Senator Kate Lundy, shadow minister for Information Technology, lambasted the government over its outsourcing initiative, singling out IBM Global Services as a "particularly poor performer". The results are revealed in the 2001-02 Industry Development Progress Report.
She said IBM failed three out of ten out-of-scope requirements, and couldn't provide data on a fourth. Lundy added the breaches had adverse impact on three small Australian ICT companies, causing one to go "under external administration".
These breaches include:
- Payments to small and medium-sized enterprises (SMEs) AU$1.6 million less than target requirements
- Marketing agreements to Wizard Information Services and Approved Systems were not met
- Inability to provide data on an initiative requiring Telstra to award contracts on the basis it requires 1 percent of labour to be from regional SMEs
- Failure to provide assistance to Synergy Plus in year two of the contract.
When contacted, a spokesperson for Senator Richard Alston, the Communications and Information Technology Minister, preferred to take the glass-half-full approach. He claimed that despite the outsourcing initiative hitting the halfway mark, it has almost achieved its targeted goals.
He pointed out that:
- Of the AU$845 million Australia value-adding component, AU$738 had been delivered
- Of the AU$330 million SME participation deliverable, AU$317 million had been completed
- Of the AU$277 million in exports written into the contracts, AU$75 million was remaining
- Of the AU$92 million of additional investment in the contracts, AU$133 million had been fulfilled--thus exceeding requirements.
"It is unfortunate that Senator Lundy has chosen to focus on a couple of areas of this report," he said. "There have been a couple of areas of underperformance but the government has negotiated equivalent or better than equivalent (contracts from the companies involved)."
"Renegotiation is better than imposing financial penalties that cannot benefit Australian industry," the spokesperson added.
Other shortfalls pointed out by Labor's Lundy include:
- Computer Sciences Corp: Shortfall in total net employment of 67.5 jobs and regional employment of 27 jobs
- EDS Australia: Payments to SMEs AU$4 million under target requirements
- Telstra Enterprise Services: The so-called "regional employment" occurred predominantly in Canberra and Brisbane.
It is unfortunate that Senator Alston cannot see fit to enforce the contracts as they stand and penalise the offending companies according to the letter of the contracts.
Would anyone expect one of these big outsources to cut a customer the same slack?