ATO gives DXC Technology further AU$735m for IT services

The ATO has renegotiated its IT services contract with DXC Technology, boosting the total value of the contract to AU$1.47 billion.

The Australian Taxation Office (ATO) has renegotiated its IT contract with DXC Technology, giving the global technology services company a further AU$735 million for "centralised computing".

The contract, now worth AU$1.47 billion, is valid until the end of June 2019.

A spokesperson for the ATO said that under the contract extension, DXC will be providing the taxation office with services including data warehousing, mainframe, midrange, storage, datacentre facilities, private cloud, and public cloud.

According to the spokesperson, a number of the ATO's IT contracts are due for renewal in the coming year.

"Many of these contracts have been in place since 2009-10, and the market and government IT procurement policy has changed over that time," they added. "In consultation with the Digital Transformation Agency, we are revising the way we would use these services to be in line with government policy."

As a result, the spokesperson said that to allow proper consideration of the options available, the ATO will be extending some services currently offered by incumbent suppliers.

"We expect to finalise our new IT sourcing strategy in 2018 and, as part of this, we will progressively extend some services currently offered by incumbent suppliers to ensure continued stability of systems while we approach the market for services," the ATO explained.

The original contract was awarded to Hewlett Packard back in December 2010; however, DXC has emerged with the billion-dollar contract following a string of mergers and sector spin-outs.

Over the past 12 months, the ATO has suffered a handful of IT-related incidents, including "one of a kind" SAN outages experienced as a result of the failure of the Hewlett Packard Enterprise (HPE)-owned and operated equipment at the end of 2016.

A report into the outages revealed the SAN could not handle more than one drive or cage failure thanks to a design decision taken by HPE.

As noted by the report, an analysis of logs from the six months before the incident showed a number of alerts indicating problems with the SAN.

"Since May 2016, at least 77 events related to components that were observed to fail in the December 2016 incident were logged in our incident resolution tool," the ATO said previously. "We were not made fully aware of the significance of the continuing trend of alerts, nor the broader systems impacts that would result from the failure of the 3PAR SAN."

The report described HPE's lack of preparation for an event of the kind experienced by the ATO in December.

"Recovery procedures for applications in the event of a complete SAN outage had not been defined or tested by HPE," the ATO said.

As a result of the incidents, the ATO has rebuilt its storage solution with a new 3PAR, and decommissioned the old one in July for forensic analysis.

The ATO has since experienced multiple outages and mainframe reboots, with the most recent outage in September affecting its online services.

The formation of DXC Technology was finalised in April, which was the result of the merger of Computer Sciences Corp (CSC) and the Enterprise Services arm of Hewlett Packard Enterprise (HPE).

Hewlett Packard split its business into two entities in November 2015, with HP focused on PCs and printers and HPE concerned with commercial technology.

HP announced its plan to split almost a year prior, with the company saying at the time that separating into two companies would give each the independence, focus, financial resources, and flexibility needed to adapt quickly to changing market and customer dynamics.

Similarly, CSC underwent its own split in 2015, which resulted in two separate publicly traded companies -- one focused on commercial businesses and the other on the public sector.

DXC Technology Australia and New Zealand managing director Seelan Nayagam told ZDNet in August that the local arm of the global IT giant also completed the upgrade of the Australian government's Budget system.

The ATO was last month called out by the Australian National Audit Office (ANAO) for not tracking the costs involved in its digital transformation program, Reinventing the ATO.

The Reinventing the ATO Program was expected to better position the ATO to be more contemporary, innovate with technology, and meet taxpayer expectations, with the program applying to all aspects of the ATO's operations, including infrastructure, tools, services, and capability, with 100 projects in total part of the digital transformation.

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