Queensland Premier Peter Beattie has enraged the state's IT industry by approving a 10-year, multi-million dollar contract extension to German behemoth SAP without going to tender.

Adding insult to injury, Beattie also slammed the local IT industry in the "smart state" by adding vendors have to be internationally competitive and adhere to international standards to secure government contracts.

In a Brisbane radio interview on 4BC during the week, Beattie said he would prefer to give the contract to a local Queensland firm, but had to choose the best.

"Because at the end of it all I've got to make sure that I get good value for taxpayers' money," Premier Beattie said.

This statement alone has angered Queensland's IT community more than the handing of the multi-million dollar contract to SAP, an extension of an existing whole of government contract.

Technology One executive chairman Adrian Di Marco said he is concerned about the free pass SAP has been given by the Queensland government, pointing out that the local IT industry has been undermined by the Premier himself.

"It is one thing for the government not to do the right thing by taxpayers and another to start swinging at local industry - most of the local industry is upset about the comments," Di Marco said.

"The thing is in Queensland we have the Smart State initiative, which is seen by the local industry to be nothing more than window dressing and Beattie thinks it has real teeth which shows just how out of touch he is in Queensland.

"Tenders are issued with a bias against local industry. What happened 10 years ago was that SAP won the tender for financial management software for Queensland government and now the government has decided to further entrench SAP without going back out to tender; there have been a lot of changes in 10 years."

Interim chairman of advocate group Software Queensland, Dr Paul Campbell, said the premier is pushing the Smart State line but the government is not smart enough to use Queensland-developed software.

"One of our members was negotiating a reseller agreement in the US and the company raised questions about the Premier's comments - I do not think the problem will go away; it has created some serious problems," Campbell said.

"We are not asking for preferential treatment but a fair process."

Software Queensland has written to Premier Beattie's office outlining a request for a formal meeting and expected to hear back by the end of the week. Australian Computer Society president Edward Mandla said the Queensland government decision is typical of Australia's ICT problems.

Mandla said Australian government [officials] have a real aversion to buying local software.

"They are not prepared to believe that software produced locally is as good as what is produced elsewhere in the world," he said adding that as a country, Australia had a real chip on its shoulder.

SAP spokesperson Jennifer Roach said the Queensland government has been a long-standing customer but would not confirm the extension, adding that all SAP officials familiar with the contract were attending a conference in Germany.

SAP contract history

The original contract for SAP R/3 financial software was selected in 1995 under a 10-year agreement.

The decision to keep using SAP R/3 was based on coverage of the software already in use across the Queensland government along with the investment in skills, business processes, the use of SAP as a full, enterprise resource planning solution in agencies, and the need to maximize the government's return on investment.

The current annual expenditure by the Queensland government on licence and licence maintenance of finance systems for all software providers is in excess of $2.5 million.

ICT workers represented 13.4 percent of the total employment in Queensland during the 2004 financial year, according to figures just released from the Australian Bureau of Statistics.