The upgrade, to be handled by ViaIP, is the latest to be carried out under the auspices of the T5 group council tender (GCT-T5).
The tender involves ten other NSW councils and was formed to access greater volume discounts on telecommunications and network equipment and services than any one council could have achieved individually.
It followed an earlier tender, dubbed GCT-T1, which began in 2005.
"We chose ViaIP to upgrade our network as the services on offer will improve our business practices across the council," John Lenehan, IT Manager at Shoalhaven City Council said.
"In addition, the architecture's in-built redundancy will provide us with business continuity enabling us to use a back up link in times of emergency."
Ordinary council meeting notes from June last year [PDF] show that Shoalhaven Council awarded a mobile and fixed voice service supply contract to Optus as part of GCT-T5.
It is said to have saved $65,000 alone on the Optus services by participating in the GCT-T5, the notes show.