@wgly I don't wish to challenge you on your knowledge of the IT...

@wgly
I don't wish to challenge you on your knowledge of the IT industry, as I suspect you know far more than I do. But I am always keen to learn something if I am mistaken.

Their product division is running at 7%+ gross margin, so it would seem extreme if they were running at 1%, even for such a large tender. Also there are not just product deliverables, which might be somewhat significant in the expected margin.

Below is some detail of the tender from RFT17/0001 at www.tenders.gov.au. I have highlighted the last paragraph.
The reason why I thought there was a low likelihood of DTL losing is that there are additional value add deliverables mentioned. This gives a significant advantage to the incumbent IMO in many different ways. You really have to do something terrible or silly to lose from such a position in my experience, as the government will not be just taking the lowest price on a product, but actually cares about other aspects of their offering, and will be receiving input from direct internal users.

"The Digital Transformation Agency (DTA) invites interested parties to submit tenders in response to the requirements set out in Request for Tender (RFT) SLS 0001 – Establishment of a Whole of Australian Government Software Licensing and Services Panel – Category 1: Microsoft Licensing Solutions Provider (MLSP).
There is a requirement for one or more suppliers to provide MLSP Deliverables to the Commonwealth. In the future the panel will be reopened to add additional suppliers and categories. Dates for any additions are not yet set.
The panel will be accessible by all Commonwealth entities including any incorporated entity over which the Commonwealth or a State or Territory exercises control.
The key objective is to ensure ongoing value for money for entities to receive basic and additional value add MLSP Deliverables."