New Digital Seller Underperformance Policy raises the bar for Federal digital delivery

The Australian Government’s new Digital Seller Underperformance Policy is now live, and it matters for every organisation selling digital products or services into the Commonwealth.

The policy, led by the Digital Transformation Agency, establishes a structured approach for identifying, assessing, and recording serious underperformance by digital sellers. It applies generally to large contracts valued at $4 million and above, or contracts considered strategically significant.

At its core, the policy is about improving information-sharing across government procurement. Until now, poor seller performance on one major digital project could be difficult for other agencies to see or factor into future buying decisions. The new policy gives buyers a more consistent way to report serious issues and gives government a central mechanism for recording confirmed cases.

Importantly, this is not a seller blacklist. Inclusion on the Confirmed Serious Underperformance Register does not automatically exclude a seller from future government work. Instead, it becomes one factor in future value-for-money assessments.

That distinction matters. The policy is not designed to punish suppliers by default. It is designed to make past performance visible, encourage earlier remediation, and improve contract management across major digital projects.

A stronger accountability framework

Under the policy, government buyers can report underperformance to the DTA at any stage of a contract. Once reported, the matter goes through a structured and impartial assessment process.

Sellers are given a fair opportunity to respond. They have 15 business days to provide evidence, context, or rebuttals before any confirmed finding is recorded.

This gives the policy two important features:

• It gives buyers a formal channel to raise serious issues.
• It gives sellers procedural fairness before reputational consequences are created.

That balance will be important for industry confidence. Vendors need to know the process is fair. Government buyers need to know that serious problems will not disappear into individual agency files.

“At its core, the DSUP introduces a mechanism for capturing and sharing confirmed cases of seller serious underperformance across government through a central register,” said Simon Quarrell, Deputy Chief Executive Officer, Digital Investment Advice and Sourcing Division, DTA. “This information will be made available to agencies on a need-to-know basis when assessing sellers for future work.

“The DSUP will enable agencies to make better-informed procurement decisions. It creates greater transparency and consistency in how seller underperformance is considered across the Australian Government.”

Why this matters now

The timing is significant.

The Commonwealth is pushing ahead with major digital, data, AI, cyber, identity, and service delivery reforms. The Data and Digital Government Strategy, the APS AI Plan, Digital ID, Services Australia transformation, cyber resilience, and whole-of-government data priorities all point to continued demand for capable digital partners.

But the policy makes one thing clear: the market is maturing.

Federal buyers are not just looking for innovation language, platform promises, or glossy transformation claims. They need delivery confidence.

For sellers, that means procurement conversations will increasingly need to include:

• evidence of delivery performance
• clear implementation plans
• risk controls
• contract governance
• remediation processes
• customer references
• measurable outcomes

The strongest sellers will not just promise transformation. They will show how they manage delivery risk.

What this means for digital suppliers

For vendors, the DSUP should be treated as a commercial signal, not just a compliance update.

It raises the importance of contract performance, transparent reporting, and early issue resolution. Suppliers who wait until a project is failing before engaging with the buyer will face greater risk.

The practical message is simple: if delivery problems emerge, fix them early, document the fix, and keep the buyer informed.

Suppliers should also expect more questions from government buyers about past performance. Sales teams may need stronger proof points. Delivery teams may need tighter reporting. Account managers may need to work more closely with project teams to identify risk before it becomes formal underperformance.

This policy also favours vendors that can show mature governance. That includes clear escalation paths, delivery assurance, cyber and data controls, user adoption support, and transparent status reporting.

What this means for government buyers

For agencies, the policy creates a more consistent way to share information about serious seller underperformance.

That should support better procurement decisions across government. It also gives buyers more confidence to act when major digital contracts are not delivering.

The policy may also improve contract management behaviour inside agencies. If serious underperformance can be reported and recorded centrally, buyers have a stronger reason to document issues properly, escalate early, and manage remediation in a structured way.

In practice, this could lead to more disciplined digital delivery across the APS.

A clear signal for the Federal market

The Digital Seller Underperformance Policy fits into a wider Federal trend: digital transformation is no longer just about ambition. It is about delivery, assurance, accountability, and public value.

For government, the goal is better protection for taxpayers and stronger outcomes from major digital investments.

For industry, the message is equally clear: strong relationships and strong proposals are no longer enough. Delivery performance will matter more, and poor performance will be harder to hide.

For the Federal digital market, this is a useful reset.

The next phase of Commonwealth digital transformation will reward sellers that can prove they deliver, not just sellers that can pitch.

Read more on the Digital Transformation Agency website.