ATO's $400m IT contract goes to EDS

The federal government has announced that the preferred tenderer for the Australian Tax Office (ATO) IT outsourcing contract is EDS Australia.

Worth more than $400 million over five years, the ATO contract is the largest of the federal government's whole of IT outsourcing deals to date and is expected to deliver significant savings.

According to John Fahey, Finance Minister, "Over a five-year term, this outsourcing contract will deliver savings in the order of $100 million."

The contract includes provision of:

More than 900Mips of mainframe capacity;Distributed and desktop operations including some 18,000 desktop computers;About 500 file servers and 1200 printers;Around 1.7Tbytes of DASDSupport services and voice and data telecommunications services.

The outsourcing contract does not include applications development, IT&T security policy, or strategic planning.

It is not yet clear whether the excise collection function, transferred from Customs to the ATO as a result of the reshuffle following the last federal election, will come under the scope of the contract according to Tony Henshaw, government services director, EDS.

EDS ran the IT systems related to excise collection for Customs, and is currently negotiating a short term contract with ATO to provide similar services.

Under the contract EDS will provide: "IT service delivery that will assist the ATO in the implementation of the government's tax reform initiatives and other changes as the government moves into the 21st century," said Senator Richard Alston, Minister for Communications, IT and the Arts.

"EDS has agreed to meet the stringent technical and contractual requirements to ensure that the privacy and security of taxpayers and other confidential information are scrupulously preserved," Alston said.

Henshaw believes EDS and ATO will sign the outsourcing contract "in the next two to three weeks".

He said EDS will begin the transition process with the ATO shortly, and expects the handover to occur on July 1 1999.

Current ATO staff within the scope of the contract, will be made redundant. Henshaw expects most of those staff to transfer to EDS.

A key requirement for bidders was a commitment to development of the Australian IT&T industryAccording to the federal government $280 million worth of products and services for EDS' contract will be sourced and developed in Australia.

Federal government officials said more than $100 million worth of work from the deal will flow through to small to medium companies.

EDS' sub contractors on the bid include local IT company Ipex, which will provide PC hardware and a range of related services, and BHP IT which will provide help desk services. Protech, Salmat Holdings, and CSM were also named as subcontractors. Other partners on the contract are Lucent JNA and Fuji Xerox.

EDS' winning bid included a commitment to five new business initiatives in Australia:

The establishment of a $26 million e-business centre in Sydney, to provide skills and capabilities for EDS in the Asian region. The investment will include at least $10 million worth of business for small to medium enterprises (SMEs).

The establishment of an SME international marketing program to support overseas marketing of Australian IT products and services;A commitment to additional R&D spending in Australia from Lucent Technologies; A commitment from Fuji Xerox to re-manufacture and export raster output scanners in Australia;The provision of funding for five scholarships for SME employees to attend executive development programs.

Commenting on the bidding process, Henshaw said: "It came down to the two of us [EDS and CSC] in the end," although he said he believed there was a third bidder.

A spokesman for losing tenderer CSC, commented: "[CSC] is naturally disappointed not to be awarded the contract. We appreciate the complexity of the issues faced by government in reaching its decision."

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