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Report critical of Govt outsourcing contract, questions savings

Report critical of Govt outsourcing contract, questions savings

An audit report tabled in Federal Parliament yesterday has criticised the Department of Veterans Affairs (DVA) over its handling of an IT outsourcing contract with its partner, IBM Global Services Australia (IBM GSA).

The Australian National Audit Office, which prepared the audit titled Management of an IT Outsourcing Contract, questioned the logic of DVA's IT planners in moving from a mainframe to server environment during the outsource period.

"Although DVA's IT strategic plan foreshadowed the increased adoption of applications using client-server technology, DVA's outsourcing contract [with IBM GSA] focused on the operations and activities of the traditional mainframe," the ANAO report said.

"Within 12 months of the contract's signature, the department required additional client-server technology to replace some of its existing mainframe-based services and to deliver other initiatives. The ANAO considers that DVA's management of the procurement of additional services would have been strengthened by a holistic review of needs and the contract requirements, rather than recourse to 'add-on' arrangements."

Some of the client-server technology supports new financial, human resource and data management systems that were introduced in DVA over the term of the contract.

The outsourcing contract was initially valued at $65 million over five years when signed in February 1997. IBM GSA was called upon to maintain DVA's computing infrastructure which covered mainframe computer processing, network and desktop infrastructure, voice communication services, office automation training and associated support services.

This deal was then replaced by an expanded contract later in that year. This contract included two more Government departments: Finance and Administration, and Comsuper.

The extended contract covering three agencies was valued at $90 million. At the time, DVA anticipated $20 million in savings over the term of the contract. However, the department has to this date not tabled the actual savings made.

The ANAO concluded that there has been limited information supplied by the DVA by which to assess whether the department received "value for money from its IT services after the contract was signed".


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