Telstra is celebrating a victory on two fronts after winning a $162 million contract with the Department of Defence (DOD) while also denying its rivals a slice of the action, but the telco should consider itself lucky to be part of the natural ebb and flow between multi-sourcing and single-sourcing, according to one analyst.

The six-year contract sees Telstra become the sole provider of mobile phones, fixed-line voice, fixed-line data and broadband services used by defence staff.

A Telstra spokesperson said the contract represented a major win for the telco and is the first time the department has awarded all of its voice, mobile and broadband communications requirements to a single supplier since the competitive market in telecommunications was established in 1997.

"This contract also represents a significant win back from a combination of providers, including SingTel Optus, Vodafone and AAPT," said the spokesperson.

Geoff Johnson, networking and communications analyst at research firm Gartner, added: "This is one of the largest communications contracts — I'd say within the top three."

"Culturally speaking, if you look at most defence organisations in the world, they tend to go back to the major provider at some point because of the confidence in their ability to manage," he said.

The telco analyst told ZDNet.com.au today that the DOD's announcement is typical of the swing between multi-sourcing and single-sourcing for large scale contracts, saying: "It's usually about managing a history, so you will see the pendulum swing between multiple and single vendors after a few years of one or the other."

"Not everyone can bid for this type of contract," he said. "It has to be a vendor or vendors that are able to meet fairly onerous contractual terms and deliverables, particularly because of the scale of defence organisations."

Parliamentary Secretary for Defence Procurement Greg Combet said it was anticipated the contract would result in a cost saving for the department of more than AU$13 million a year and an improved level of service.

He said Telstra was chosen as the contractor based on a value-for-money comparison.

The Department of Defence has one of the most geographically-diverse fixed-voice networks in Australia and one of the largest mobile phone fleets in operation, with increasing focus on high-speed remote access with mobile broadband.