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SA Govt curtails $400M DXC outsourcing deal

Whole-of-government project hit by implementation delays and spiralling costs
Adelaide - South Australia's capital

Adelaide - South Australia's capital

The South Australian Government is reviewing its $400-million end-user computing program with DXC Technology, claiming it was plagued by “delays and disputes” from the beginning. 

The state government intends to cut back the whole-of-government hardware supply and management contract it awarded to DXC nearly three years ago after the original budget overran by more than $60 million. 

The two parties are now embroiled in a contract tussle in an attempt to define “the definition of transformation activities”, technical solution offerings and each others’ roles and responsibilities.

The state government first awarded DXC — then known as CSC — the contract to supply and support PCs, laptops and tablets in February 2017, hoping it would save $11 million a year once implemented across 17 agencies. 

However, it now intends to stop the roll-out beyond two agencies, the Department of the Premier and Cabinet (DPC) and SA Health, after seeing its original 10-year budget of $394 million spiral to $457 million.

The South Australian Government has so far pumped an extra $48 million into the program to mitigate “increased contract charges” and removed estimated financial savings worth $37 million.

SA Health also coughed up an extra $5.5 million to fund its Windows 10 migration but acknowledged more funding would be likely required in future. 

Once reduced down to the DPC and SA Health, the EUC program will cost $245.8 million over 10 years, an audit report revealed. 

However, as a result of its decision to curtail the minimum volume level of 55 000 units, the SA Government will curtail addition support costs of 7 per cent per device for those delivered. 

Much of the increased cost was put down to migration to Windows 10 delays, with the auditor’s report calling the process “problematic and complex”.

As of 23 July 2019 only 96 of a total 633 devices in the DPC had been migrated to Windows 10 due to a software upgrade, putting it far behind the intended completion time of the following month. 

Across SA Health, the situation was more woeful, with only 535 out of the target of 24,150 devices migrated by September this year. 

The number of upgraded devices that are now expected to be migrated by October 2021, the report said. 

A further 10,000  of the total desktop environment fleet currently fall outside of the initial migration strategy and will be the subject of further application compliance analysis, which is expected to take place after 2021. 

SA Health is expected to incur extra costs if ongoing Microsoft Windows 7 support beyond 2020 is required, the report said. 

Meanwhile, the 15 remaining agencies who were also earmarked for Windows 10 upgrades have now been left to “develop their own alternative” upgrade strategy and support arrangements. 

DXC Technologies has been contacted for comment.