Gershon’s ICT review gives clean slate to Government's ICT procurement

Ovum claims Gershon’s recommendations are consistent with those of other jurisdictions that have undertaken similar reviews.

Steve Hodgkinson, research director at Ovum, said Gershon’s recommendations are aimed at giving the ICT centralisation/decentralisation pendulum a shove back towards the centre.

“This is, however, easier said than done,” he claimed.

According to Hodgkinson one of the big barriers to the implementation of the review’s recommendations is the existing portfolio of contracts and supplier relationships.

“Ovum’s analysis of the trend in the annual value of contracts for the top 10 IT suppliers, however, reveals that Tanner has been dealt an unexpectedly free hand on procurement,” he said.

“The revenue earned from contracts with Federal Government agencies by the top 10 IT suppliers in FY2007/08 was around $1.4 billion.”

According to Hodgkinson, the top 10 are the combined HP/EDS and IBM competing for top spot, Unisys and KAZ competing for 3rd slot.

Others in the 10 are Accenture, CSC, Dimension Data, Thales, CA and Mincom.

If no new contracts are entered into, or existing contracts extended, this figure for the top 10 suppliers will fall to $1 billion in FY2008/09, $700 million in FY2009/10, $200 million in FY2010/11 … and only $100 million in FY2011/12.

“Within three years virtually all the existing portfolio of contracts with the top 10 IT suppliers will have expired – notwithstanding the ATO tenders currently in progress,” he said.

“Only Unisys has a major contract extending beyond 2012/13 – an outsourcing contract for the Department of Defence.”

Hodgkinson said this situation arises due to the combined effects of IT outsourcing contracts coming to the end of their term, the completion of major change programmes, and the procurement drought created by the change of government and the Gershon Review.

“This set of circumstances plays well into the Government’s new ICT agenda - giving Minister Tanner an unprecedented opportunity to reshape the ICT procurement landscape and the relationships with its major ICT suppliers,” he claimed.

“Some of the proposed changes to IT procurement may favour incumbent suppliers.

“Cooperative Agency Procurement, or ‘piggybacking’, will be encouraged under the new arrangements, so some existing contracts may be extended without being retendered.”

Hodgkinson believes Tanner, however, can manage the granting of extensions to existing contracts – and will never have a better opportunity to reshape the portfolio of major ICT contracts and vendor relationships.

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