Persistent rumours that the NSW Government would attempt to sell off the Australian Centre for Advanced Computing and Communications (ac3) have been realised. The ICT infrastructure provider established by Labor in a deal with the State’s major universities more than ten years ago looks like it will soon be on the market.
The NSW Government has published a call-out for interested private-sector buyers to register their interest via the NSW eTendering website, explaining that it wants to “minimise any ongoing financial risk and liabilities for the State” that could emerge from its ownership of the enterprise.
The Government-owned company describes itself as an “independent broker and provider of sustainable, scalable and secure ICT infrastructure, cloud and collaboration services to various agencies of the NSW public sector as well as private sector clients”.
It was originally established as a source of supercomputing resources to support research at its eight co-founding universities - University of Sydney, University of NSW, University of Technology Sydney, Macquarie University, University of Wollongong, Newcastle University, Charles Sturt University and University of Western Sydney – but changed its business focus to co-location, managed services and cloud-based services in recent years when use of the super computer failed to match expectations.
According to its website ac3 services 50 government clients from various jurisdictions and roughly 40 private sector clients. The NSW Government, however, is its main customer, representing 80 per cent of revenue. It provides either primary or secondary data centre hosting for a number of NSW agency corporate systems.
As of March 2013, ac3 employed 50 staff.
While ac3 has been profitable in each year since 2007, according to its publically available financial statements, the profits have been small compared to commercial sector providers of similar services.
Net profits were:
- $654,000 (4% of revenue) in 2011
- $146,000 (1% of revenue) in 2010
- $113,000 (1% of revenue) in 2009
- $409,000 (5% of revenue) in 2008
- $185,000 (3% of revenue) in 2007
However the company’s extensive public sector client base means that it may appeal to managed services providers looking to get a foothold into the NSW Government market, as incumbency has been proven time and time again to be a positive factor in attracting agency business.
The move appears to have been part of the O’Farrell Coalition’s considerations since it assumed government in March 2011. The NSW Government consolidated its ownership of ac3 in June 2012 when it acquired the 43 per cent share held by the eight universities, taking it to 100 per cent ownership.
It has said that it will look to ensure that ac3 employees are treated fairly and equitably through the privatisation process and that no customers are left dissatisfied.
These first steps in the privatisation process came in the same week that the Queensland Government made the findings of Peter Costello’s Commission of Audit public, including recommendations that the State divest many of its ICT assets and the internal infrastructure provider CITEC.
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