NSW Government lambasted for awarding "wasteful" SAP contract

Stephen Withers
Thursday, 19 June 2008 14:18

IT Industry - Deals

A prominent senior executive in the Australian software industry has blasted the New South Wales state government for awarding a huge contract to enterprise software vendor SAP without first going to open tender. The government's decision to not even test the market for alternative solutions first was described as unbelievable.

The New South Wales government has awarded a $A115 million contract to SAP without giving local companies a chance to tender, a move that's raised the ire of the executive chairman of enterprise software developer TechnologyOne.

Adrian Di Marco, the founder of TechnologyOne and a staunch campaigner for the rights of the local software industry to compete for government business on a level playing field with multinationals, said it was "unbelievable" that such a contract should be awarded without thoroughly testing the market.

Governments in Australia are by far the largest buyers of technology, accounting for more than 40% of the national market by some estimates.

Many small to medium technology enterprises in Australia look to the government sector to help them build their businesses. However, they have often been frustrated by the tendency of governments and their  agencies to favour offshore suppliers through whole-of-government purchasing policies and the imposition of costly red tape.

In NSW, Australia's largest state, over 60% of the ICT industry consists of smaller companies, according to peak ICT industry body the Australian Information Industries Association. NSW state government expenditure on ICT is expected to be around $1.5 billion in the coming year, according to the recently announced state budget.

Di Marco recently advocated the establishment of supply panels for federal government contracts, but it was just such an arrangement that resulted in TechnologyOne being locked out of the supply of a payroll, human resources and finance system for use across New South Wales schools and colleges of technical and further education (TAFE).

"The [Department of Education and Training] contract was awarded after the NSW Government did not go to open tender but instead relied on what is now a 15-year-old panel that has become 'an old boys club' in that only US-owned Oracle, German-owned SAP and now US-owned Mincom are allowed to bid for NSW Government business," said Di Marco.

However, there is a difference between what Di Marco wants in a panel arrangement and what is in place now in NSW. Please read on to page 2.