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ATO heads to market to find IBM mainframe replacement

The tax agency wants to see the new replacement in before tax time 2024.
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Written by Aimee Chanthadavong, Senior Journalist on

The Australian Taxation Office (ATO) has said it is looking to replace its current IBM z14 mainframe before tax time 2024.

The ATO uses its mainframe environment primarily to provide access to application backend data.

According to tender documents, its mainframe service, which is due to expire in 2023, is currently provided under the agency's long-standing "centralised computing" contract held by DXC Technology.

The ATO outlined that it is considering two different replacement options: A consumption-based "cloud-like" service or a more traditional model -- much similar to its existing arrangement -- where the ATO owns or leases the mainframe hardware and contract services from a service provider, with the option of the hardware and service provider being from different suppliers.

"Mainframe capacity requirements continue to grow … the ATO seeks a new mainframe to meet its operational requirements and to implement new cost-effective arrangements to support this requirement," ATO stated in the tender documents.

"This mainframe RFT seeks to modernise the contract structure, gain commercial flexibility and importantly revamp services to benefit from recent technology advancements such as automation."

Tender submissions close June 29. The initial contract is expected to commence in March 2023 for three years with the option to extend it for one three-year term and two two-year terms.

Replacing its mainframe is part of the ATO's IT strategic sourcing program where it aims to replace its existing centralised computing, end user technology, and enterprise service management centre contracts prior to their expiry, by shifting away from a traditional IT service management model to a service integration and management operation model.

Previously, ATO chief information officer Ramez Katf said the program is aimed at modernising the agency's IT outsourcing portfolio by "developing market-aligned and more flexible bundles".

"This is a reshape of how we get these services into the organisation. The technology ecosystem continues to evolve, and our outsourcing model needs to adapt and become future ready," Katf said.

"Our aim is to provide greater opportunities for competition, delivering better value for money for the Australian community."

During the recent federal Budget, the government committed AU$6.6 million over the forward estimates period for the development of IT infrastructure required to allow the ATO to share single touch payroll data with state and territory Revenue Offices on an ongoing basis.

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