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Resources, Energy and Tourism backs away from IT outsourcing

by David Shi •
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The Department of Resources, Energy and Tourism (DRET) has decided not to go ahead with its own IT outsourcing arrangement, despite conducting a full Expression of Interest (EOI) process into the option in 2011.

“The Department undertook a final review of the supply, sustainment and support of ICT Services for the Department and at this time believed that it was not in the best interest of the Commonwealth to proceed,” said a Departmental spokesperson.

An initial invitation for EOIs for the proposed arrangement was released by DRET on 24 July 2011, and hinted towards plans to replace of a number of ICT service contracts and agreements currently in place across the Department, most notably a $6 million shared services supply contract under which DRET sources its ICT needs from the Department of Innovation, Industry, Science and Research (DIISR).

Many of the functions now held by DRET were part of DIISR prior to machinery of government changes which took place in 2008, and the shared services arrangements are a legacy of this former structure. DIISR itself meets these needs through an outsourcing contract signed with UXC Connect.

A shortlist of six companies was selected from the EOI, however on March 2012 the Department notified the shortlisted vendors that it would be discontinuing the EOI process.

It has declined to comment any further on the Department’s reasons for discontinuing the EOI process.

A multi-year DRET outsourcing arrangement could have been worth tens of millions of dollars, based on recent contracting activity. According to Intermedium’s Analyse IT tool, it spent $5.6 million in ICT contracts during 2010-11, $3.9 million of which went towards IT services.

Despite DRET’s decision not to pursue its own outsourcing arrangements, procurement in the area has been actively embraced by other Federal agencies. The Department of Immigration of Citizenship (DIAC) will approach the market in Quarter 4 of 2011-12 to refresh its two core ICT managed services supply arrangements:  for End User Computing and IT Service Desk Services and for Mainframe, Midrange and Storage Services. The current arrangements are due to expire in June 2013.

The Australian Consumer and Competition Commission (ACCC) has also entered a new IT outsourcing arrangement, signing a $15 million deal with Datacom Systems for the management of the agency’s IT infrastructure through to May 2014.

According to Intermedium’s recently released IT Services Market Overview Report, the IT Managed Services category of the Federal Government ICT market was worth $2.7 billion in 2010-11, with 511 Managed Services contracts commencing within the financial year.


Related Articles:

ACCC switches providers in new IT outsourcing deal

Procurement plans reveal DIAC’s outsourcing intentions

Department of Resources, Energy and Tourism opens awaited Managed Services EOI

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