Defence Delivers $549 Million IT Contract To Leidos Australia

23 September 2016

Australia’s Department of Defence has awarded a $549 million, multi-year contract to Leidos Australia for the supply of computer equipment and accessories and the provision of centralised processing services to its Chief Information Officer Group (CIOG).

The contract, which extends to the end of 2023, was awarded to Abacus Innovations Australia which, until earlier this year, had been a subsidiary of Lockheed Martin Australia, and formerly known as the US-based company’s Information Systems and Global Solutions (IS&GS) business.

In August, US-based multinational defence contractor, Leidos Holdings, merged with Lockheed Martin’s IT services subsidiary, effectively taking over the IS&GS business.

The new win comes just two years after Lockheed Martin inked an $800 million deal with the Department of Defence for the company’s IS&GS business to supply centralised processing services until 2022.

At the time, Defence CIO, Dr Peter Lawrence, said the project would consolidate infrastructure and applications, improving the overall effectiveness and efficiency of data centre delivery within the Department.

“Centralised processing will deliver a smaller number of more reliable and resilient data centres, from within 280 data centres to 11 domestically and three internationally, Lawrence said. “It will improve the availability and security of Defence’s computer processing capability."

The CIOG manages one of the largest IT networks in Australia, with more than 6,000 servers, three primary data centres, and over 100,000 workstations.

The entity leads the integrated design, delivery, and sustained operation of the Department of Defence’s Single Information Environment (SIE), supporting military and business operations.

The Group is currently in the process of undertaking a transformation program that will simplify, standardise, and modernise the Department’s IT capabilities. According to CIOG, it represents the largest upgrade to the Department’s secret and restricted networks in more than a decade.

The transformation program includes upgrades to the Department’s desktop operating system, a new mailbox storage system, new desktop sharing, video conferencing, and instant messaging to support better staff collaboration and productivity.

Leidos, which won the contract after an open tender procurement process, represents the largest supplier of IT services to the US military since it took on Lockheed’s IS&GS business, according to Leidos’ marketing and communications lead in Australia, Petros Kosmopoulos – previously the marketing and communications manager for Lockheed’s IS&GS in Australia.

The company merged with Lockheed’s IS&GS business in a multi-billion dollar Reverse Morris Trust transaction, which is designed to let a company spin off – in this case, as Abacus Innovations Corporation – and later sell its assets, avoiding certain taxes on the transfer.

Leidos claims almost 1,000 employees in its Australian operational footprint, with the local region representing a point of strategic for the company, and works with the Australian Taxation Office in addition to the Department of Defence.

The company’s Abacus Innovations Australia subsidiary has also won a number of additional contracts with the Department of Defence – many of which are related to CIOG’s activities – totalling well over $10 million.


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