EDS scores $604m ATO extension

The Australian Taxation Office (ATO) has decided to extend its contracts with EDS for end computing and centralised computing services over a further two years.

The original contracts were set to expire at the end of June next year, but now EDS will be providing the services until 30 June 2012. "The extension will help us manage transitional issues associated with engaging any providers who have been successful in our phased procurement program for ICT services," ATO second commissioner David Butler said in a statement.

The public servant said that the delay in choosing a new provider would allow the office to make "significant savings relating to desktop computers", although he did not specify how. Butler added the delay would allow the ATO to expand the virtualisation of its datacentres. "This work will give us access to less costly and more adaptable technology," he said.

The $604 million extension value included the final year of the contract.

The ATO decided in 2007 to break up EDS' stranglehold on the agency's IT contracts following internal reviews by Boston Consulting Group. It broke EDS' $1 billion whole-of-agency deal into a managed network services contract, an end-user computing contract and a centralised computing contract.

CSC, incumbent EDS, Fujitsu-owned Kaz Group, Lockheed Martin Australia and Unisys are the companies shortlisted to take the reins of the end user computing contract once EDS' term finishes. It is worth around $60 million annually. The shortlisted vendors for the centralised computing contract, worth $160 million a year are Lockheed Martin, CSC, IBM and incumbent EDS.

Earlier this month, ATO announced that the third contract, for managed network services, had been granted to Optus, worth $186.5 million over four years.