"Part of the reason for the drop appears to be that hardware and telecommunications equipment is now increasingly being supplied in managed services arrangements and so agencies are not entering into separate contracts with suppliers," Hurditch said.

Five agencies have now averaged more than A$100 million a year in new contracts over the last three years. "These agencies constitute Intermedium's tier one and they dominate the market, accounting for 75 percent of contracts," she said.

The top four contracts combined are worth almost A$800 million and cover outsourcing services, telecommunications and enterprise software agreements. "Some categories, such as cabling, continue to be solid niches for specialist participants," Hurditch said. "Others, such as photocopiers, are being cannibalized by multifunction devices, with that market down from a high of A$21 million in 2002-03 to A$13 million last year, a drop of nearly 40 percent."

Of the A$2.99 billion in contracts awarded, about half were sole source - awarded via contract extensions or variations to incumbent suppliers. "If ever there was solid evidence of the value of incumbency - this is it," Hurditch said.

Intermedium will brief ICT suppliers and government purchasers on their 2004-05 findings in Canberra on November 22, 2005.