The federal government's "Shared Services Centre" has swooped on a $62 million services contract that had been in private hands for years.
Industry insiders say they were gobsmacked when the Australian Public Service outfit aggressively bid for an Education Department contract held by outsourcing giant Serco, with the work to be "insourced" back into government.
About 100 call centre workers employed by the UK-based multinational in regional Victoria face an uncertain future after Serco lost the "customer-facing" service contract it had held since 2011.
Several other companies had put together bids for the work when they were told recently that it was to "insourced" and that the SCC would be taking over.
The coup has sent shockwaves through the business process outsourcing industry with executives crying foul at having to compete against a government entity when bidding for work they believe should go to the private sector.
"The whole industry was just gobsmacked," one executive said.
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But the Abbott government's "contestability agenda" is clear in its instructions to the bureaucracy's leaders that shared services should be in the mix in decisions about the future of Commonwealth functions.
The contractors in the call centre in Bendigo, which was run by a smaller firm called Excelior before their takeover by Serco, also answer telephone inquiries for the Employment Department.
The capture of the contract from Serco will take the Shared Services Centre into new territory; the provision of customer-facing services when it takes over the call centre in January 2016, shocking observers who expected it to confine itself to back office functions.
But the government's contestability agenda will force bosses to consider the shared service model when assessing what work can be outsourced or privatised.
The SSC already has more than 600 public servants or staff, making it bigger than some departments, and has taken over "backroom functions" from 11 departments and agencies and further growth looks likely as the privatisation push gathers pace.
The centre, which emerged from the breakup of the education and employment departments in 2013 and has only been operating since early 2014, is a key plank in the government's contestability program which might see tens of thousands of Commonwealth jobs outsourced.
Public sector experts say the program, which will be rolled out across the Commonwealth government in the next three years, could be one of the biggest upheavals in the service's history.
The Finance Department has confirmed that "portfolio stocktakes" are under way with government departments being assessed to see if work can be farmed out to either the private sector or the SSC.
The Shared Service Centre declined to comment on the Serco contract.
The Education Department would not answer questions about the call centre work.
"The Department of Education and Training's contract with Excelior/Serco for contact centre services is in place until January 20, 2016," a spokeswoman said.
This contract is also used to deliver Department of Employment contact centre services.
Serco also declined to provide detail of the future of the contract.