The network will provide an easy and reasonably-priced route for government agencies to communicate among their own offices and to share data with other GSN users.

Three "strong contenders" were short-listed, says the commission's ICT deputy commissioner Laurence Millar. All were assessed as "capable of delivering the required services", he says. No one should be thought of as "losing" the deal, rather "IBM came through as the best of a good bunch."

TelstraClear was rumored to be another of the contenders for these contracts and some industry sources were looking to an award in that direction as a competition-balancing move against the dominance of Telecom.

The network management and service delivery functions are major portions of a tender that was split into 18 sub-projects. Winners of other sub-projects include Asnet, Kaon Technologies, Datacom, BCL, CityLink, Vector Communications, FX Networks, DTS and Revera (formerly HDS New Zealand). Like IBM, these organizations are also preferred suppliers subject to contract finalization.

Industry sources suggest that being favored for another large contract represents a rehabilitation of IBM in the government's eyes since the embarrassing 1999 abandonment of the Police Incis project, after cost over-runs of NZ$40 million (US$27 million).