AFR Sources GLiNTECH for Industry Comment
Software Creators Win Rights
By Julian Bajkowski
Tuesday, 2 August 2006
The Australian Financial Review
By Julian Bajkowski
Tuesday, 2 August 2006
The Australian Financial Review
Companies contracted to write software for the federal government will be allowed to resell intellectual property created with taxpayers' money under sweeping changes aimed at simplifying how the public service shops for more than $5 billion worth of technology and services a year.
Revealed by Special Minister of State Gary Nairn to a closed technology industry briefing last week, the changes reverse the commonwealth government's decades-long default position to automatically retain all intellectual property created under its technology contracts. Under the new procurement regime, officially dubbed SourcelT, the federal agencies will be able to seek discounts on the initial purchase price of software in order to release intellectual property rights to private developers for resale.
Government purchasers will also be allowed to seek arrangements to co-license newly created software code and intellectual property rights with private software developers in exchange for a slice of the profits that might be created by the resale of government software.
Mr Nairn said the government now needed to examine the best way to utilise the highly customised software it buys in order to extract maximum value for taxpayers, including taking a cut from the resale of software if need be. "If [industry] want to own the intellectual property or enter into some type of middle-ground position where we share the IP, and presumably, the government enjoys a saving or some other benefit, it is worth the government understanding what the net benefit would be in each case," said Mr Nairn.
The mooted changes to intellectual property retention have received an unusually warm response from technology lobby group the Australian Information Industry Association. The group has traditionally accused the government of suffocating local industry with red tape and insurance imposts.
The issue has long been a source of friction between the government and the technology industry. AIIA's general manager of policy services and strategy, James McAdam, said recent efforts by the federal government had gone a long way to reducing inhibitors faced by local companies when trying to secure government work.
One area of progress was the introduction of the case-by-case liability assessments that came into effect last week. This new approach, promised during the 2004 federal election, replaces mandatory uncapped liability insurance requirements.
Mr McAdam said it was a significant issue for smaller Australian technology suppliers that have sought to secure contracts from government agencies to provide them with valuable customer reference sites. Public reference sites are particularly useful when Australian companies seek export opportunities.
One company in this category is open-source software developer GLiNTECH, which employs 70 people on revenues of $11 million. To date it has largely avoided bidding for government work because of high costs compounded by rigid intellectual property conditions.
GLiNTECH managing director Dimitri Spyridopoulos said the procurement changes would make it a lot easier for his company to successfully bid for government work because they quantified risks and created certainty of ownership. "If it happens, it's great," he said. "Uncapped liability was a nightmare; no insurance company would cover you. From an open-source perspective [where companies can share openly intellectual property] it really frees things up."
State governments are watching the federal government's procurement reforms with interest as they seek to align their buying practices to cut costs and boost returns.
So far Victoria, Queensland and Western Australia have moved to overhaul liability and intellectual property regimes in an effort to make their local suppliers more competitive. NSW has said it is prepared to consider contractual variations on a case-by-case basis.
The president of the NSW Society for Computers and the Law, Andrew Perry, said the procurement policy changes would allow the government to save money by increasing competition for contracts. "Local companies have always felt exposed and at the mercy of the government. This makes a lot more sense," Mr Perry said.
