ATO makes first move in AU$1bn outsourcing deals

The Australian Tax Office yesterday made the first moves in its hunt to find suppliers for its AU$1 billion, five-year IT outsourcing contracts.

The ATO yesterday released its expressions of interest documents for vendors to begin applying for the department's managed network services contract, which has been held by EDS for the past decade.

The managed network services contract is expected to be worth AU$55 million per year for a period of up to seven years and covers the ATO's local and wireless networks, application and gateway security, call centres, carriage services, PABX, remote access gateway services, videoconferencing, and desktop handsets.

The ATO currently spends AU$17 million on network management, AU$5 million on security, AU$15 million on call centres and AU$18 million on carriage services.

Last year the ATO approved a new outsourcing strategy proposed by the Boston Consulting Group, which advised the department to ditch its single supplier arrangements in favour of three major contracts.

The next round of work to be put up for grabs is the ATO's end user computing contract, which will follow a similar process to this contract.

After EOI submissions are assessed, successful bidders will need to pass a lengthy period of testing, in which the ATO's business leaders -- rather than its IT department -- will specify its requirements and then compare the bidder's working proposals. The ATO will establish special security-protected test centres to prevent malicious intervention from competitors and the incumbent supplier.

The cost of this process itself, estimated to be as much as AU$1 million, will leave around six vendors financially capable of competing for the work.

Responses to the EOI will need to be lodged by 29 February this year.