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ATO offers up $1bn worth of contracts

by Staff Writers •
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The ATO has announced it will open IT outsourcing contracts worth over $1b to multiple suppliers, potentially ending its longstanding single-supplier arrangement with EDS. The ATO is the last of the Tier 1 Federal agencies (those contracting more than $100m per year on ICT), to retain a whole-of-agency ICT infrastructure outsourcing arrangement.

As a result of internal reviews and advice from Boston Consulting Group, the ATO has decided to split its IT outsourcing arrangement into three separate streams. (See note below on plans in relation to desktops).

EDS has held the ATO outsourcing contract since 1999. According to information reported in AusTender, the EDS contract has been worth $1.815bn in total. The scope of the contract was for the provision, installation, configuration, support and maintenance, management and operation of ICT infrastructure services. The contract with EDS was initially for 5 years, with two extensions taking it to June 2008.

This decision by the ATO marks a change in outsourcing strategy from sole sourced to selective sourcing, a trend evident across Federal Government agencies. The decision by the ATO to use a selective sourcing follows the decison by Customs earlier in the year to break up its full infrastructure outsourcing deal with EDS.

The ATO will extend its current contract with EDS until 2010 to cover the transition period. Greg Farr, ATO Second Commissioner, indicated previously that the ATO may extend some aspects of the EDS arrangement while it completes the market testing and tendering process, and it would appear that at least some of this contract will be allocated to other suppliers before the 30 June 2010 deadline.

The first tender will be for the ATO's "managed network services", covering voice, mobile and data carriage, PABX, desktop handsets and LAN and WAN switches. This procurement is expected to commence with industry briefings and release of an EOI in late October. The ATO expects to issue an RFT to a short-list of suppliers in mid-2008.

The second tender will be for "end-user computing", including mobile device management, service desk, service management and printer management, while the third tender will be for "centralised computing" such as the ATO's mainframe computing needs, mid-range storage and its data warehouse.

The second and third tenders will be announced simultaneously during the middle of next year, with RFTs likely in January 2009.

While details of these three tranches of the ATO's ICT procurement have been widely reported, there is no mention of how the agency plans to meet its future desktop requirements. In 2005–06 the ATO managed more tha 28,000 workstations and more than 4,400 laptops. As part of its recent selective sourcing strategy, Customs took a decision to bring its destop and LAN management back in house following the completion of its contract with EDS. It will be interesting to see if the ATO is considering a similar approach.

Full Report on Federal Government ICT Infrastructure Outsourcing

Intermedium released a detailed report on ICT Infrastructure Outsourcing by Federal Government agencies. It includes an analysis of 59 agencies, almost half of which outsource all or a very substantial proportion of their ICT infrastructure (and in some cases telecommunications services), to an external supplier.

The report shows 24 Federal Government agencies with major IT infrastructure contracts that have run their course. They will need to go to the market to meet their ICT requirements by mid 2009.

For each agency, it also provides details about its ICT outsourcing, including:

  • Outsourcing status – full or partial outsourcing of ICT
  • Outsourcing-related tenders released in 2006-07
  • Procurement plans items related to outsourcing
  • Details of the existing outsourcing suppliers
  • Value of existing contracts
  • Contract commencement and end dates
  • Average contract value per year
  • Total contract value to the incumbent during 2005-06
  • Other comments and information available in relation to outsourcing, including material from Annual Reports
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