The Australian Customs Service (ACS) is reviewing its mammoth outsourcing deal with EDS in preparation for the contract's expiry in March 2003.
The ACS has to advise EDS of its intentions 12 months before the end of the five-year, $220 million outsourcing agreement.
ACS spokesman Leon Beddington has confirmed negotiations are taking place, but was unwilling to disclose the agency's intentions.
"Negotiations are currently taking place with EDS, and Customs is reviewing all of its options," he said.
Beddington was unwilling to confirm whether the ACS would follow the lead of other Federal Government agencies in recent months by moving to a more selective outsourcing model, claiming that any comments at this stage could be "misinterpreted".
EDS communications manager Brian Finn said it would be inappropriate to disclose details during negotiations.
Earlier this year, the CSIRO introduced selective IT outsourcing, following the lead of Centrelink in rejecting the single service provider model pushed by the Federal Government under its controversial whole-of-government outsourcing program.
The ACS outsourcing deal has been plagued by controversy since its inception, including parliamentary investigations by the Senate Legal and Constitutional Committee.
There was also a three-month delay when EDS was preparing a new electronic system for Customs to be GST-compliant by July 1, 2000.
Meanwhile, EDS is merging three of its largest business groups into two new business units in a massive re-organisation aimed at taking advantage of emerging opportunities in business process outsourcing and IT consulting.
Effective from April 15, EDS will combine the operations of its information solutions, e-solutions and business process management groups to form two new groups: operation solutions and solutions consulting.
The operation solutions unit will combine EDS's core IT outsourcing business with its emerging business processing outsourcing unit to offer a broader and more unified portfolio of outsourcing services, an EDS spokesman said.
"This is about positioning ourselves for growth," the spokesman said. "It leverages our traditional IT outsourcing strengths in the rapidly growing market for business process outsourcing and IT solutions consulting.
"Straightaway, it lets us go head-to-head with the big consulting companies."