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2014 Vic election: CenITex outsourcing uncertain as RFP closes

by Ammy Singh •
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As the Victorian Government’s Request for Proposal (RFP) for the outsourcing of the State’s shared services provider, CenITex, closed on Monday this week, the fate of the agency remains up in the air shortly into the newly elected Andrews Labor Government’s term.

The RFP, issued by the Department of State Development, Business and Innovation (DSDBI), which is responsible for whole-of-government ICT procurement, sought a single supplier to act as the prime contractor of all CenITex services. The Department had also welcomed offers in the form of alternative proposals by suppliers, flagging the outright purchase of CenITex as a possibility. 

The outsourcing of CenITex forms part of the ongoing process to transform the agency from an ICT service provider to a broker of third party services.

While the RFP documents initially indicated a successful bidder would be announced in early to mid-2015, following evaluation over the summer period, the change in Government following the 2014 Victorian State Election may grind proceedings to a halt at the discretion of the new administration.

RFP documents clearly stipulate that, “at its sole and absolute discretion, DSDBI may choose not to proceed at any stage of this procurement program” prior to contract finalisation.

Should the outsourcing not continue, suppliers may find themselves jilted after having participated in an earlier EOI round in September 2013 for the provision of storage, processing, network management, service desk and desktop, and end user services traditionally supplied by CenITex. The EOI process sparked an industry consultation with CSC, Datacom, Dimension Data, Fujitsu, HCL, Hitachi, IBM, Kinetic IT, NEC and Telstra, that resulted in the Government abandoning plans to split CenITex’s activities into five towers serviced by separate suppliers, instead moving towards the revised, single-supplier model stipulated in the RFP released in October 2014.

Any change to the planned CenITex outsourcing is also likely to significantly affect internal business planning. According to the agency’s 2013-14 Annual Report, “CenITex business planning has been developed under the expectation that once contracts are in place, a new operating model established and all transfer and transition activities completed, then CenITex as an entity will be closed.”

Established in 2008 by the then-Labor Victorian Government, CenITex services the computing needs of approximately 38,800 public servants across eight Departments and four agencies, accounting for $150.52 million of the State’s $1.5 billion annual ICT spend in 2013-14. The 2014-15 Victorian Budget provided $6 million to DSDBI to manage the outsourcing of CenITex’s services.

The move to outsource CenITex was sparked by the release of the Victorian Government ICT Strategy in February 2013, which aimed to enable a more efficient use of ICT in the Government by leveraging services available from the private sector.

CenITex staff briefing in May 2013 indicated that the agency’s current operating model was under pressure from new capabilities around cloud and utility ICT models that challenged the agency’s cost structures.  

At an Intermedium AIIA Budget Briefing earlier this year, then-Victorian Minister for Technology, Gordon Rich-Phillips reiterated this message, telling attendees that the Government was looking towards outsourced arrangements to “deliver better value for money”, creating new “opportunities for the ICT industry through that new service provision model in the process”.

“We need to look at what opportunities exist in Government for services such as Cloud, what that can mean for service delivery, for procurement within Government, and for getting better value for money for services into Government,” the Minister said of the CenITex outsourcing.

The Victorian Labor Platform 2014 policy document does not indicate any plans with regard to the future of CenITex.

In Queensland, plans to divest the State’s long-standing services bureau, CITEC, were recently shelved after an external review concluded the entity was not ready for sale.

The NSW Government has had more success with selling off internal service providers, successfully disposing of the Australian Centre for Advanced Computing and Communication (ac3) to Klikon Solutions in late 2013.

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