ATO extends IT megadeals with DXC and Leidos by $440m

The Australian Taxation Office has extended two of its largest IT outsourcing deals by almost $440 million, buying extra time to potentially transition off them.

Its massive Centralised Computing services agreement, run by DXC, has a $332.7 million extension, starting July 1, from when the existing contract was due to expire and lasting until the end of 2025. 

Meanwhile, the ATO’s End User Technology and Support (EUTS) megadeal with Leidos Australia will now run until the end of 2024, at an additional cost of $106.5 million.

It’s the 69th amendment to the DXC deal - which has grown from $738 million to over $2.5 billion over its life.

The extension of the EUTS is the 58th amendment to the contract since it was first signed in 2010, bringing its total value up to $735 million.

Deals under review

The extensions come as the ATO recontests both deals, alongside a third one known as Enterprise Service Management Centre or ESMC, which Leidos also holds.

Collectively, these are the three largest IT contracts at ATO.

The agency had previously marked 2023 down as a year of “contract execution, transition and service transformation” to any new contractual arrangements.

While some of that work may still happen, it appears a longer transition period has now been set.

The ESMC expiry is still set for mid-2023.

However, an ATO spokesperson told iTnews that all three had been extended. 

Clarification on the length of the ESMC extension was being sought at the time of publication.

“Consistent with whole-of-government requirements, the ATO’s sourcing strategy is seeking to develop smaller, market-aligned bundles to provide greater opportunities for competition,” the spokesperson told iTnews.

“New contracts are on track to be awarded progressively throughout 2023.

“To support the transition to new contracts, the ATO has executed planned extensions to the existing contracts for Centralised Computing, Enterprise Service Management Centre and End User Technology Services.”

It has been heavily rumoured in government circles in recent weeks that the ATO has concluded the recontesting process and awarded at least some of the work.

iTnews was unable to independently verify the identity of the suppliers involved.

The ATO did appear to confirm there had been some movement in the area, but declined to address specific questions from iTnews.

“At this stage, we are unable to comment further on the awarding of these contracts,” the spokesperson said.