Australian state to save millions in services deal

Aggregating voice and data services under a new Common Use Arrangement (CUA) is projected to save government agencies in Western Australia up to A$14.6 million (CAD$12.7 million) a year with potential savings of A$30 million.

In a presentation to 150 agency representatives in Perth, the WA Department of Treasury and Finance director of IT&T procurement, John Crowe explained how its new list of preferred voice and data service providers will eliminate the need for individual contracts and increase buying power.

The preferred voice providers are Bright Telecommunications, Macquarie Telecom, Optus Networks, and Telstra. For data services the list also includes Amcom and Swiftel Communications. The new contract began on March 1.

Under previous arrangements, Crowe said there was A$79 million worth of business, with Telstra currently enjoying the lion’s share of about 75 percent. “It’s not new services but rather we’ve tried to rationalize and standardize the services,” Crowe said. “These categories will provide standard broadband services rather than having different proposals from different companies [agencies] will need to evaluate.”

Crowe said 10 companies bid for the tender though he didn’t identify or disclose unsuccessful candidates.

“The spend savings are in the order of at least 19 percent for the 2006-2007 financial year and our target is a 38 percent reduction in spend,” Crowe said. “That’s possible under the proposal but the 19 percent is a good outcome compared to what we are spending. We believe with the pricing we have we can double that saving.”

While the successful companies are largely running their own networks, Crowe is not so concerned if they are reselling some services, because he is looking to get more competition in the WA government market.

From here, Crowe said, the challenge for the providers is to work with the government agencies to win business.

The whole of government CUA includes both voice and data, and is designed to support VOIP.

“The major component is broadband services, so we’re moving to greater use of broadband and using VOIP is a key strategy in that,” Crowe said, adding there will be a particular focus on buying cooperatively to leverage further savings. “A small number of agencies are currently trialling VOIP, but over the next two years the strategy is to implement it much wider over the public sector.”

Macquarie Telecom’s WA manager, Paul Cresp said the “pick and buy” arrangement means government agencies can purchase services from the company without having to undergo individual tendering processes.

“The CUA will facilitate greater competition in the WA telecommunications market,” Cresp said.

The CUA is in line with the WA government’s shared services push across all aspects of its IT infrastructure.

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