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Defence outsourcing likely to stay in-house

Defence outsourcing likely to stay in-house

In a move that will bring little joy to battered outsourcers, the Department of Defence (DoD) has confirmed it’s running an internal bid for a tender to provide network management and support services for the Corporate Services and Infrastructure Group (CSIG).

The tender is the first stage of a two-phase market testing program for IT management and support services within Defence to determine who will perform "central office" functions revolving around CSIG in Canberra.

Defence assistant secretary, IT market testing, strategy and policy branch, information systems division Mike Herron confirmed the Defence internal bid.

Herron said it had been a standard practice over the last decade and that internal bids were "enshrined into the Defence employees certified agreement".

"Defence has a Commercial Support Program that has been in place for over 10 years," he said. "That's the rules of engagement as to how we market test stuff. [It] dictates how we approach the market on issues regarding outsourcing. In effect, it is a bid backed by the department, on the department's behalf, to give [DoD employees] a fair go in the fight."

Fifteen candidates (including Defence) have been short-listed for the central office tender, which Herron said includes running functions such as networks, call centres and the help desk, but does not include hardware or infrastructure.

"The infrastructure is not included. It's management of [the IT assets], not ownership," Herron said. "Defence runs a fairly significant wide area network (WAN), which provides connectivity to a large number of bases, so it's management of that sort of activity. It's management of the help desk or call centres – we've centralised that function. It's the core of the service delivery as opposed to what happens on the base.

"Defence buys a fair bit of hardware and we will maintain that capability. [We will not be market testing hardware purchasing] as part of this exercise. If another project comes along and looks at that as a separate exercise, then that's their concern, not mine. I'm concerned with service delivery as opposed the infrastructure itself, but I wouldn't want to say it's definite."

Insiders suggest that Defence is more than likely to run with its own tender, not least because IT outsourcers are increasingly seen as a risky option in terms of both cost and security.

Chairman of defence supplier industry group, Australian Defence Information and Electronic Systems Association (ADIESA), Geoff Rhodes, said that while market testing was a worthwhile exercise to determine the fiscal value of Defence IT, national interest and security concerns would always dominate over any cost reductions.

"You would have to question if that sort of thing [IT infrastructure and services] could ever meet the national interest test in the hands of a foreign company," Rhodes said.

In Defence, security considerations were "fundamental", he said.

Asked if the recent theft of mainframes from an ostensibly secure EDS facility had harmed the Defence view of IT outsourcer security, Rhodes said "that sort of thing is most unlikely to help".


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