Feds sign 11 per cent more ICT deals

Feds sign 11 per cent more ICT deals

The federal government last year awarded more than $3 billion in ICT contracts, an increase of 11 percent, according to recent research.

Based on information from AusTender, analysis from research and consulting firm Intermedium showed that 78 federal government agencies reported just over 24,000 ICT contracts, up from 73 agencies last financial year.

Intermedium said this was largely due to the impact of the Free Trade Agreement.

The firm's director Judy Hurditch said the 78 agencies listed account for most of the federal government ICT contracting activity.

"The data is a window into new business won in 2004-2005, and so provides valuable market intelligence, particularly for suppliers interested in how they are performing relative to their competitors," she said.

Intermedium extracted the 2004-05 contract data from AusTender on September 30.

'We wait three months after the end of the financial year to let the data stabilize, as some agencies take a while to do their reporting", Hurditch said.

"The value of reported contracts as at September 30 was $2.99 billion. Allowing for those agencies which do not publish their contract data, and for the fact that some 2004-05 contracts may yet be published, I am confident the full value of the market for 2004-05 will exceed $3 billion."

Key outcomes of the analysis include the fact that the market has grown 11 percent each year for the last two years. "Few suppliers can complain about this level of growth," she said.

IT services made up the bulk of the growth with a number of large outsourcing contract renewals.

Across the other segments, hardware dropped, as did the large office machines and telecommunications equipment segments, but software and telecommunications services increased.

"Part of the reason for the drop appears to be that hardware and telecommunications equipment is now increasingly being supplied in managed services arrangements and so agencies are not entering into separate contracts with suppliers," Hurditch said.

Five agencies have now averaged more than $100 million a year in new contracts over the last three years. "These agencies constitute Intermedium's tier one and they dominate the market, accounting for 75 percent of contracts," she said.

The top four contracts combined are worth almost $800 million and cover outsourcing services, telecommunications and enterprise software agreements. "Some categories, such as cabling, continue to be solid niches for specialist participants," Hurditch said. "Others, such as photocopiers, are being cannibalized by multifunction devices, with that market down from a high of $21 million in 2002-03 to $13 million last year, a drop of nearly 40 percent."

Of the $2.99 billion in contracts awarded, about half were sole source - awarded via contract extensions or variations to incumbent suppliers. "If ever there was solid evidence of the value of incumbency - this is it," Hurditch said.

Intermedium will brief ICT suppliers and government purchasers on their 2004-05 findings in Canberra on November 22, 2005.

A number of federal government IT executives who spoke to Computerworld agreed with the research claiming there has been plenty of ICT activity in the nation's capital, adding it was a constant search to find skilled talent to meet demand.

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