Victoria set for $6m coup de grace to outsource CenITex

The decline and fall of CenITex is set to end shortly, with the Victorian state government announcing AU$6m to go to tender and outsource CenITex's functionality.
Written by Chris Duckett, Contributor on

The Victorian state budget has delivered a coup de grace in the long decline of CenITex, as the government signalled its intention to outsource the agencies IT shared services functionality.

In its budget papers, the Victorian government said that the move to commit AU$6m to outsourcing was intended to deliver better value for money and service delivery.

The full tender for outsourced IT services is due to occur later this year, with the government allocating the full amount to the 2014-15 financial year, and none thereafter.

Victoria's move is the next step following a succesful expressions of interest process in September last year, with responsibility for the outsourcing to be transferred to the Department of State Development, Business and Innovation.

"The collaborative dialogue has provided useful information that will inform the approach to market that should be taken for the services provided by CenITex," said Victorian Minister for Technology, Gordon Rich-Phillips. "As intended, the feedback will inform better ways to structure the Request for Proposal that is released into the market as part of the procurement process."

"The transition will provide access to this procurement and other ICT market and project management expertise and will continue to ensure the outsourcing project will be closely coordinated with, and meet the ICT service and transformation needs of, Victorian Government departments."

The replacement of CenITex with outsourced services, is similar to the recommendations from the federal Commission of Audit report delivered last week, which recommended the use of both shared services and outsourcing in commonwealth IT procurement.

"Any approach to shared services will need to be carefully researched and appropriately implemented," the report said. "A key lesson from other jurisdictions is that standardising business processes is a necessary pre-condition to successful shared services projects and provides efficiencies just as significant as those gained from economies of scale."

The beleaguered government IT agency has been under siege since late 2011, when the ombudsman heard allegations of "serious improper conduct" at CenITex through a whistleblower. In 2012, the Victorian Ombudsman released a report that found deep-rooted nepotism and favouritismin the agency.

"Often, the companies or contractors were chosen because they were associates or friends of other contractors already working at CenITex," the ombudsman said in the report.

Private cloud and regional connectivity

As announced last week and confirmed in the budget, the Victorian government also announced the commitment of AU$9.5m across its forward estimates to its VicConnect telecommunications procurement project, with funding allocated for the creation of a private government cloud and marketplace for ICT services that form part of the state's Telecommunications Purchasing and Management Strategy (TPAMS).

For its 2014-15 financial year, the government said it expects to spend AU$3.5m, before settling into an average spend of AU$2.0m over the next three years.

Rich-Phillips said last week that VicConnect would increase the choice of services available to department, increase supplier competition, and provide better value for government.

"TPAMS was established over ten years ago. Since then, the telecommunications and broader ICT industry has changed dramatically, as has the size and nature of government demand for ICT," he said.

Regional mobile phone coverage and internet availability on regional rail services is set to receive AU$31.2 million over the next four budget years, as Victorian government has allocated AU$7.8 million each year to the project. In partnership with the commonwealth government, rail services between Melbourne and Ballarat, Bendigo, Geelong, Seymour, and Traralgon are set to be upgraded.

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