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DHS puts 20% of Telco market up for grabs

by Paris Cowan •
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Up to 20 percent of Federal Government Telecommunications business could be snapped up for as long as seven years, with the Department of Human Services (DHS) currently seeking suppliers to take on the telecommunications requirements for the whole portfolio.

The DHS was formed in 2004, but it has only been since December last year that plans to consolidate the activities of its constituent agencies into a more effective service delivery entity have started to take shape, with the announcement of the Service Delivery Reform (SDR) program. According to Minister Bowen, the SDR was the means by which a consolidated agency (ie DHS) would provide better services to Australian citizens.  It was envisaged that there would be a single point of contact for services, whether it be face-to-face, online or over the phone.

Both Medicare and Centrelink sit within the portfolio grouping  alongside the DHS entity, and these three agencies all rank amongst the top ten Federal Government telecommunications purchasers over the past 3 years, according to Intermedium’s data.

The supply arrangement will apply across these three major agencies, as well as several smaller agencies which also fall within the DHS cluster, such as the Child Support Agency (CSA). The Department of Veteran’s Affairs (DVA), which entered into a shared services arrangement with DHS in March 2010, will also have their telecommunications needs met under the proposed procurement.

DHS is looking to contract suppliers for a period of five years with the option of a two year extension to supply end-to-end managed services. While the Department has not officially given an indicative value for the total supply, it has told ZD Net that estimates fall around $500 million for the life of the contract.  At its ICT Signposts Briefing in September 2010, Intermedium Senior Associate Murray Harrison, a previous CIO at the Australian Customs Service, suggested that agencies were likely to start looking for ways in which to use NBN-related capabilities.  A number of requirements that will be distinctly facilitated by the NBN can be seen within this approach to the market.

The tender covers four ‘Service Bundles’:

1.    Managed Telephony Services –Within this bundle, DHS is looking for vendors to supply all telephony infrastructure and associated support services. This includes IP telephony and associated hardware, LAN Services, call management systems and a user-centric phone solution that would allow DHS employees to access their personalised telephony settings from any workstation.

2.    Telephony Carriage Services –In addition to the provision of standard telephony carriage, the selected vendor/s from this service bundle will be required to provide the satellite and PSTN Services that enable the Department’s mobile service delivery to remote and regional areas. DHS is also looking for options to facilitate outbound SMS delivery from desktops.

3.    Managed Contact Centre Services –The contract will cover all the infrastructure and support services needed to equip the ‘one-stop’ service portals that will provide customer access to all of the welfare agencies within DHS. As well as intelligent routing, and interactive voice response (IVR), DHS is looking for solutions to enable video call and web-chat alternatives to over-the-phone customer service. It is also looking to implement “web co-browsing” between customers and customer support staff.

4.    Managed Video-Conferencing Services –DHS is looking to equip the whole portfolio with video-conferencing capabilities, from a single-user desktop facility, to whole-room meeting facilities and telepresence capabilities. It is also looking to implement a conference booking system accessible from all DHS workstations.

The contract will not cover internet-based network connections or mobile voice and data requirements as these will be sourced through whole-of-government panel arrangements that have been put in place by the Department of Finance and Deregulation (Finance).

Tenders have closed for both Finance’s  Internet Based Network Connections (IBNC) and Telecommunications Commodities, Carriage and Associated Services panel arrangements, and these are currently under evaluation.

Since 2007, the DHS agencies have procured an average of $70 million worth of telecommunications products and services each year.

This consolidated arrangement will replace individual managed services contracts worth tens of millions of dollars annually.

The portfolio’s biggest purchaser, Centrelink, is currently engaged in a telecommunications managed services contract with Telstra which was signed in 2004. This contract has been extended to the beginning of 2012, expanding the total supply value to $331 million.  The extension clearly gives DHS to time necessary to assess the large and complex tender arrangement, with responses closing on 4 February 2011.

Medicare has sourced the bulk of its telecommunications services from Optus, only recently entering into a two-year arrangement with the company worth $70 million. This will also expire at the end of 2011.

The DVA and the lead agency (DHS) both have comparably small telecommunications agreements signed with Macquarie Telecom and Telstra respectively.

However it is also possible, and even likely that a greater range of companies will be selected to supply the required services in the new DHS procurement landscape. DHS has been very careful not restrict its flexibility in any way, reserving the right to select one vendor to cover all service bundles, to select a different vendor to supply each of the bundles, or even to contract multiple vendors within each bundle.

The DHS has also stated that the contract will be open to other agencies and the same pricing conditions will be extended to external purchasers.

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  • Federal
  • Telecommunications
  • Human Services
  • Centrelink
  • chris bowen
  • DHS
  • DVA
  • Finance
  • IBNC panel
  • macquarie telecom
  • Medicare
  • Optus
  • Shared Services
  • Telstra
  • tender