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DHS spends $224 million on data centre lease

by Paris Cowan •
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The Department of Human Services (DHS) has re-signed with Canberra Data Centres for a new and expanded lease within the Hume Data Centre that will be worth $223.7 million over ten years.

At  a value of more than $22 million per annum the lease is nearly ten times the annual value of the DHS’s previous agreement with the provider, which was signed through the interim whole-of-government Data Centre Panel in 2009. The previous contract, signed by Centrelink was worth $4.9 million over two years.

A spokesman for the Department said that the value of the lease has increased because the Hume Data Centre is one of two facilities into which the DHS hoped to have consolidated its seven existing data centres by the end of 2014.

“The increased contract value reflects the much larger footprint DHS now occupies within the Hume data centre,” he said. “As part of the progressive consolidation of our ICT systems, we are leasing more physical space within HDC in order to accommodate the equipment we are relocating from other facilities.”

He added that the DHS would soon begin transitioning Medicare systems to the Hume Data Centre from where they are currently housed at the Deakin Data Centre, at which point it will join the Department of Defence in transitioning out of Deakin altogether.

Last month Human Services Minister Kim Carr emphasised the centrality of data to the DHS, which now includes two of the Federal Government’s biggest agencies, Centrelink and Medicare, and processes $140 billion in payments to more than 20 million customers each year.

"We're merging almost 500 servers into just eight that provide maximum performance while reducing the space required in the data centre, resulting in lower financial and environmental costs,” he said in a statement. "Already we've seen an improvement in speed and reliability of the ICT services for people using the Child Support program since they moved from their old data centre to the new site."

Despite being signed through the whole-of-government Data Centre Facilities Panel, the Department did not seek any new quotes from other panellists, as “there were no other facilities at that time that met the department's requirements,” said a spokesperson.

“Additionally, had other facilities been available, it would not have been cost effective to relocate the existing equipment at Hume to an alternative facility,” he said.

The contract solidifies Canberra Data Centre’s position as the leader in the Federal Government market. It is the only supplier to have won contracts through the whole-of-government Data Centre Facilities Panel to date, with this latest deal taking its revenue from the panel to $272 million.

The lease is just the second major contract to have been signed though the Data Centre Facilities Panel, now more than 12 months since it was established.

On 27 April the Australian Government Information Management Office (AGIMO) announced that the Department of Finance and Deregulation had entered into a ten-year lease with Canberra Data Centres worth $45.6 million on behalf of a consortium of agencies.

A spokesperson for Finance has subsequently told Intermediumthat the consortium consists of five “predominantly smaller” agencies.

Via the AGIMO Blog, First Assistant Secretary John Sheridan signalled the consortium model could become a common fixture when it comes to procurement through the Data Centre Facilities Panel, adding that the agency is currently “working with agencies to build further consortium leases through the Panel”. The model is no doubt aimed at leveraging price efficiency for smaller agencies.

However, if Finance chooses to keep membership of future consortiums confidential for security reasons, as it has this one, then it could become difficult for Data Centre providers to keep track of which agencies have and haven’t gone to market for their leases.

By contrast, the DHS has encouraged journalists to publish pictures of its new facility. The Department of Defence signed a lease for its primary data centre with Global Switch in 2010, the location of which is also publically available.

The consortium lease is the first major contract signed through the Data Centre Facilities Panel. Finance said that a previous contract signed against the SON ID by the Australian Crime Commission (and reported on by Intermedium) was a short bridging lease to cover the interim between the expiry of ACC’s original lease and the start of the consortium lease. This would suggest that the ACC could be one of the five consortium agencies.


Related Articles:

Three IT giants shortlisted for Defence Centralised Processing Project

ACC the first major customer for whole-of-government Data Centre Panels

DHS on track to trim down data centre numbers

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