Analysis: Outsourcing incumbents prove hard to unseat

Intermedium managing director Judy Hurditch, meanwhile, described the battle between IBM and HP for the enterprise technology supply to the Australian Tax Office as a "contest of true gladiators, with only one victor possible."

She noted that while Commonwealth Procurement Guidelines favour an equal opportunity for all suppliers, the process by its very nature has bias toward incumbents.

"Value for money is said to have 'three legs' - the fit to requirements, the tendered whole of lifecycle cost (including transition in and transition out costs), and the degree of risk," she told iTnews.

"How this plays out in a practical sense can favour an incumbent.  But only if firstly the bidders cannot readily be separated on the degree to which they are able to meet requirements, and secondly if they cannot be separated on a total cost basis.  If there is a tight result on these two dimensions, then the decision will come down to the assessed degree of risk."

Hurditch said that if one of the two bidders is the incumbent with a satisfactory performance record, they will often gain the edge due to being a 'known quantity'.