Federal Government ICT spending flows again

Federal Government ICT spending has begun to flow again after a dry patch in recent months, according to industry sources.

With the Gershon Federal Government ICT procurement changes still to be implemented, overall spending dropping by 16 per cent during the last financial year ($3.1 billion compared with $3.7 billion in 2006-07), and a drop in confidence as a result of the economic downturn, government agencies had turned off the taps on ICT spending.

ASX-listed integrator, ComputerCorp, for example, recently blamed slower sales across Federal Government and WA for a drop in its half-year revenue to December 31. But in a positive sign for the economy, several industry representatives flagged more tenders are on offer this year and said some large deals had been approved.

“They are just starting to open up now and we are starting to see a lot of relaxation,” sales director for infrastructure distributor Westcon Group, Leigh Howard, said. “There were quite a lot of projects on hold from the Gershon report, but things are starting to ease up and we are seeing some spending. Most governments want to spend their way out of this challenging environment and they are going to lead the way.”

In January, ASX-listed services provider, ASG Group, landed new contracts worth $30 million including wins with the National Museum of Australia, the National Capital Authority, the Department of the Prime Minister and National Cabinet, and the Australian National Government Water Commission. Canberra-based reseller, Dataflex managing irector, Brian Evans, also indicated a solid January performance.

“We had a pretty good January, although some of that came out of education, and February is looking very good,” he said. “It is across the board. We are seeing orders from a number of different departments, so it is not like you are seeing business from one particular vertical like health, for example. On top of that, it is across the board requirements – they are looking at PCs and whatever else they need to do.”

Head of consulting for analyst firm Intermedium, Kevin Noonan, said agencies were also beginning to put on more resources, and highlighted the Department of Immigration and Citizenship as one example.

“I’m seeing the beginnings of some cautious optimism. There are three drivers that have appeared. One is that even though there were some clear cuts coming through Gershon, the fact that the cuts are now known and factored in, and are only coming in progressively over a number of years, means agencies have now factored that in and understand the impact of it,” he said.

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