Following a revision to its $342 million managed services contract with IBM, the Federal Department of Health and Ageing (DoHA) will in future seek its hardware and software in the open market or else from the relevant whole of government (WofG) panels.
“If other agencies go down this path, this will be the single biggest change we have seen to Infrastructure Outsourcing arrangements since the big monolithic contracts with single suppliers were broken down,” said Managing Director of Intermedium, Judy Hurditch
Hardware and software have previously been purchased through the Department’s comprehensive IT outsourcing agreement with IBM, which has been in place since 1999 at an estimated value of $25 million per year.
However, Intermedium has learned that the scope of the contract was recently revised, meaning that DoHA will be required to source its hardware and software requirements from elsewhere.
“The old contract had provision in it to purchase, from IBM, hardware and software. The new contract does not,” a spokeswoman for DoHA told Intermedium.
“The Department will now be required to go to market or use an existing whole-of-government panel, as per the Commonwealth Procurement Guidelines (CPG’s), to purchase these assets.”
A comparable Federal government agency in terms of public sector staffing numbers, the Department of Education, Employment and Workplace Relations (DEEWR), has procured an average of $18.2 million in hardware and $15.8 million in software over the last five financial years.
Ms. Hurditch believes that DoHA is looking to benefit from the establishment of WofG panels for these products, and that this sort of amendment to outsourcing arrangements could become more widespread in the future.
“By contributing to the volume of demand going through WofG panels, agencies such as DoHA may increasingly be able to access lower prices when sourcing their ICT requirements,” Ms. Hurditch said.
“The procurement savings claimed by Special Minister of State, Gary Gray in his Technology in Government and Public Sector Summit address are no doubt being widely discussed across government, and agencies would be under some pressure to move their procurement to these arrangements wherever possible, especially with all agencies looking to alleviate the pressure of their 1.5% efficiency dividend”, she added,
“It is likely that other agencies with managed services contracts will seek to do the same if it is proven to be more cost effective to procure outside their primary outsourcing agreement and the agreement can be amended,” she said.
The Whole-of-Government panels now available to DoHA for its hardware and software include:
- The Whole-of-Government Desktop Hardware Panel, encompassing standard desktop and mobile PCs (Acer Computer Australia, Corporate Express Australia, Dell Australia, Data #3, Datacom, CSG Services, Ethan Group, Hewlett-Packard, UXC Connect, Lenovo, Greenbox Systems and APCD);
- The Major Office Machines Panels, encompassing the Managed Print Services panel (CSG Enterprise Print Services, Canon Australia, Konica Minolta and Ricoh Australia) and the Equipment and Support panel (Fuji Xerox, Konica Minolta, Kyocera Mita, Ricoh Australia, Lexmark International and Sharp); and
- The Microsoft Volume Sourcing Arrangement (Data#3 is the sole provider).
It is presumed that other software requirements, not currently available on multi-agency access panels would have to be sought by DoHA in the open market.
DoHA’s Procurement Plans indicate it may approach the market in 2011-12 for several ICT acquisitions previously included in the DoHA-IBM outsourcing agreement, such as mid-range and storage services.
IBM and DoHA’s IT outsourcing agreement has been in place for 12 years and was extended to 2015 with a value of $109 million in late December 2010.
According to Intermedium’s Federal Government Infrastructure Management Outsourcing Report, the current arrangement was estimated to be worth approximately $342 million over the contract life and, before its revision, encompassed mainframe, midrange, network, storage and desktop support, and end-user computing services, including the roll out of a desktop virtualisation solution, new security compliance initiatives, and mainframe and storage updates.