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The Digital Transformation Agency (DTA) has come under intense scrutiny during the Senate Select Committee on Adopting Artificial Intelligence, held at Parliament House in Canberra on 16 August.
During the proceedings, Senator David Pocock questioned the agency on the federal government’s six-month trial of generative artificial intelligence (genAI) through Microsoft 365 Copilot via the DTA which started in November 2023.
The trial started out for 7,000 members of the Australian public service to utilise Copilot services.
DTA CEO Chris Fechner confirmed to the committee that Microsoft has continued to extend a 15 per cent discount for those participating in the trial.
“If that period goes through and there are no changes to that, it will revert to their standard pricing associated with the ancillary products, but we are still discussing with Microsoft’s various changes to the volume sourcing agreements,” he said.
According to Fechner that volume sourcing agreement has a new iteration that is due in mid-2025.
“We’re actually looking at what the inclusion of new products, such as Copilot, might mean to the subsequent licensing arrangements of the Commonwealth,” he said.
When it comes to the how the agreement originally came about, DTA acknowledged a “long standing arrangement around the provision of Office” 365 productivity tools, “as well as underpinning technology platform services”.
“Within that volume sourcing arrangement, there is one of the key positions where we get our things like Microsoft Office from,” said Fechner. “Within that construct, we have what’s called additional products and within that additional product has the opportunity, with licensed discounts and negotiated terms, to adopt different products in the Microsoft suite but not at full capacity.”
For the enrollment of Microsoft Office, there is a current order of 180,000 licenses.
“In that particular case, we had an offer from Microsoft to have an introductory trial with a discounted price for a small cohort to demonstrate its proof of capability, of which there were about seven and a half thousand people that participated,” said Fechner.
“As a percentage of our total enrollment, it was a very, very small enrollment, but the pricing arrangement was made under the volume sourcing agreement, under the additional products.”
However, he did note there was a condition that “Microsoft added an additional discount function for the purposes of the pilot”.
Pocock said that it was a “stretch to say this is an additional product,” while he acknowledged [Copilot] is a Microsoft product, “but it’s not like having Word and then adding Excel to your bundle”.
“This is about the public service trialing artificial intelligence in terms of efficiency gains and whatever else,” said Pocock. “Maybe part of that is you didn’t feel the need to actually go to market and see what may be there.”
According to Fechner, the reason that Microsoft Copilot was attractive inside of its frameworks, and outside of its environments, was because Copilot is explicitly built to extend onto the functions of Word, Excel, PowerPoint and Teams.
“It has been used, as I said, to further generate content inside of documents, create images—all those sorts of things which it can do,” he said. “But its natural integration with the actual Microsoft products, because of our full enrollment of that Microsoft Office Suite, made it the most effective way.”
Fechner confirmed the AI Task Force, went out with a tender to the local marketplace, to ask what capabilities and services were available during the discovery phase.
“We believe that following the pilot and following the introduction of our policy and the need to manage the risk associated with new use cases for AI,” he said. “There will be more opportunities to investigate broader market responses in that space within the government context.”
DTA confirmed that it had received from Microsoft an extension on pricing capability for agencies to continue to utilise the capability if they wanted to.
“There were some participants in the trial that started late, that still felt that they needed more time to actually fully evaluate it,” said Fechner. “The DTA is now leading an evaluation of the productivity, quality and capabilities of Copilot. We will actually have that done in the next couple of months, by the end of September.”
When asked about “Microsoft monopoly” and what it means to Australian companies in this space, Fechner said the DTA has a marketplace of around about 4,000 sellers, the vast majority of which are small to medium enterprises, not large enterprises.
“Through things like our marketplace, we provide access to a large portion of the ICT industry across Australia to access government buyers,” he said.
“We actually have, within product suites, the opportunity to buy things, and additional products might be something like Microsoft Visio that not everybody needs.
“Copilot is currently in the category of non-full enrollment. Agencies are at their discretion able to not take up that product. They aren’t at their discretion to not take up Microsoft Office, for instance, because of that interoperability that’s required between agencies on things like templates and the like.”