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Procurement plans reveal DIAC’s outsourcing intentions

by Paris Cowan •
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Brand new Procurement Plans have revealed that the Department of Immigration and Citizenship (DIAC) intends to approach the market for its two core ICT managed services supply arrangements, without materially changing the scope of either of the contracts. 

The procurement process is due to commence in the 2011-12 financial year, suggesting that DIAC is fully aware of the length of time it will to complete the process before the current contracts expire in June 2013.

Unisys currently manages the provision of IT service desk, end-user computing and secure gateways to the Department, under a $211.5 million contract which commenced in April 2007 according to Intermedium’s contract’s data.

CSC has held the contract for manage mainframe, mid-range and storage services for DIAC since original monolithic Group 3 outsourcing contract began in 1998. The current CSC / DIAC contract is worth $38 million and runs from July 2010 to 30 June 2013. According to Intermedium’s Infrastructure Management Outsourcing Report, this brings the total value of the CSC/ DIAC outsourcing relationship since inception to $616 million.

With both contracts due to expire at the end of the 2012-13 financial year, DIAC has allowed a maximum of 18 months to approach to market, evaluate bids, hold contract negotiations and allow for a transition period (should this be required as a result of a new supplier being chosen in either case).

According to the 2011-12 Procurement Plans, approaches to market for both are scheduled for Quarter Three of the financial year (Jan-March).

CSC’s share of the Federal Government ICT market has been increasing significantly due predominantly to its success in winning Defence contracts.

In 2007-08 and 2008-09, CSC was maintaining total average government contract value of approximately $50 million per annum, predominantly with Defence and DIAC (no outsourcing contracts were signed in these two years). In 2009-10, this rose to $199 million, including a $121 million extension to the DIAC outsourcing contract signed in this period.

In 2010-11, CSC significantly reduced its dependence on DIAC by entering into contracts with a total value of $136 million with the Defence agencies to achieve a $288 million contract total for the year.

Unisys has not shared CSC’s growth story in the Federal Government market.

Since commencing its IT managed services contract with DIAC in early 2007, and then winning a $278 million contract with Defence in 2008, the company has had a modest level of new business with Federal Government agencies.  It has had a total contract value of between $7 and $9 million per annum since the 2007-08 financial year, excluding a $9 million outsourcing contract with the Australian National Audit Office, where it has been the incumbent supplier for well over a decade.

Since it last went to market to procure major outsourcing arrangements, DIAC has received a new pool of funding – $170 million – for its Systems for People initiative, bringing total budget allocations for the program to $829 million, up from the original budget of $659 million.

Chief Information Officer Bob Correll left DIAC suddenly in April 2011. Since Correll’s departure oversight of ICT has transferred to new CIO Tony Kwan, who was previously CIO at Department of Families, Housing, Communities and Indigenous Affairs (FaHCSIA). While FaHCSIA did outsource their ICT infrastructure to UXC Getronics Australia (now UXC Connect) between 2004 and 2009, they have since moved to a self managed supply.

Intermedium will hold its annual Procurement Plan Briefing in Canberra on 4 August 2011. Register now to gain Intermedium’sinsight into the year ahead in Government ICT, generated from our combined analysis of the latest procurement plans, budget allocations and expiring contracts.


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