[LINK] Warning on (IT Outsourcing) work contracts

[Bernard Robertson-Dunn]

<brd>
Looks as though this whole of government IT outsourcing thing just won't
lie down and die.
</brd>

Warning on work contracts
Rebecca DiGirolamo and Selina Mitchell
04 October 2001 
The Australian
http://australianit.news.com.au/common/storyPage/0,3811,2984925%5E442,00.html

The South Australian Government's unprecedented outsourcing of its entire
IT management and maintenance contract to US firm EDS should sound warning
bells for similar federal contracts. Such whole-of-government outsourcing
contracts were outdated licences to print money and taxpayers could
continue to be short-changed by multinational companies.

These warnings were issued yesterday by Adelaide University Centre for
Labor Research executive director John Spoehr, following revelations that
EDS appeared to have overcharged the tax office and South Australian
Government under the umbrella of IT outsourcing contracts.

"We can expect to see continued problems arising from large-scale
outsourcing projects," Professor Spoehr said. "The warning signs were there
some time ago and clearly, strategies have not been put in place to contain
the blow-outs."

Texas-based EDS is a major beneficiary of the federal Government's computer
outsourcing policy and has been awarded a $490 million five-year deal with
the tax office and a $200 million deal with the Customs department.

This week's report by South Australian auditor-general Ken MacPherson
reveals EDS overcharged the state Government in hardware and services as
part of its $700 million contract. The Australian understands the
overpricing was by more than $10 million.

Last week, The Australian revealed EDS had been charging the tax office
exorbitant prices for computer replacement parts. "The South Australian
outcome could yet be followed by similar examples of wastage in federal
government outsourcing contracts," Labor IT spokeswoman Kate Lundy said.
She said whole-of-government technology outsourcing contracts were
described within the IT industry as "licences to print money" and most
governments around the world stopped agreeing to such contracts years ago.
"EDS exploited the situation, but governments were dopey and ill-informed
for purchasing this style of contract," she said.

An EDS representative said he could not comment.

A spokesman for South Australian Administrative and Information Services
Minister Robert Lawson said the Government had not been overcharged by EDS
and defended the contract.

-- 
Computers are useless. They can only give you answers.
-- Picasso

Regards
brd

Bernard Robertson-Dunn
Canberra Australia
brd@dynamite.com.au
brd@austarmetro.com.au