Global services leviathan, EDS, has turned a troubled outsourcing agreement with the Australian Customs Service from a deal on the brink of collapse to a $542 million gem set to extend into 2007.
The 27-month extension is EDS’ largest contract win this year and adds $193 million to the deal that has been running since 1997.
It covers the Federal Government agency’s mainframe and mid-range platforms, desktop support, application support and helpdesk services. EDS’ federal government account executive, Mike Smith, said the significant difficulties that had dogged the relationship in the past were now ancient history.
“There had been problems on both sides that took the relationship to a bad place,” he said. “We addressed some key personnel issues that enabled us to sign a new agreement in 2002 to take the relationship forward.”
Smith described how the contract had been drawn up giving EDS an unworkable remit.
“Being one of the early adopters [of outsourcing] in the federal government, they failed to retain some in-house responsibilities," he said. "It led to strange behaviour on both sides.”
The refreshed relationship with the Customs Service will see EDS take a development role in the update of the cargo management platform. EDS is also looking to Citrix for the introduction of a thin-client desktop approach, part of a key goal to reduce some of the traditionally-high Federal Government spend on systems maintenance.
“Across numerous agencies we see 80-90 per cent being spent on solving the IT hairball,” Smith said. “Part of our proposal for the contract extension was based around how we could reduce cost in one area in order to reinvest it in a more valuable area.”
Smith said that the coming election would mean a change in the way federal government departments looked at IT spending.
“There has been a recent emphasis on project-work,” he said. “After the election they will begin to look at operational change – migrating spend to areas that need it.”