The Australian Taxation Office has revealed that its five-year desktop services contract with defence giant and IT contractor Lockheed Martin has a total pricetag of $380 million — a number 25 per cent higher than it had initially estimated.
The contract — inked in July this year — represents one of the three major chunks created when the ATO flagged plans in 2007 to break up its comprehensive technology outsourcing deal with EDS (now HP Enterprise Services). It covers the support of desktop PCs and equipment, office machines such as faxes and printers and associated back-end infrastructure. Lockheed Martin will be providing a single point of contact service desk for IT and service management issues under the deal.
The ATO had publicly put the price of the contract — which it terms its “end user computing services” arrangement — at $60 million a year.
But in a contract disclosure notice published through the Federal Government’s AusTender system in late September, the ATO revealed the deal would cost more than expected over its five-year lifespan — $16 million a year more.
It is understood that some in the industry were surprised by the enhanced value of the contract, with large customers such as the ATO typically seeking to wring more financial value from second-generation outsourcing contracts. However, the ATO has also gradually grown its headcount over that time.
A spokesperson for the ATO did not immediately respond to an emailed request for comment on the issue this morning, but this article will be updated with the agency’s response. When it awarded the contract, the ATO said that Lockheed’s bid represented the best value for money for the deal.
The ATO’s contract was hard fought, with Lockheed beating out a number of traditional IT services firms to win the deal, including big names such as CSC — which was a finalist, incumbent HP Enterprise Services, KAZ (now part of Fujitsu) and Unisys.
Lockheed is not known to have won other large desktop support deals in Australia in recent times, although it does have an IT services arm that operates internationally.