Home Affairs' VMware arrangements top $60m

Home Affairs has consolidated its VMware subscriptions into a single three-year, $61 million deal, representing an increased cost although it’s unclear by just how much.

The department struck the $60.9 million agreement about a month ago, against a backdrop of other large federal entities facing increased licence costs since VMware was acquired by Broadcom.

In a statement to iTnews, a spokesperson for Home Affairs confirmed that its licence costs had gone up, but said the increase “reflects broader market conditions, with software vendors across the industry adjusting subscription pricing over recent years.”

It appears the department was able to minimise some exposure to price hikes through its approach to the renewal.

“Prior to entering into the new agreement, Home Affairs undertook procurement activities to assess its requirements and optimise its use of VMware products and services,” the spokesperson said.

“The department also utilised specialist procurement expertise as part of the procurement process to support negotiations and ensure value for money in accordance with Commonwealth procurement requirements.”

However, the structure of the new three-year deal also makes it difficult to determine by how much the department’s overall licence costs increased between renewals.

The department had a previous three-year, $13.8 million agreement covering “software support and maintenance” that expired at the end of June.

However, it was also one year into a separate three-year, $42.9 million agreement, also for “software support and maintenance”, that was due to run through until mid-2028.

“The new $60.9 million agreement supersedes the previous $13.7 million agreement and incorporates the remaining scope and value from the earlier $42.9 million agreement,” Home Affairs’ spokesperson said.

“The new agreement consolidates these arrangements into a single contract.”

The difference between the old and new agreements is somewhere around $3.3 million, although it’s not clear how representative of the cost increase this is.

Questions by iTnews that sought to clarify the actual cost increase were not directly addressed by the department.

The new VMware agreement runs through to mid-2029 and offers no extension options for the department.

It’s understood that the contract was struck in US dollars, and came to US$42,310,220.51.