Battle for ICT contracts in Australia

A Liberal Party shadow minister in Victoria, Australia has slammed the Labor ICT’s contract awarding process and demanded it starts giving local PC assemblers preference over interstate-based multinationals.

Australia’s shadow minister for education, Victor Perton, was scathing in his assessment of “a Luddite state government’s” handling of ICT policy and tendering processes.

With applications now closed on a Victorian government contract for about A$35 million (US$23 million) worth of hardware, local companies are hopeful they will not lose out again to big brands.

Victoria’s Department of Education and Training (DE&T) is in the process of evaluating responses from more than 15 companies.

A DE&T spokesperson said this “very important” contract would provide the “administration systems environment for schools” for three years.

The most keenly contested part of the tender is for 4150 desktop PCs, 1680 servers and 1700 laser printers, which sources estimate will cost a total of around A$20-25 million. Additionally, a further $A10-15 million will be spent on 1660 UPSs (uninterruptible power supplies), 1660 LAN switches and associated products and services.

The bidding closed in April, a decision should be made by July and delivery of equipment will commence in early February next year.

“I think that all of the leading industry groups and any of the local suppliers would tell you that the government sector in Victoria has a significant underspend in ICT,” Perton said.

He claimed there was “lots of rhetorical flourish but almost no performance on the ground” when it came to supporting the local ICT industry.

“Contract after contract is won by multinationals based interstate with almost no presence in Victoria other than sales staff looking for government and corporate ICT work,” Perton said. “It astonishes me that the government continues to disregard Victorian companies.”

Joel Schwalb is managing director of one local bidder, Melbourne-based PC systems and IT services company, Ipex ITG Pty Ltd. He agreed with Perton and said it was “about time the Victorian government considered the local industry more favorably.

“There is a totally ridiculous aura that prevails about using multinationals in government contracts when it comes to PCs and servers,” Schwalb said. “There is not a single area where local companies can not compete. Not in quality, functionality, delivery or service. Recent Victorian education agreements for hardware have seen international companies awarded huge contracts in preference to local alternatives. ”

In November 2001, IBM Corp. was awarded a A$92 million contract to supply 40,000 notebooks. Then in February last year, Acer Inc. won a A$35 million deal to supply 21,000 desktops to what was then called the Department of Education, Employment and Training (DEET).

At the time these deals raised the hackles of Victorian PC companies who felt they were not being given a fair chance. Accusations were made that the state government was ignoring perfectly viable local options and awarding contracts to internationally-owned, interstate-based monoliths with minimal commitment to Victorian investment that lowered prices beyond profitability to “buy” the business.

According to Schwalb, the contract processes which were in place were reasonable but had suffered serious management deficiencies.

“I think politicians have a genuine desire to see these contracts weighted towards local suppliers,” he said. “The problem is in defining how public servants are to arrive at a decision. It comes down to the whim of those in charge of that decision making process.” Schwalb said the multinationals had vast resources to put into marketing their products including “wining and dining” departmental officials and advisers.

Other local companies tendering for the DE&T contract include Paragon Systems Pty Ltd., TPG Internet Pty Ltd., Anabelle Bits Pty Ltd. (ASI), Optima ICM Ltd., Ocean Office Automation Ltd., Omega Technology (QLD) Pty Ltd., and Alpha Computers Inc.

Neither IBM nor Acer would confirm or deny whether they were bidding for this contract. Sources claim both definitely had their hands up to do the deal direct, as did fellow multinationals Dell Inc. and Hewlett-Packard Co.