The Department of Defence has confirmed that it expects to approach the market to outsource its distributed computing bundle of services, estimated to be worth $90 million per annum, in the fourth quarter of 2013.
Distributed computing will be the third ICT service bundle to be outsourced under reforms to the Department’s ICT procurement aimed at streamlining vendor management.
The services set to fall within the distributed computing bundle are currently split between a number of contractors, with the majority provided through major deals with Fujitsu and Unisys.
Based on the average annual value of these contracts, Intermedium estimates that Defence currently spends approximately $90 million per annum on its distributed computing environment. This suggests that if the Department were to sign a three year deal with its preferred distributed computing supplier it is likely to be in the vicinity of $270 million. If the Department were to sign a five year deal, it would be worth in the vicinity of $450 million.
The scope of the distributed computing deal includes service desk support, management and monitoring of hardware and the deployment of software updates, according to the 2009 Defence ICT Strategy.
Fujitsu has been the main provider of central ICT infrastructure support services to Defence since 2005, including service desk, server and desktop operations, network operations, watch function, and email and groupware operations. These are provided to Defence facilities in Canberra.
Since 2010, Defence has signed 26 contracts with Fujitsu with a total value of over $204.6 million.
The bulk of the contracts are due to expire in June 2013, including a:
- $38.8 million three-year contract;
- $38.3 million two-year contract;
- $31.3 million two-year contract;
- $21.5 million two-year contract; and a
- $20.9 million three-year contract.
The most recent contract is worth $52.9 million over a 10-month term expiring in June 2014, indicating that it is likely an interim agreement to cover the period between the expiry of the above agreements and the finalisation of the new distributed computing contract.
Central ICT services for remaining Defence facilities are provided separately under Defence’s regional services support arrangement with Unisys. The arrangement is worth $277.6 million over a six-year term expiring in November 2014.
The Defence environment includes approximately 82,000 windows workstations, 1,800 windows servers and 8,400 printers. Defence employs around 270 full-time equivalent staff in the service components covered by the distributed computing bundle.
The consolidation of the distributed computing arrangements is part of broader ICT procurement reforms currently underway at Defence under a Department-wide Strategic Reform Program which aims to deliver greater efficiency when it comes to staff, management and business-as-usual costs. Areas of ICT procurement have been split into three main bundles:
- Distributed Computing;
- Centralised Processing (data centre consolidation); and
- Terrestrial Communications.
The Terrestrial Communications bundle has been awarded to Telstra for $1.1 billion over 6.5 years.
Defence is still evaluating bids for the consolidation of 280 data centres into 10 facilities under the Centralised Processing project. Hewlett-Packard, IBM and Lockheed Martin have been shortlisted to provide an end-to-end solution for Defence’s fleet of data centres.
Defence has also outsourced systems integration work through its Applications Managed Services Partnership Agreement (AMSPA), which has split responsibility for particular deliverables between Accenture, BAE Systems, CSC, HP and IBM.
The ICT component of the Strategic Reform Program is expected to achieve savings of around $1.9 billion over 10 years. The main savings stream outlined are the creation of a single enterprise architecture, standardising the ICT environment, consolidating 200 data centres into less than 10 facilities, and reviewing the two pass process for ICT projects.
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