Health orders urgent review of IBM deal

Australia's Department of Health and Ageing (DOHA) has ordered an urgent review into its $109 million decision to retain IBM as its outsourced ICT supplier for a further four years.

The IBM contract was signed two days before Christmas - less than six months before an existing deal with Big Blue was due to expire.

It was the third consecutive occasion the department had retained IBM without going to tender, despite the requirement that large tenders be contested in the free market under the Commonwealth Procurement Guidelines (CPGs).

DOHA defended its decision to retain IBM on the basis that it had been approved by former Finance Minister Lindsay Tanner.

The department now sought to use the open market to source a review of its decision.

In an email sent out to suppliers last week, the department sought "quotation for the provision of a review of processes, procedures and functions" related to its ICT outsourcing.

The industry was given a few days to respond - with "in confidence" responses required by lunchtime on February 18.

The department hoped the successful tenderer would complete and submit the review by February 28.

Interested parties had a matter of hours to prepare and submit a tender document, and the winning party will have little over a week to conduct the study (assuming they had not been given advance notice of the tender).

The department's request for quote document made clear its expectations for how such a process could be wrapped up under such a tight timeframe.

"The Department elected to enter into a direct source procurement... based on a business case and procurement advice against the Commonwealth Procurement Guidelines," it said.

"The decision was signed off by the appropriate delegate, endorsed by the Executive and the Minister for Health & Ageing, and supported and agreed to by the Minister for Finance and Deregulation."

Need a crash course in Health's IBM deal? Try iTnews' coverage:

• DOHA questioned in parliament over whether it was preparing a tender (October 2010)
• DOHA hires a CIO for the first time in five years (November 2010)
• iTnews reveals that DOHA had already spent $1.5 million on ICT procurement advice (November 2010)
• DOHA revealed in The Australian to have successfully sought permission by Finance Minister Tanner to re-engage IBM, but denies contracts are signed (December 22)
• DOHA announces retaining of IBM in the shadow of Christmas
• iTnews reveals that 76 percent of DOHA ICT purchasing during the ALP Government's tenure has been sourced direct (January 2011)
• iTnews reveals the extent to which tender guidelines are being ignored across all agencies, and the root causes of the problem (February 2011)