The Government will award a £100 million (€127 million) telecoms and internet supply contract to Eircom and Eircell Vodafone shortly following the conclusion of exclusive negotiations with the firms.
The decision to award the tender to the State's two largest telecoms firms will disappoint competitors who have argued the contract should have been used to promote greater competition here.
The contract, which is for a duration of five years, is believed to be the single biggest tender for telecoms services in the history of the State. Successful bidders for the contract will supply a range of communications services to public bodies and Government Departments. They would also supply and maintain a backbone telecoms and internet infrastructure for e-government.
The Irish Times has learned that Eircom and Eircell have been invited to enter into exclusive negotiations with the Government on the detail of their joint bid. It is likely Eircom will supply fixed and internet services while Eircell Vodafone will supply mobile telecoms services.
Several other bidders who submitted applications to the Department of Finance have been told their bids were not successful. Eircom and the Department of Finance both refused to comment yesterday on the tender.
The contract winners will have to provide a telecoms network to almost every geographical region in the State to aid the Government's decentralisation programme to move public-sector employees outside Dublin.
They would be required to offer a wide range of services including fixed-line telephony, mobile telephony, a managed internet protocol service to support data networking between agencies and internet-access facilities. The key qualities of the telecoms services required are around-the-clock availability, a range of options for connection and bandwidth to cope with the needs of offices of varying size, according to the tender documents.
Firms which expressed a formal interest in the tender to the Department of Finance include: Global Crossing, Cable & Wireless, GTS, Compaq, Cara Group, ESB Telecom, Enthropy, Colt Telecom, Chorus and Esat. Competing firms will be disappointed by the Government decision to award the contract to Eircom and Eircell, the two biggest telecoms firms in the State.
Industry sources said yesterday the Government might have missed an opportunity to promote competition and the construction of crucial broadband infrastructure. "They could have used the contract as a means to persuade competing firms to build out extra infrastructure in the State and this would have promoted competition," said one source.
But another source said the decision was not surprising as the tender documents had favoured a single point of contact. Eircom was the only company capable of delivering the level of reach and was a less risky option for the Government, said the source.
It is understood Eircom will act as the single point of contact with the Government in relation to the contract but that Eircell will supply the mobile services.
The contract, valued at more than £100 million over five years, is a significant win for Eircom and Eircell Vodafone. But it will conserve rather than dramatically increase Government traffic on its network.
Indeed, it is likely revenues from Government business will fall when the contract goes live later this year.
Eircom already supplies most public bodies in the State with telecoms services at prices which are understood to be well in excess of the new tender price. It is estimated the firm may have had to reduce its prices by 30 per cent in the new tender to retain the contract.
