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Contracts publication reveals per annum cost of Distributed Computing at Defence

by Helen Flint •
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Following the deferral of a planned approach to market (ATM) for its Distributed Computing Bundle, the Department of Defence (Defence) opted to extend its contracts with its incumbent suppliers of distributed computing services, Fujitsu and Unisys. On 8 April 2014, it published the details of the extensions on AusTender. With the publication of these two contracts it is now possible to ascertain the current approximate per annum cost of distributed computing at Defence, and also to estimate the likely latest date that a refreshed ATM would need to be issued if the two contracts are not to be further extended.

The ATM for the Distributed Computing bundle was set to replace the contracts with Unisys and Fujitsu and included all end user and desk side support services across Australian Defence locations.

The Unisys contract for Defence Regional Information Services (DRIS) has a value of $69.9 million and is for a period of 2.5 years from 24/03/14 and to 31/10/16. The Fujitsu contract for Distributed Computing Central Services (DCCS) has a value of $201.0 million over 3.25 years from 27/03/14 to 30/06/17. 

Taking the Fujitsu and Unisys contracts together, the total value of Defence’s current arrangements for Distributed Computing is estimated to be in the vicinity of $90 million per annum, which is in line with Intermedium’s previous estimates of its spending in this area.

At the time of announcing that it would not proceed with the market test of the Distributed Computing Bundle, Defence said, “A decision on the longer-term delivery of ICT services through a Distributed Computing Bundle will be made over the next 24 months”.

Allowing for a period of 12 months to conduct the refreshed ATM for the Distributed Computing Bundle, and working back from the earlier of the two contract expiry dates – the Unisys one- of 31 October 2016, the latest Defence could be in the market unless contract extensions are available to it would be October 2015, well inside the 24 month period. 

A February 2014 Fujitsu press release states that the DCCS contract provides services for Defence facilities in Canberra and “includes provision of Service Desk, Service Catalogue, Information Technology Service Management (ITSM) tools support, processes, and resource based tasking for server and desktop, email and groupware.”  Fujitsu Australia and New Zealand CEO Mike Foster also revealed that to meet its support commitments to Defence, Fujitsu maintains a Defence specific workforce of around 500 staff.

In 2010, Fujitsu successfully re-contested the contract it had previously held with Defence under the KAZ Group banner. Fujitsu bought KAZ Group for $200 million in March 2008, part way through KAZ’s first contract term with Defence.

Since 2010 a total contract value of $232.7 million had been reported against the original ATM CIOG 163/09 Central ICT Services. This latest extension now brings the Fujitsu deal to a potential total contract value of $433.7 million over the seven years from July 2010 to June 2017.

According to the January 2014 Unisys press release, the DRIS contract provides “IT support for 100,000 end users at 460 Defence locations across Australia…including network security and infrastructure support, as well as server and desktop support, to all sections within the Australian Department of Defence including the Australian Defence Force - comprised of the Royal Australian Navy, Australian Army and Royal Australian Air Force.”

Unisys won the $277.6 million contract to supply Regional ICT Services back in 2008, and this latest extension brings the total value of the contract up to $347.5 million over eight and a half years.

In January 2014 Defence announced that it would not be proceeding with the planned ATM for the Distributed Computing Bundle saying “Defence is currently undertaking a significant Information and Communications Technology (ICT) transformation program.”

“As the projects currently underway require a focused and sustained effort, Defence has decided not to proceed with the planned market testing of the Distributed Computing Bundle.”

Defence has struggled under a heavy ICT project load in recent years with an ambitious ICT reform agenda underway.

2009 saw the release of a number of key reports setting out the future for Defence generally and ICT management specifically including:

Force 2030, Defending Australia in the Asia Pacific Century - Defence White Paper 2009

The Strategic Reform Program - Delivering Force 2030

Defence Capability Plan 2009

Defence Information and Communications Strategy 2009

The Strategic Reform Program aims to deliver $1.9 billion in savings through ICT reform at Defence and Distributed Computing is part of this set of reforms. The Defence ICT Sourcing Strategy recommended that the agency consolidate its infrastructure into three outsourced bundles:

Terrestrial Communications

Centralised Processing (Data Centre Consolidation)

Distributed Computing

The Terrestrial Communications bundle is the only one to be resolved to date, when Defence outsourced its telecommunications requirements to Telstra in April 2013, in a $1.1 billion 6.5 year deal.

Evaluation of bids is still underway for the Centralised Processing bundle, which will see the consolidation of around 280 data centres down to 10 facilities. Three suppliers, Hewlett-Packard, IBM and Lockheed Martin were initially shortlisted for the Centralised Processing bundle, and in September 2013 Defence further down selected to just two suppliers, IBM and Lockheed Martin, to continue negotiations. The contract for Centralised Processing is expected to be awarded by the end of 2014.

Defence has indicated that it will make a decision regarding the future of the Distributed Computing Bundle within the next two years.

A new ICT Strategy for Defence, which is expected to be released later this year, may shed some light on the future of Distributed Computing.

Related Articles:

Defence reveals timeframe for Distributed Computing approach to market

Defence struggling under current ICT project load

New Defence ICT Strategy underway

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