Computer Sciences Corp (CSC) has responded to opponents of the federal government's IT outsourcing program accusing critics of over-simplifying debate and misinterpreting commercial realities.

Referring to the political outcry that has plagued the program since its inception in 1997, CSC's vice president of integrated business services, Roger Allen, said debate has been misleading and did not reflect the real business environment.

CSC won the government's Cluster Three outsourcing contract two years ago which includes the Department of Immigration and Multicultural Affairs and the Department of Finance and Administration.

As reported in Computerworld (May 22, p1), Opposition IT spokeswoman Senator Kate Lundy has been a strong critic of the program, which she claims has been plagued by budget blowouts and unmet contractual arrangements.

Allen admits CSC has been hit with financial penalties as a result of unmet service level agreements but points out that two years ago outsourcing contracts were "signed in a vacuum" because there were no benchmarks.

"The situation today is very different after two years experience and arrangements are now exceeding expectations; business agreements are evolutionary, a static contract does not reflect life and can be outdated within hours of being signed," he said.

"How could we have predicted East Timor, Kosovo and the influx of illegal immigrants which impacted greatly on the Immigration Department's IT operations?"

Measuring hundreds of service level agreements is not a sensible approach to outsourcing either, Allen said, as they should be an incentive to boost performance.

"Fewer, more meaningful service level agreements are more effective; they should be realistic, achievable, relevant to business impact and readily measured," he said.

CSC believes IT outsourcing has been unfairly portrayed in the public domain because critics are measuring the contract, instead of the business and the strategic benefits of outsourcing.

Public debate has led to a range of financial audits by the Australian National Audit Office with findings due in early September.

Allen predicts the results will be mixed because auditors "are looking for the worst" but pointed to findings by Ernst & Young which undertakes an annual audit of CSC's outsourcing arrangements - a federal government requirement.

The audit shows CSC has exceeded all of its targets and is well-positioned in its bid for the Group One contract that is to provide Australia's largest processing facility for Centrelink and the Department of Family and Community Services.

CSC is competing against Siemens Australia and sees this contract as the platform for the company's future plans in the Asia-Pacific region.

However, industry sources believe political debate is overshadowing the bid because the federal government has been accused of favouring multinationals over the development of the local IT industry, but figures from the program show outsourcing has generated more than $400 million for Australian small- to medium-sized enterprises.

"We may not have a PC plant around the corner, but we see people skills as our platform of growth, especially with the current IT skills shortage," Allen said.

"The company's acquisition of BHP IT involved 2000 staff and our approach is one of expansion to provide an incubator for IT skills."

The federal government is set to begin the tendering process for the Group 10 contract, which includes the Attorney General's department, National Crime Authority and the Australian Federal Police.

Outsourcing has revitalised the ACT's economy, with the private sector accounting for 60 per cent of jobs.