Defence opts out of Government data centre panel

The Department of Defence is the latest agency to bypass the Government's mandatory data centre panels, awarding a $40 million migration services contract to Accenture this month.

Accenture is not one of the members of the panel, managed by the Department of Finance and Regulation's Australian Government Information Management Office (AGIMO).

It is not clear whether Accenture bid for inclusion to the panel, which was established in April 2011.

Use of the panel is mandatory for all agencies subject to the Financial Management and Accountability Act 1997, unless an exemption is granted.

A Finance spokesman said Defence had requested an exemption because it had issued an Expression of Interest to the market before the the whole-of-government panel was introduced.

As such, the deal came under a provision in Finance's coordinated procurement arrangements, which encouraged agencies to review existing arrangements and decide whether to exercise existing options or enter into new arrangements.

Defence “had an existing arrangement” with their Expression of Interest and the Migration Services Panel was not yet operational, the spokesman said.

How Defence opted out

A Defence spokesman said that its Chief Information Officer Group decided to replace its current Primary Data Centre facility at Deakin, Canberra, with an upgraded facility in Sydney.

The Data Centre Migration Project involved a two-stage acquisition strategy that commenced in May 2010 -- before the AGIMO Migration Services Panel was established.

In the first stage, Defence approached the market through its Defence System Integration Panel. This was a "discovery assessment and short-listing activity", which led to the engagement of Accenture.

Defence sought and was granted an exemption from Finance's Migration Services Panel on 9 February 2011.

A spokesman said that the panel, now established, would meet the future requirements of the Department of Defence.

The department declined to identify other bidders for its contract as it “does not release commercially sensitive tender information in relation to its procurement processes”.

Use of the mandatory panel

The Department of Human Services/Centrelink has been the sole user of the panel since it was established in April this year.

Department of Human Services' outgoing chief information officer John Wadeson often joked that AGIMO appeared to have set up the panel mainly because DHS would have go to the market for its data centre requirements in any event.

There have been more deals done outside the data centre panel than within.

HP won a $739 million contract with the Australian Taxation Office for the "Provision of Centralised Computing Services" earlier this year.

Telstra's data centre option for Health & Ageing is also in limbo because the telco is not on the panel.

The Finance spokesman said several agencies were now engaged in discussions with panellists, but declined to identify the agencies due to commercial-in-confidence caveats.

AGIMO's whole-of-government data centre strategy aimed to avoid $1 billion in costs over 10 years.

An industry insider said that if agencies bypassed a whole-of-government panel and got a worse price, meeting the $1 billion goal would be much more difficult.

“It is likely to make AGIMO very cross, especially if AGIMO gets put in the position of having no choice in the matter because they would be accused of causing delays in very important projects," the insider said.

"The agency might also be accused of being arrogant, but that might be a common complaint.”