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IBM Win at Customs Heralds the Start of a Busy Few Years for Outsourcing

by Staff Writers •
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Customs is reported to have signed a 5 year, $160m contract with IBM for the management of its main processing environment, heralding a 'season' of upcoming outsourcing contests with a number of major outsourcing contracts due to end in the next 12 to 24 months. However, given the preparation required for a major market testing exercise such as that just concluded by Customs, it is highly likely that a number of these will have contract extensions put in place to buy more breathing time.

The $160m contract is the first to be signed by Customs following the break-up of the previous 5-year single supplier/ full ICT outsourcing deal with EDS. EDS has been Custom's outsourcing supplier since 1997, with a total contract worth more than $550m. The relationship will finish at the end of June.

The new contract includes mainframe, data centre, data storage and some mid-range equipment, as well as data recovery systems and selected application services. IBM will also provide a complete upgrade of hardware and software running in the main processing environment, as well as support for certain applications, including Custom's Cargo Management System and Passenger Processing Border Control System.

Customs' 'market testing' program began more than 12 months ago with industry briefing sessions and the release of an RFT in May 2006. Negotiations with shortlisted tenderers began in December 2006.

Other outsourcing deals at Customs

IBM's win is one of four 'selective-sourcing' deals at Customs. The second, a $7.5m contract with Cybertrust to secure and manage its internet gateways, was signed on 14 June. The 3 year contract (with an option for a 2 year extension), renews a previous 3 year contract with Cybertrust.

Customs is understood to be in negotiation with two preferred providers (EDS and KAZ) for the applications maintenance and support services contract. The other sourcing arrangement is for telephony, and Telstra is believed to be the preferred supplier for this contract.

As part of its selective sourcing strategy, Customs took a decision to bring its desktop and LAN management back in house following the completion of its contract with EDS.

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