Govt AWS contract balloons 10x to $390m in three years

Denham Sadler
National Affairs Editor

US tech giant AWS has had its whole-of-government sourcing deal extended and “enhanced”, after the value of its previous deal ballooned in value by more than 10 times to $390 million across its life.

The Digital Transformation Agency (DTA) announced on Thursday that it had renewed its whole-of-government volume sourcing deal with Amazon Web Services (AWS), which had been set to finish at the end of April.

The new deal is set to cost at least $174.1 million over the next three years.

The deal gives federal, state and territory departments and agencies, along with public universities and government-controlled business entities a consistent approach to access and use AWS services, including cloud hosting.

The standardised agreement aims to make it easier for government to buy from AWS and reduce the costs of these deals.

Parliament House

The first deal with AWS was signed in 2019 and was estimated to be worth $39 million across three years. But the cost of this deal has skyrocketed in the years since and is worth a total of $390.8 million now, an increase of more than 10 times.

Amendments to the deal across its life included a $107.5 million jump earlier this year to cover “operational spend by agencies” and a $159.3 million increase late last year for “future commitments and increased uptake of the deal”.

Through the new deal, agencies and departments will be able to buy cloud services through the DTA or directly from AWS. Customers of the existing deal include CSIRO, the ABS, ASIC and the ATO.

“This enhanced whole-of-government agreement represents AWS’s deep long-term commitment to Australia and our ability to innovate and improve based on feedback from our partners and customers,” AWS public sector country director of Australia and New Zealand Iain Rouse said in a blog post announcing the new deal.

“We are looking forward to continuing to support the government in its digital initiatives, drive local economic growth and solve some of the biggest challenges in society.”

The federal government has seven whole-of-government agreements in place, all with multinationals: AWS, Concur, IBM, Microsoft, Oracle, Rimini Street and SAP.

As with the AWS deal, these agreements often significantly increase in value after their original signing.

The DTA signed a deal with SAP in 2017, running to September 2022, initially valued at $42 million, but this agreement is now worth $315 million.

A whole-of-government deal was inked with US tech giant IBM in 2018 estimated to be worth $1 billion over five years.

Microsoft’s own whole-of-government deal is now worth more than $800 million, eight times its value in 2019 when it was reissued by the DTA.

These deals have been controversial over their preferencing of large multinational tech firms over local players, with concerns also around the sovereignty of data and taxation issues.

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