Veterans Affairs shifts IT infrastructure to Centrelink

UPDATE: IBM snubbed, up to 40 staff to be redeployed.

UPDATE: Up to 40 IT staff at the Department of Veteran Affairs (DVA) are likely to be shifted to the Department of Human Services after the signing of a IT infrastructure shared services agreement.

Australia's Department of Veterans Affairs (DVA) has confirmed that the management and support of its mainframe, midrange server, desktop, telecommunications, help desk and secure gateway services will all fall into the control of the Department of Human Services.

Under the agreement, the DVA has already agreed to pay $15.1 million to Human Services for "project management and technical services" assocaited with the migration of IT infrastructure between the two departments. The migration was expected to be complete by July 2011.

The spokesman for the DVA said the Federal Government has committed $20 million to the project.

"This is an internal change and will have absolutely no impact on Veterans," the spokesman said.

The shared service deal is almost certainly set to come at considerable cost to the DVA's technology outsourcer of some 13 years, IBM.

DVA signed a four-year extension with IBM in 2006 for some $90 million, but according to the DVA's most recent annual report [see graph below], it has progressively spent less with IBM as it prepared for the shared services migration.

Source: Department of Veterans Affairs Annual Report 2009/10

"Most services currently provided for the Department by IBM will transition to DHS," a spokesman for Veterans said.

"The contract with IBM expires in April 2011, but has extension options. DVA is currently considering what, if any, services the department may continue to contract to IBM." 

Veteran systems

The DVA explained in its 2009/10 annual report that legacy applications running on mainframes that support its provision of welfare services to older war veterans represented a significant IT expense.

"With the numbers of the older veteran population declining slowly, the department must actively manage the cost and risk of extending the useful life of Veterans' Entitlements Act 1986 (Vea) processing systems for at least ten more years," the department said.

These "older processing systems... have a limited business life," the department said, but would need to be "retained, but rationalised."

The DVA expected that the shared services arrangement (with Human Services) would "reduce costs and improve efficiency" such that budget can instead be spent on online self-service portals and re-tooling of its business applications to meet the expectations of younger war veterans returning from more recent campaigns.

A DVA spokesman has since told iTnews that these needs are likely to be met by in-house resources and use of existing supplier panel arrangements.

Whole-of-Government strategy

The DVA is among the first of what iTnews expects to be several agencies using Centrelink's IT resources to offload IT costs.

Under a plan outlined to iTnews in May, the Department of Human Services (which includes both Centrelink and Medicare) has been charged with using its expertise and excess capacity to take on the enterprise IT infrastructure needs of smaller agencies under "shared services arrangements".

Centrelink was provided an additional $8 million in the 2009/10 Federal Budget towards its shared services project, and has since splashed out $40 million on extra data storage in anticipation of more agencies coming on board its infrastructure cluster.