State providers eye prospects in $590M govt upgrade

With the promise of A$1 billion (US$590 million) in state government contracts wafting in their nostrils, South Australian IT service providers are intently watching how changes in the State’s IT and communications strategy will bring them greater wealth. Or not.

A review committee representing the Treasurer and Minister for Industry and Investment, Kevin Foley, and the Department of Administrative Services, has confirmed a plan to invest A$1 billion — covering computer hardware, software, data processing, telephones and mobile phones — over a five-year period.

Foley said the first contracts were expected to be put to open tender from the middle of the year. It was not yet certain whether they would take the form of a series of smaller contracts or fewer large ones.

The government has informed its current outsourcing partner, U.S. giant Electronic Data Systems Inc. (EDS), that it “has no intention of merely re-signing its existing contract” which expires in July 2005.

EDS signed a nine-year, A$550 million contract with the South Australian government when large scale outsourcing was considered fashionable. It currently services around 50 percent of the governments’ entire IT services with the remaining half being looked after by Telstra and Microsoft, amongst others.

Foley said that since the formulation of the EDS contract the government’s requirements have changed significantly. What’s more the current government, which celebrates its 12th month in office in March, has exhibited a strong focus on cost reduction.

“We’re looking at what we need and how we can provide the best service at the best price,” said a spokesman from Kevin Foley’s office.