ATO’s EDS deal value less than expected


The Australian Taxation Office appears to have bargained the division of HP formerly known as EDS (now HP Enterprise Services) down a bit in its negotiations with the supplier over the centralised computing contract the pair inked late in 2010, putting a $738 million price tag this morning on the deal — substantially less than the $800 million expected.

The deal represents one of the three major chunks which the ATO divided its technology outsourcing needs into several years ago when its former comprehensive technology outsourcing arrangement with EDS expired. The other portions of the ATO’s needs – covering telecommunications and end user (desktop) computing – were previously awarded to Optus and Lockheed Martin respectively.

The centralised computing chunk covers a range of services relating to the infrastructure and core server layer of the ATO’s technology platforms – including mainframe, mid-range, data warehousing, storage, gateway and datacentre services, for example. The value of the deal $738 million – which HP disclosed in a media statement this morning – is $62 million short of the $800 million value estimated back in 2008 by the ATO when it picked a shortlist of suppliers for the contract.

In its statement, HP revealed a number of other details about how it would actually implement the contract. For starters, HP will migrate the ATO to “a next-generation HP datacentre facility”. HP did not, however, note where that facility would be located, or make reference to the Federal Government’s ongoing plans to implement its much wider-ranging comprehensive data centre strategy.

Secondly, HP noted that it would replace the ATO’s current batch of mid-range servers with “mostly virtualised” hardware running Intel CPUs and a Unix-based operating system – but without noting what operating system that would be. The most common Unix-like operating system is currently Linux, with Red Hat being the dominant vendor in the space.

The ATO’s storage needs will be served by HP StorageWorks P950 arrays, and a variety of other HP products will also be used as part of the contract; the company’s Network Node Manager, for example, as well as the company’s Storage Essentials solution for performance management and so on.

“Government agencies around the world are facing smaller budgets while trying to enhance value to taxpayers,” said David Caspari, vice president of Enterprise Services, HP South Pacific. “HP will help ATO meet its future business requirements through controlled and efficient management of their technology infrastructure.”

Image credit: Chris Gordon, royalty free