The Defence Department says it is too busy to conduct value-for-money tests on computing deals with the private sector worth more than half a billion dollars.

The Defence Department says it is too busy to conduct value-for-money tests on computing deals with the private sector worth more than half a billion dollars. Photo: Louie Douvis

The Defence Department says it is too busy to conduct value-for-money tests on computing deals with the private sector worth more than half a billion dollars.

Government technology experts say the department has cut hundreds of public servants from its IT operations in the past three years without showing the promised savings.

The decision to delay open tenders for $500 million worth of contracts, which was announced by the department this week, will see outsourcing giant Unysis "delighted" to earn an extra $50 million as it retains some of the work for another two years.

Defence intended to invite new bids in 2014 as existing contracts with a range of private IT companies, worth a total of more than $500 million, expired during the year.

But in a brief statement, the department said it was too busy transforming its tech programs to carry out the new tender process.

"Defence is currently undertaking a significant Information and Communications Technology transformation program," the statement read.

"As the projects currently under way require a focused and sustained effort, Defence has decided not to proceed with the planned market testing of the Distributed Computing Bundle."

Instead the department will extend its existing Unisys Regional ICT Services Agreement for on-site support services until October 2016.

"A decision on the longer-term delivery of ICT services through a Distributed Computing Bundle will be made over the next 24 months," the statement said.

Unisys won the Regional ICT Services Agreement, worth about $311 million, in 2008 and the extension will add about $52 million to the final bill.

The company's Australian subsidiary said the deal provides support services for up to 100,000 navy, army, air force and civilian personnel at 460 sites across the nation.

According to the online trade journal IT News, attention will now turn to Fujitsu's deal with Defence, due to expire in June, under which 450 of the multinational's staff are embedded in the department.

Defence announced its Strategic Reform Program in 2010, a plan to bundle the bulk of its private sector IT deals into three large contracts.

Telstra scored the $1.1 billion telecoms component of the package last year and either IBM or Lockheed Martin are expected to win the consolidated data centre contract early this year.

But IT News industry commentator Brett Winterford believes the reform project's ambitions are not being realised after 200 to 300 public servants' jobs were cut from Defence's Chief Information Officer's Group without departmental bosses being able to show matching savings.

"Defence has followed the reform timetable to the letter in terms of staff cuts, but isn't hitting its project milestones," Mr Winterford wrote on Friday.

"In other words, staff in the Defence CIO Group were almost certainly cut in anticipation of savings that haven't yet been realised."

He said agencies were ''being pushed into outsourcing deals - in the name of cost savings - without first being given the necessary resources to clean up their shop".