Australian Taxation Office axes long-standing IT supplier

Australian Taxation Office axes long-standing IT supplier

HP Enterprise Services, formerly EDS, loses big chunk of mammoth technology contract.

The Australian Taxation Office has cut a A$60 million chunk out of the long-standing mammoth technology contracts it has held with outsourcing firm EDS . The outsourcer, which has been recently rebranded as HP Enterprise Services, has been axed from a shortlist of five service providers to provide desktop services, under the Tax Office's End User Computing (EUC) services bundle.

The EUC contracts include supplying and supporting desktop computers and office equipment, infrastructure support and the provision of a single point of contact for IT service management across the ATO. HP is the incumbent provider and would probably be hoping the snub is not a portent for deals that are still to be signed off under the ATO's information and communications technology sourcing strategy.

HP is still in the running for a $160 million agreement for centralised computing services, which is due to be awarded in mid-2010.

An HP spokeswoman said the company remained a committed partner for the ATO and would continue to deliver EUC services until mid-2011 under a managed services contract extension signed in June.

A statement from the ATO said it had initially briefed technology industry representatives about its requirements for the EUC services bundle in April 2008 and received 10 expressions of interest. They had been whittled down to five - CSC Australia, HP, Kaz Group, Lockheed Martin and Unisys.

Kaz was also cut from the shortlist. That is less of a surprise, given that it has been bought by Fujitsu, which intends to ditch the brand and absorb it into its own services.

"The Tax Office has been carefully evaluating all the responses to the EUC request for tender since May this year," the ATO statement read.

"The next phase of the tender process includes entering into due diligence and negotiation discussions with the shortlisted providers. These activities will result in a further shortlisting to just one preferred provider in June 2010. The final contracts (one for each major service) are expected to be signed shortly thereafter."

The EDS deal with the ATO dates back to Howard government spending reforms, which proved lucrative work for four providers - EDS, CSC, IBM and collapsed technology services outfit Commander Communications.

The EDS deal with the ATO was originally announced as a $500 million, five-year deal. It has soared in value as the ATO's technology needs grew and the agency took up options to extend the relationship.

Last year the ATO admitted that EDS would have banked about $2.4 billion from its outsourcing agreement by the time the contract expires in mid-2010. Fairfax Business Media

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