Defence dips into contingency for troubled data centre overhaul

The Defence department has been forced to dip into a $37 million contingency fund as a result of unforeseen problems with its massive centralised processing data centre overhaul.

Earlier this month iTnews reported that issues deploying a private cloud and migrating applications had delayed delivery of Defence’s new data centre capability.

The project will see Defence’s data centre footprint slimmed from 280 over-subscribed and end-of-life computer rooms to 11 local and three international facilities that host a private cloud set-up.

The private cloud component - which has been built using Microsoft, Oracle Solaris, and NetApp technologies - was made operational in late 2015, but the agency has faced difficulties deploying it into the new data centres.

Defence has also run into trouble migrating some of its business applications into the new environment.

The agency revealed in recent responses to questions on notice from budget estimates that it had been granted approval to access $30 million out of the total $37 million contingency fund late last year.

The money was needed to fund "unforeseen costs" stemming from delays to the project's delivery as well as "changes in the Defence landscape, delivery and commercial challenges".

It has resulted in an extra $22.7 million being added to the purchase order it has with project contractor Abacus Innovations. Defence and Abacus - then known as Lockheed Martin’s IT services business  - signed a $710 million contract for the centralised processing deal in late 2014.

Defence said it had so far paid out just under $3 million of the extra contingency to Abacus, with the remainder to be incurred over future financial years.

The $7 million left of the contingency fund will be spent in future financial years, Defence said. Just under $4 million will be spent on ongoing project labour, and just over $2 million will go towards the cost of additional data centre facility remediation.

It said it doesn't expect to need any further contingency funding for the project.

Defence has executed around 18 contract change proposals since last September.

Head of the ICT operations division, air vice marshal Andrew Dowse, told estimates some of the problems stemmed from "a lot of interdependencies between Defence and Leidos that in the early days of the project were perhaps not as well managed". 

He said the agency now had "very strong governance" in place, and Defence IT leaders were meeting with Abacus executives every fortnight to "ensure we are managing the risks and that we are remaining on schedule".

The department said it had improved its project status reporting, schedule management, dependency management, and risk and issue management.

"These improvements have applied to both Leidos and Defence-shared governance arrangements, as well as Defence-only governance arrangements," it said.

The problems have set back the delivery of full operations for the centralised processing capability to the fourth quarter of this year.

The agency confirmed to the estimates committee that it was on track to be fully operational by then.