Case studies

ATO ICT Contract Models Project

Australian Taxation Office — Public sector

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Key Personnel


July 2015March 2016


This project formed an important part of a broader program to improve procurement outcomes for the ATO. The outcomes of this project will improve supplier accountability and drive better supplier performance. The proposed models also ensure that the contract framework is consistent with and supports the project methodology used for each procurement, which will lead to better business outcomes for the client.


As part of the ATO’s procurement reform program, Proximity was engaged to conduct a review of the ATO’s existing approach to ensuring supplier accountability in its ICT contracts. Proximity was required to make recommendations about how the use of milestones and price and payment models could be improved to increase supplier accountability and contract performance without creating unnecessary management and administration. Proximity was also engaged to assist with implementation of the recommendations.


Proximity was engaged directly by the ATO ICT Panel Management team and worked closely with that team to deliver the services. Proximity also worked closely with various IT division stakeholders. We performed this role through a mix of on-site and off-site work.

The work performed by Proximity included:

  • Conducting a comprehensive review of the ATO’s use of milestones and price and payment models in ICT professional services contracts
  • Drafting a report with recommendations for how to improve supplier accountability and performance without additional contract management and administration
  • Developing various milestone and price and payment models to suit different types of ICT professional service arrangements
  • Developing practical guidance on how to implement each accountability model and creating a contract model selection tool to assist users to adopt the model best suited to their ICT project
  • Assistance with implementing the new accountability models and conducting training for IT project managersacross the ATO

These price and payment models included different variations of time and materials and fixed price models, a target cost incentive model and a model for agile software development projects. The common thread through all models (including the time and materials models) was ensuring all payments to a supplier are made when value is delivered to the ATO and ensuring the contract model matched the project methodology (rather than the other way round).


Proximity took the following approach to delivering this project:

  • Conducting extensive interviews of stakeholders across the ATO ICT division and external suppliers to determine the effectiveness of existing approaches to implementing milestones and price and payment models for different types of ICT contracts
  • Facilitating to confirm existing approaches, document concerns and seek feedback on our draft price and payment models
  • Developing the draft report and implementing feedback from stakeholders and project sponsors
  • Finalising the report and developing the comprehensive models and guidance documentation

We worked very collaboratively and inclusively with all stakeholders to develop practical contract models that people understood and supported.

The outcome

Lessons and achievements

Proximity’s assistance resulted in the following achievements:

  • Development of best practice contract models fo different types of ICT professional services
  • Development of the ATO’s first contract template for the delivery of agile projects
  • Development of practical, easy to use guidance on how to implement the contract models
  • Development and delivery of training for ICT project managers

Types of work used for the project

Review– completing a comprehensive review

Workshop facilitation – hosted a workshop involving ATO IT project managers and other stakeholders

Evaluation – preparing the evaluation plan and evaluation report

Training – conducting training for IT project managers across the ATO

Risk Management – assistance with implementing the new accountability models.

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