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DIAC renegotiates telco outsourcing deal for $94 million

by Paris Cowan •
Free resource

The Department of Immigration and Citizenship (DIAC) has chosen to stay with its incumbent telecommunications supplier, Optus, renewing the relationship with a $93.6 million deal that will extend out to September 2014.

At the same time, the Department of Infrastructure and Transport has gone to the market to weigh-up its options for the renewal of its own telecommunications outsourcing arrangement, which also currently sits with Optus.

The new DIAC contract represents an increase in the Department’s annual telecommunications costs of more than $10 million, with the previous contract averaging $36 million per annum, compared to approximately $47 million under the latest agreement.

DIAC’s existing contract with Optus is due to expire on 30 June 2012, and was worth $143 million over four years.

According to an Optus media release, the deal covered the implementation of a virtualised contact centre solution and the roll-out of VoIP capability to 7,000 desks. It also included the transition of DIAC's Wide Area Network services to the Optus network.

It is the first of three tranches of outsourcing that DIAC is expecting to renew this year.

According to its procurement plans, it will go to market for End User Computing and IT Service Desk Services and Mainframe, Midrange and Storage Services sometime in this current quarter (Q4 2011/12). Unisys currently manages the provision of an IT service desk, end-user computing and secure gateways to the Department, under a $211.5 million contract which commenced in April 2007.

CSC has held the contract to manage mainframe, mid-range and storage services for DIAC since the original monolithic Group 3 outsourcing contract began in 1998. The current CSC/DIAC contract is worth $38.3 million. Both contracts expire on 30 June 2013.

The Department of Infrastructure and Transport’s existing contract with Optus, for which a renewal is currently underway, is worth an average of $2.3 million per year according to 2009-10 Senate Order Reporting. The total value of the five year deal, signed in July 2006, is reported as $11.7 million.

However, the conditions of telecommunications procurement in the Federal Government have changed substantially since the managed services contract was last taken to market, particularly due to the establishment of three mandatory telecommunications whole-of-government panels, for:

  • Mobile devices and carriage;
  • Telecommunications management; and
  • Internet Based Network Connections.

The existence of these panels is likely to reduce the annual value of the Department’s contract, as the range of services that it covers has narrowed. Tender documents specify that the current approach to market will only apply to those telecommunication services not covered by whole-of-government arrangements, including:

  • Voice carriage;
  • Infrastructure, maintenance and support of PABX, Voice and WAN; and
  • Switchboard services.

The contract will be for an initial term of two years with three one year extensions and tenders close on 19 June 2012.

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  • Federal
  • Telecommunications
  • Justice
  • Department of Immigration and Citizenship (DIAC)
  • Department of Infrastructure and Transport
  • ICT Outsourcing
  • Optus
  • Telecommunication
  • VOIP
  • Wide Area Network