South Australia extends HP mainframe contract

$119 million contract to 2018.

The South Australian Government has extended its mainframe outsourcing contract with HP for an additional four years.

HP currently supplies mainframe computing services to run South Australia’s Justice information system, Police offender information system and a bevy of accounting, HR and payroll systems.

The South Australian Government signed an eight-year deal with HP in 2006 for the provision of mainframe services. It was due to expire in December 2014 but will now be extended to May 2018.

The total value of the 11-year mainframe services agreement to HP now stands at $119 million.

HP’s acquired services arm EDS had previously provided the same services to the Government for close to a decade. It was among the few chunks of work the company retained after South Australia broke up a monolithic technology outsourcing deal with the Texas-based company in 2007.

South Australian Government CIO Andrew Mills told iTnews the state had decided against a public tender process for the mainframe contract beyond 2014 due to reaching "processing capacity limits" late last year and triggering further negotiations under the current agreement.

"The mainframe infrastructure has already been upgraded as a pre-condition of the extension," he said.

"This new infrastructure has sufficient capacity to meet the Government's projected requirements for the life of the current contract."

The state estimated it would save $3.1 million under the extension, as weighed against not doing anything before the contract's original expiry in 2014.

The latest renewal was negotiated in an effort to mitigate risk and avoid the capital cost of purchasing new mainframe infrastructure, according to a press statement released overnight by South Australia’s minister for the public sector, Michael O’Brien.

HP will own the infrastructure and operating system licences, while Government agencies own and manage the applications running on the mainframe.

“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,” O’Brien said in the statement.

“By allowing immediate access to additional capacity, the risk of outages – and therefore disruptions to services – will decrease.”