DIAC flags massive outsourcing overhaul
The Department of Immigration and Citizenship (DIAC) has revealed plans to overhaul its information technology and communications outsourcing contracts, which have been dominated by CSC since 1998.
DIAC has requested business advisory services to review its outsourced IT and telecommunications contracts, which until 2001 were all held by CSC. In a request for tender (RFT) issued late Friday, DIAC revealed it was seeking a consultancy to provide procurement, technical and strategic advice as its contract with CSC heads towards its expiry date of June 2011.
The review of IT outsourcing contracts could also impact Optus and Unisys. In 2001 DIAC made moves to loosen CSC's stranglehold over the agency's IT operations when it hived off telecommunications work directly to Optus — a task that was until then under CSC's management. CSC was retained for mainframe, mid-range and storage services over the period, but in 2007 desktop services were moved to Unisys under a four-year deal worth $150 million that also ends June 2011. The value of CSC's work for DIAC between 1998 and 2009 was $350 million.
It is not yet clear whether DIAC intends to replace its contract with Optus. Just last year it inked a four-year deal with the telco worth $143 million taking it to 2012.
DIAC appears to be following the tack of fellow agency, the Australian Taxation Office, which in 2007 hired the Boston Consulting Group to assist its move away from the agency-wide IT outsourcing deal held by EDS since the 1990s. The ATO last week announced it had signed Optus as its managed network services provider under a four-year deal worth at minimum $186 million.
The timetable for DIAC's replacement of contracts is planned to commence almost immediately, according to DIAC's RFT for advisory services, with the department planning to release an RFT by December this year. It plans to have selected a shortlist of suppliers by June 2010, locked down new contracts by November 2010, and commenced transitioning services by December 2010.
The agency has been a lucrative client for CSC over the past decade. Although IBM picked up the bulk of work under its over $500 million Systems for People project, CSC was awarded over $6 million for the project.
DIAC warned there may be significant changes to the scope of the tender by the time a contract is ready to be signed. Some components of its outsourced IT environment may be considered for centralised procurement, similar to Defence's government-wide Microsoft software licensing deal through local IT company Data#3, which was signed earlier this year. DIAC said the government was in the process of determining items for centralised procurement and reserved the right to comply with the government's goals.