Australia's ICT research and development capability has been dealt a body blow, with the Brisbane-based Distributed Systems Technology Centre (DSTC) forced into closure after 14 years.

Employing nearly 70 technologists, DSTC has developed cutting-edge Web technologies and standards and is the Australian base of the World Wide Web Consortium (W3C).

DSTC's staff have been officially notified and their positions will be finally be dissolved after intense negotiations failed to secure new funding from either government or private interests in time for the centre to meet financial requirements.

DSTC CEO Mark Gibson confirmed he had advised staff to seek alternative employment. He added it had been "very difficult" to secure private investment without any government backing. Gibson said that the centre is still talking "to a wide range of interests in health and security."

DSTC was previously funded under the federal government's Collaborative Research Centre (CRC) scheme, administered by the Department of Education Science and Training.

Currently working across federal and state government on major projects such as e-Health, smartcard and national security initiatives, DSTC specialized in the creation and retention of technologies and intellectual property around interoperability, data fusion and management and exploitation of unstructured data and knowledge. This includes the current creation of common information architecture and interoperability standards for Electronic Health Records (EHRs). The future of DSTC staff on secondment to the National E-Health Transitional Authority is unclear.

The last decade has seen the vendor-neutral centre pioneer emergent technologies which both enterprise and the public sector are now starting to take for granted, including Web services, ITIL (Information Technology Infrastructure Library), semantics, open software standards and reusable and secure code bases.

The centre's closure has also sent shockwaves through government IT circles, especially over the fate of DSTC's so far un-valued intellectual property assets.

Under CRC guidelines, the IP will be auctioned off to DSTC's current shareholders in the first instance and commercial interests thereafter. These include Sun Microsystems, Boeing, Fujitsu, Mincom, Telstra, Advanced Data Integration and national security specialist systems developers The Distillery.

Of particular concern is a range of research that focuses on security and intelligence, electronic health records and smartcard technologies. DSTC has also played a key role in the creation of intra-government search and metadata standards, users of which include the Australian National Library, the Australian Archives, the Australian Government Information Office, Defence and a number intelligence agencies.

No independent or formal audit or valuation process to determine the market value of the centre's IP assets currently exists. Similarly, no estimate exists as to what a firesale of the centre's IP assets into private hands will cost the government - both in terms of IP the government will be required to repurchase or the costs involving stalled projects.

The centre's closure also lays waste to Prime Minister John Howard's instructions to both his ministry and public servants that they must work together, create interoperability between agencies and improve service delivery improvements.

Defence sources have described the centre's closure as "an utter debacle", adding that IT vendors will "sell our own research back to us marketed as middleware at a cost of billions." A spokesperson for Education Minister Brendan Nelson would not comment on cost implications for government, but said the federal government had contributed $23 million over the last seven years to DSTC - but that the centre had lost out against more competitive bids for CRC funding.

Enquiries to the office of Health Minister Tony Abbott were redirected to a spokesperson department of for the Department of Health and Ageing, who said health department funding for DSTC's electronic health records research had not been withdrawn. The spokesperson would not comment on how the closure would affect the government's commitment to have electronic health records running within 12 months.

A spokesman for the Special Minister of State in charge of government IT strategy, Senator Eric Abetz said his office was currently seeking advice about the implications of the DSTC situation.