The South Australia Government has extended a contract with computer giant Hewlett-Packard for the provision of mainframe services.
The government's existing eight-year deal with the company expires in December 2014, but will now be extended to more than 11 years, to May 2018. This brings the total cost of the 11.5-year contract to $119 million. The cost of the three-and-half-year extension is $33 million.
HP provides the infrastructure and operating system, while the government owns and manages the applications that run on the mainframe.
Finance Minister Michael O'Brien said that the new deal would provide increased capacity, and save the government more than $3 million.
He said it will satisfy the government's current and projected processing requirements for the next six years, and reduce the risk of disruptions with immediate access to additional capacity.
"This agreement sees the government gain the operational and performance benefits associated with new infrastructure without having to purchase, own, maintain and manage that infrastructure," the minister said.
"By spreading the costs over a longer period this new extension, which will expire in May 2018, will achieve approximately $3.1 million in savings over the next six years."
This is the last time that the contract can be extended before the government has to go back out to market for it. Chief information officer Andrew Mills said that the state fully intends to approach the market in time to have replacement arrangements in place by May 2018.
Hewlett-Packard recently announced a global restructure, including the planned axing of 27,000 jobs worldwide by 2014.
The company said that the restructure is designed to simplify business processes, advance innovation and deliver better results for customers, employees and shareholders.
It is also expected to deliver the company more than $3 billion in savings.
Updated 3.03pm 30 May 2012: added additional information on the cost of the extension.