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Victoria Police to market test over $300 million in outsourcing deals this year

by Paris Cowan •
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The history of ICT outsourcing within the Victoria Police has been problematic at best.

With no intention of repeating past mistakes, the agency has engaged PriceWaterhouseCoopers to begin planning for a market test of its managed services contracts two-and-a-half years ahead of their scheduled expiry.

This month the Victoria Police published details of a $4.5 million deal it has signed with the firm, which will cover the period 14 January 2013 to 31 July 2015.

A Police spokesperson explained that PWC would be managing the design and conduct of a procurement process “to enable new IT service arrangements to be established prior to the expiry of current contracts and to meet the future IT needs of Victoria Police”.

She said that tenders are expected to be called some time in 2013, but could not specify a date.

The Victoria Police’s outsourced services are currently covered across four service tranches or ‘towers’:

  1. Tower 1 – Mainframe and Unix Servers – provided by IBM for $82.1 million over nine years (18 February 2006 to 30 Jun 2015);
  2. Tower 2 – Desktop, Networking and Service Desk – signed with IBM for an original value of $65.69 million (extension details not available);
  3. Tower 3 - Applications Development, Support and Maintenance – provided by Fujitsu for $126.5 million over nine years (18 February 2006 to 30 Jun 2015); and
  4. Tower 4 - IT Asset Procurement Services – provided by a panel made up of Fujitsu, HP and Power Parameters and worth $36.2 million over nine years (18 February 2006 to 30 Jun 2015).

A now-expired data centre contract (named B5 after the building in which the facility was to be constructed) with Fujitsu is also associated with this cluster of contracts, having originally been within the Tower 1 responsibilities held by IBM. It was worth $30.4 million.

It is one of several ICT deals which attracted the attention of the Victorian Ombudsman in 2009, culminating in a high-profile investigation into ICT procurement practices within the agency and ultimately resulting in the resignation of Chief Information Officer Valda Berzins and Group Manager of Business and Planning John Brown.

The Ombudsman found that Berzins had grossly breached her financial delegation when she signed the (then) $28 million B5 contract with Fujitsu, having only received Ministerial approval to spend $11.6 million.

He also raised concerns about the absence of a tender process ahead of the contract signing, suggesting that an exemption approval process had served solely to justify Fujitsu’s selection.

The services covered by B5 had originally been IBM’s responsibility under the Tower 1 contract, before the funding was re-allocated to Fujitsu (reportedly without the Tower 1 contractor’s prior knowledge).

Claims that additional payments under Tower 2 may have been paid to IBM as a “sweetener” for the removal were subsequently dismissed by the Ombudsman.

Even before 2009, however, the Victoria Police was no stranger to ICT outsourcing turmoil.

In 2003 The Age reported that the Victoria Police had extended its chequered – and continuously expanding –outsourcing deal with IBM, despite a commissioned review which advised it not to. The contract, which was signed in 1999, was understood by the newspaper to be worth $250 million at that stage.

The Victoria Police is one of the few agencies in the State which will not source the bulk of its ICT requirements from CenITex. In October 2011 Premier Ted Baillieu announced he would halt the transition of the Victoria Police and VicRoads to the shared services agency, pending an investigation by the State Services Authority into its operations.

Related Articles:

No new blood for ICT at Victoria Police, despite Rush recommendations

Mapping the progress of Victoria’s troublesome ten

Poor planning and loose purse strings to blame for “scandalous waste” in Victoria

For more information, please contact the Editor (02) 9955 9896.

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