By Paul Hemsley and Julian Bajkowski

The Department of Defence has revealed that has nominated Telstra as the preferred tenderer to upgrade its mammoth terrestrial communications network and install wireless technology and desktop video conferencing in a deal estimated to be worth around $1 billion.

While the deal is still to be officially inked, Defence’s naming of its preferred carrier all but seals the deal for Telstra that beat out Optus and Fujitsu in a tendering process that from March to May this year.

The picking of the former government-owned monopoly comes as Defence tries to further cut its costs in the face of shrinking government revenues that are putting substantial pressure on the Budget.

The awarding of the contract also clears the way for Defence announce its selection of a new Chief Information Officer to replace Greg Farr who has been credited with reinvigorating Defence’s internal IT capability from a costly and moribund legacy cost centre that drew attacks from ministers to a fast moving and agile leader in government technology.

Mr Farr’s acolyte and Defence Chief Technology Officer Matt Yannopoulos is known to be a contender for the job which is considered to be the toughest government technology post in Australia and has previously been difficult to fill because of power struggles between Defence’s civilian and uniformed arms and heavy lobbying from the supplier community.

A warning from Mr Farr that he would not tolerate technology suppliers undermining each other or his authority saw him become the target of a relentless whispering campaign that ultimately proved fruitless during his the period of his appointment.

Although far from a surprise, Telstra’s appointment underscores the perception that the federal government is becoming increasingly conservative in terms of security in its choice of suppliers for infrastructure that has national security sensitivity.

While its staff are loathe to talk about it, Defence ultimately stands to be a big beneficiary of the National Broadband Network because it will have access to access to far greater national connectivity in many regional areas where it has bases without needing to roll its own fibre.

Under the soon to be signed deal, Telstra it will install technology throughout the Defence network that will allow internal users to connect to internal networks at any time through wireless technologies through both in-house and personal devices.

Defence personnel will also be able to have desktop to desktop video conferencing to collaborate on both the Defence Restricted Network and the Defence Secret Network.

The system will also allow Defence on deployment to have improved communications with the its fixed network.