costs. By focusing on rebuilding internal capabilities, the government aims to enhance efficiency and control over critical IT functions. This shift could lead to long-term cost savings and improved operational effectiveness across various departments. The reduction in external labor spending also reflects a broader trend towards fiscal responsibility and resource optimization within the public sector.
What's Next?
The government is expected to continue its efforts to reduce reliance on external contractors, with further audits and policy adjustments likely. Departments may need to invest in training and development to build internal capabilities, ensuring that they can meet IT and digital needs without excessive external support. This transition could involve significant changes in workforce management and resource allocation strategies.
