ATO shortlists four for AU$385m network deal

The ATO has shortlisted four vendors for the first of its three major outsourcing deals -- managed network services, worth AU$55 million per year.

CSC Australia, Dimension Data, Optus and Telstra have been invited by the Australian Taxation Office to formally bid for the managed network services contract, following a successful lodgment of an expression of interest (EOI) in the work filed by the companies.

The contract, which could be worth up to AU$385 million over the scheduled five to seven year life of the contract, covers the department's communications infrastructure.

EDS has held the contract for the past decade. However, after a review conducted by the Boston Consulting Group, the ATO decided to break up its monolithic outsourcing contract into three separate deals.

The vendor briefing conducted by the ATO in December last year for the contract attracted 67 vendors. The intent of the briefing was, in part, to warn vendors of the costs involved of bidding for the work and to highlight the ATO's expectations.

Despite the interest, according to the ATO's CIO Bill Gibson, just seven vendors lodged an EOI.

"Seven organisations submitted responses and we're pleased that four companies have been found to have the scale, experience and expertise to support our requirements," Gibson said in a statement.

Previous second commissioner Greg Farr warned that vendors would need to have the scale the ATO needed for the service and expected only about six vendors to meet the requirements.

A spokesperson for the ATO refused to say which applicants did not make the first round cull.

The four successful companies will now commence the year-long "workshop" process, which Gibson has said could cost each company AU$1 million to complete.

Gibson has said he will be looking to put business requirements to the fore during the process, hoping to avoid previous outsourcing mistakes where arrangements became bogged down in technical detail.

The ATO expects to issue a request for tender to the short-listed companies in late July 2008, and the contract will be awarded to just one vendor.

The next of the three major contracts to be opened to tenders will be end-user computing with a vendor briefing scheduled to be held on 9 April 2008.

"We anticipate a similar level of interest to the expressions of interest for end-user computing services and centralised computing," Gibson said.