NSW government sells off in-house tech provider ac3

By Julian Bajkowski

The New South Wales government has liquidated its 100 per cent shareholding in corporatised IT infrastructure and cloud computing broker, the Australian Centre for Advanced Computing and Communication (ac3) in a sale that Minister for Finance and Services Andrew Constance said was above the government-owned vendor’s “retention value”.

The government-owned tech services vendor has been picked up by privately held systems integrator Klikon Solutions for a so-far undisclosed sum, a transaction that essentially removes the state government from the position of being a technology vendor that potentially competes against the private sector.

While neither party is talking numbers, the Department of Finance’s 2012-2013 annual report put the value of ac3 at an asset on the government’s books at $3.9 million. Still profitable, Finance’s annual report show ac3’s revenue lifted $9 million to $24 million for the last financial year.

Around 90 per cent of ac3’s revenue is derived from government contracts and it is not yet clear whether the sale price is conditional to earn-out provisions or the retention of existing government contracts.

What is clear, however, is that the state government is happy to be out of supply-side of the technology services market at a time when there are strong deflationary pressures on the price of computing capacity.

Referencing the NSW Government’s recently released ICT Strategy, Mr Constance said that the state planned to “move away from being a provider of ICT services to being a knowledgeable purchaser of ICT services from a contestable market place.”

“The successful sale of ac3 assists to drive the NSW Government towards achieving this end state. ac3 will continue to provide essential ICT services to NSW Government agencies,” Mr Constance said.

The move by NSW to exit the supply side of the tech services market coincides with similar moves by the Newman government in Queensland where a program of divestment of government-owned tech services providers has been instigated.

While ac3 enjoyed good relations with the state’s tech sector, large sections of Queensland’s technology industry were deeply ambivalent about competing for government business against the government itself.

“A robust process was undertaken by the NSW Government with the assistance of the independent financial, legal and probity advisors to select the preferred bidder at a price which was in excess of the retention value,” Mr Constance said.

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