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Optus at Medicare, Telstra at Centrelink: What will the future hold under DHS?

by Annabelle Milosavljevic •
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One of the challenges facing the new Department of Human Services team under John Wadeson is the resolution of its telecommunications services arrangements;  Optus is the incumbent supplier at Medicare but Telstra is the incumbent at Centrelink.

In the new DHS organisational arrangement, announced last December, ICT Infrastructure Deputy Secretary Wadeson assumed responsibility for infrastructure and telecommunications across the DHS agencies.  These include Centrelink, Medicare Australia, The Child Support Agency and three smaller agencies.  According to the organisation chart, specific responsibility for telecommunications rests in Patrick Hadley’s ICT Integration and Consolidation Division.

As recently as 13 April, Medicare has posted notice in AusTender of a $42 million contract to Optus, which is due to expire in 2011.  This latest contract is on top of a $27.45 million contract awarded by Medicare in early February 2010, bringing the total awarded to Optus by the agency so far this financial year to $76.38 million.

In contrast, Centrelink has almost exclusively utilised Telstra as its telecommunications services supplier.  The provision of Centrelink’s Telecommunications Services is now due for a market test, with the term of its contract with Telstra now at an end.

With the new ICT infrastructure arrangements still being established, this dichotomy of incumbent telecommunications suppliers in the two major ‘client’ agencies will no doubt provide a key area of focus for all stakeholders over the next few months. 

Also likely to be ‘in play’ in any DHS decision making is the government’s signaled intention to move to whole-of-government (WoG) telecommunications arrangements.

This strategic direction has been heralded by the release in late March by the Department of Finance and Deregulation (Finance) of a Request for Proposal (RFP) to establish a panel of suppliers for the provision of Internet-based network connections.  All FMA Act agencies will be required to use the Panel once established.

Finance’s intended approach is to disaggregate ‘virtual connection management services’ from network carriage services.  According to the RFP, end user internet connections, wireless internet connections, owned links, ICON links, and other point-to-point links are not covered by the panel.

“It is expected that this vertical disaggregation will allow the Australian Government to gain the benefit of horizontal aggregation of carriage across participating agencies, while maintaining industry competition,” the RFP says.

Optus and Telstra are the two largest suppliers of telecommunications services to the Federal Government year in year out, according to Intermedium’s analysis.

Intermedium’s Telecommunications Services Report 2008-09 shows that for both Optus and Telstra, the overwhelming percentage of their business is now in ‘managed services’ whereby agencies bundle their requirements for both voice and data into the one service. 

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  • Federal
  • Telecommunications
  • Centrelink
  • Medicare
  • Optus
  • Telstra