DHS goes to market for $1bn welfare IT replacement

The Department of Human Services has opened bids for the first piece of work under its billion-dollar, "once-in-a-generation” welfare systems replacement.

It today approached the market for the software platform that will support the new payments engine, calling on prospective partners to be part of what will be arguably the highest profile and most keenly scrutinised IT project currently in Australia.

It will select an initial shortlist of respondents who will be invited to take part in the price-based negotiating phase, to start from December this year.

The successful software vendor will assume a central role in the welfare payments infrastructure transformation (WPIT), estimated to cost between $1 billion and $1.5 billion to complete.

The DHS will migrate off its more than 30 year-old income support integrated system (ISIS), which is underpinned by Model 204 mainframe technology.

ISIS has become an increasingly sharp thorn in the side of the DHS.

A lot of the clunkiness of the current welfare application process is blamed on the age and complexity of the existing system, which has seen millions of lines of code bolted on over its decades of operation.

“Customers are often requested to provide the same information to the department multiple times, in different paper-based and online forms. Much of this interaction is unnecessary and a duplication of effort,” tender documents state.

Centrelink staff are still required to intervene manually in the processing of many payments, presenting a barrier to the department introducing straight-through automation and self-service options.

While many of the old 3270 green screen terminals used to access the ISIS application have been replaced by a SAP web interface, a “small and reducing number” are still in use by DHS IT staff.

Model 2014 technology is supplied by a niche US provider, whose only remaining customers are Australia’s DHS and the CIA, meaning technicians with skills and experience using the platform are getting harder and harder to find.

At 128 billion database rows and roughly 30 million lines of code, many hands are required to amend the system in response to any changes to welfare policy.

“Although the current welfare payment system delivers payments and services accurately and on time, the system is now costly to maintain and unable to take full advantage of the digital offerings available,” according to tender documents.

This is the first of two major approaches to market the DHS plans to make for WPIT. It will return to industry to put together a panel of systems integrators down the track, with the successful first-round software bidder invited to put its hat in the ring again.

Tender documents reveal the DHS expects the WPIT project to take seven years to fully complete. It plans to roll it  the system in five tranches.

The first and current tranche involves planning and procurement. From then, DHS will progressively on-board different payments, starting with students and later income support and families, and finally aged care and any other remaining payments.

Welfare recipients should expect to receive payments faster, and should no longer be asked to re-supply the same information over and over once the new system is in place, DHS says.

Where the old system was architected on a payment-to-payment baisis, the new system will focus on customer micro-segments grouped by common circumstances. With a new level of real-time insight, the department hopes to tailor a service delivery approach to the needs of each of these segments.

Tender documents also reveal DHS is open to re-using its new technology as a “national infrastructure asset” that could be redeployed to calculate other government payments, which could have implications for the Medicare processing engine that was tentatively put to market last year.

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