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NSW government sells ICT services provider ac3

by Michael Read •
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The New South Wales Government has announced the sale of 100 per cent of the shares in the Australian Centre for Advanced Computing and Communication (ac3) to Klikon Solutions.

“[Finance] Minister Constance said the NSW Government’s ICT Strategy sets out a road map for Government to move away from being a provider of ICT services to being a knowledgeable purchaser of ICT services from a contestable market place,” according to a press release issued by the Department of Finance and Services.

“The successful sale of ac3 assists to drive the NSW Government towards achieving this end state.”

The NSW Government first revealed it would be divesting its shareholding in ac3 in May 2013 following the publication of a Registration of Interest (ROI) for the ‘Proposed Divestment of Australian Centre for Advanced Computing and Communications’.

According to the ROI documents, the need to “minimise any ongoing financial risk and liabilities for the State” gave impetus to the sale.

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”.

The Department of Finance and Services (DFS) has not made the value of the sale public. However, in the DFS 2012-13 Annual Report, the Department valued its holding in ac3 at $3.94 million.

The entirety of ac3’s financial information was last made publically available in 2010 to the Auditor-General. According to the Auditor-General’s report, ac3 achieved a $146,000 profit in 2009-10 with a book value (total assets minus total liabilities) of $2.48 million. Book value is likely to have increased in the following years with profit.

ac3 recorded a profit in 2012-13 with total income increasing by $9 million to $24 million. The NSW government remained ac3’s largest client, representing 90 per cent of revenue. 45 NSW Government agencies had a contractual arrangement with ac3 in 2012-13.

40 per cent, or $6.2 million, of ac3’s expenses were staff costs for the business’s 51 staff.

ac3 was first established by the former State Labor Government more than ten years ago in a deal with the State’s major universities.

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.

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.

On its website, Klikon Solutions offers a wide range of IT Services including Networks & Security, Advanced Infrastructure, Managed Services, IT Procurement and Talent Management and Recruitment.

ac3’s extensive public sector client base will be beneficial for Klikon should it wish to gain a profile in the public sector due to the positive correlation between incumbency and public sector business.

“ac3 will continue to provide essential ICT services to NSW Government agencies,” said the press release.

The sale comes as a number of other states also move to divest or alter the nature of their central ICT shared services providers. The Victorian Government recently began transitioning CenITex to a broker of managed ICT services rather than a provider, with an open approach to market for IT Infrastructure Services currently provided to agencies by CenITex.

The Queensland Government has also indicated its intentions to divest central ICT infrastructure provider CITEC and open Queensland Shared Services up to market competition, following the Costello Commission of Audit’s findings of inefficiencies and corruption in relation to the shared services providers.

Western Australia’s decommissioning of its Shared Services unit, which provided financial and human resource services to around 58 agencies until 2011, is on track for completion by December 2013.

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For more information, please contact the Editor (02) 9955 9896.

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Jurisdiction
  • NSW
Category
  • IT Services
Sector
  • Finance & Services
Tags
  • Andrew Constance
  • Australian Centre for Advanced Computing and Communications (ac3)
  • CenITex
  • CITEC
  • Department of Finance and Services
  • Klikon Solutions
  • NSW Auditor-General
  • Queensland Shared Services (QSS)
  • WA Shared Services Office