Prime Minister Malcolm Turnbull blamed the company for failing to meet its contractual obligations and it paid $30 million in compensation.

"If you engineer a bad experience like the census, why do you expect IBM can do a better service," Dr Raffoul told The Australian Financial Review.

"If the government still trusts them, they should give it [the contract] in phases and not such a big deal."

Dr Raffoul said he was concerned the government had been repeating the mistake of ICT procurements in the 1990s, when big contracts were signed with a single vendor.

David La Rose, Managing Director IBM Australia & New Zealand, and Minister Michael Keenan announce the signing of a $1 billion whole-of-government contract for the Commonwealth. Supplied

Changes were introduced from about 2000 after a review found these types of deals were not delivering value for money.

"It's the same bad practice that went wrong before but we're doing it again now under the name of new technology or digital transformation," he said.

Dean Lacheca, research director for public sector and government at advisory firm Gartner, said the scale of the deal was not a surprise but pointed out IBM had been struggling to win new business outside of government.


"There is still a significant legacy investment in IBM [in the federal government] and a big part of that deal underpins that legacy system and opens up opportunity for innovation," he said.

Mr Lacheca said the deal would give Canberra access to IBM products in a controlled way with standardised pricing but was concerned it could inhibit competition.

"Hopefully the agreement takes away pressure on procurement but we want to make sure that smaller system integrators are not locked out," he said.

"If the level of lock-in for IBM prevents encouraging the use of other technology from other vendors, that would be concerning."

Mr Lacheca said IBM was not unique around the globe to have suffered a large-scale failure as seen but believed the new agreement's focus was on meeting everyday ICT needs rather one-off projects like the census.

"Certainly I would not expect IBM would get themselves into new projects," he said.

Kevin Noonan, chief analyst at Ovum, said it was a good deal for both IBM and the government. With agencies not required to purchase IBM, the contract still had an incentive for the firm to perform.

Contrasting Canberra's continued faith in IBM, Mr Noonan said the Queensland government had blackballed IBM over a payroll failure, a move that failed to reflect the the reality that IBM is already well entrenched in government and did a good job.

"At the end of the day they're here to do business and there is no point holding a grudge," he said.