Telstra has announced it has been selected as the preferred tenderer for the Department of Defence’s Terrestrial Communications contract, which is expected to exceed $1 billion in value.
Telstra made the announcement today at an Investor Briefing held in Melbourne.
"We can confirm Telstra has been selected as the Department of Defence’s preferred tenderer for its Terrestrial Communications Services Request for Tender. We are now working closely with Defence to finalise our offer and its execution prior to contract signing," said a Telstra spokesman.
Telstra and Optus were the last shortlisted tenderers left fighting for the deal after Dimension Data and Fujitsu dropped out of the running at an earlier stage. The rival vendors have been carrying out substantial recruitment drives over the past months in preparation for the possibility of their bids being successful.
The news means that Telstra has now secured major telecommunications outsourcing deals with two of the three biggest ICT purchasers in Canberra, handing it a large slice of the top-heavy market that will continue to pay dividends for several years to come.
It tops off a blistering six months for the company in the Federal Government market. In June 2012 it was awarded a $474 million managed telecommunications services contract by the Department of Human Services, which is expected to grow to $832 million if all permissible extensions are used.
Intermedium’s records show that the DHS deal was the most valuable ICT contract commenced in 2011-12 and it elevated Telstra to the rank of top ICT supplier to the Federal Government in the period by the total value of contracts signed.
More detailed analysis of the 2011-12 Federal Government ICT market can be found in Intermedium’s upcoming Annual Market Overview Report, due for release next month.
Telstra’s rival Optus was awarded the third major deal, with the Australian Taxation Office (ATO), in July 2009 for $217 million over four years. It beat fellow shortlisted tenderers CSC, Dimension Data and Telstra to the contract, which will reach its first expiry in June 2013.
Defence’s Chief Technology Officer, Matt Yannopoulos, told delegates at the Technology in Government Summit in Canberra back in August that Telstra and Optus had just submitted their Best and Final Offers for the Terrestrial Communications contract and that it was expected to top $1 billion in value.
The contract will cover end-to-end managed services for the Defence telecommunications network, including “wall-plug to wall-plug, mobile phones, unified communications and so on” he said. It will also introduce wireless internet to many Defence bases and sites.
Defence has indicated in the past that the services falling within the Terrestrial Communications bundle cost them $156 million in the 2008-09 year.
Analysis of Defence’s contracting history shows the agency has had a strong relationship with Telstra in recent years.
Telstra has signed $400.6 million worth of contracts with the Department over the past five full financial years (2007-08 to 2011-12), including a pair of carriage deals with a combined value of $169 million which commenced in July 2008 and will continue through to May 2014.
In the same period Optus signed just $80.4 million worth of contracts with the Department.
Oversight of the telecommunications deal will fall under the remit of Defence’s new Chief Information Officer, Dr Peter Lawrence, who will replace outgoing CIO Greg Farr in the coming months.
Defence says that “Mr Farr advised Defence last year that, for personal reasons, he did not wish to re-compete for the position of Chief Information Officer when his contract expired”.