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Federal Government annual ICT purchases top $4 billion in 2008-09

by Staff Writers •
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The value of Federal Government ICT contracts broke through the $4 billion mark in 2008-09, according to Intermedium's analysis of AusTender data. This represents a growth rate of more than 10 per cent on the previous year.

To allow for greater insight from the contracts data, for the first time Intermedium has produced analysis in an ‘annualised’ format in addition to its traditional analysis.

Many contracts are multi-year. By assuming that contract payments will be spread over the duration of the contract, the annualised view provides an indication of the likely revenue stream being received by a supplier and the amount of budget commitment an agency carries forward for such contracts.

For example, using the methodology, annual ICT purchases by Federal Government agencies were $4.1 billion in 2008-09, an increase of 10.2 per cent on 2007-08’s total of $3.7 billion.

Given contracts currently in place, the Federal Government is already committed to spend at least $2.8 billion in 2009-10. This is equal to 68 per cent of the 2008-09 total, implying that remaining "contestable" expenditure in 2009-10 will be around $1.7 billion.

Intermedium’s new methodology also converts AusTender data into a true time series, enabling more effective comparisons of spending patterns between periods, categories and agencies.

This treatment of the data also provides more realistic estimates of rates of change. It shows that since 2004-05, Federal Government ICT purchases have had a compound annual growth rate of 13.8 per cent.

While most of this was due to major project commitments in 2005-06 (DIAC’s "Systems for People", ATO’s "Change" and Centrelink’s "Refresh") which saw expenditure grow by almost 30 per cent, the 10.2 per cent increase in 2008-09 reflects ongoing, long term commitments associated with outsourcing, telecommunications carriage contracts and enterprise licensing deals.

IT services remains the strongest growth sector, with purchases up by more than 12.2 per cent in 2008-09 on the back of a number of major outsourcing contract renewals and market tests.

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